Chryslers has overnight confirmed it will shed 789 of its near-3200 US Chrysler, Jeep and Dodge dealers. The 'announcement' came as the company filed motions with the US Bankruptcy Court to end selected US dealer franchise agreements.
According to US media industry source, Automotive News, the affected dealers will be required to close their franchised operations by June 9. Many are expected to continue trading via other franchises or as used car operations, Automotive News said.
Chrysler put a positive spin on the dealer group downsizing stating, "Subject to Court approval, 2392 Chrysler, Jeep or Dodge dealers will continue with the new company in a global alliance with Fiat once the sale is complete."
"We are in the process of revitalizing Chrysler's business to succeed as a viable enterprise under new ownership in the future," said Chrysler's ex-Toyota sales chief, Vice Chairman and President, Jim Press (pictured).
"With the downsizing of operations after the sale and reduction of plants and production, similar reductions must be made to the size of the dealer body. We appreciate the support of our dealers and regret this painful action," Press said.
Chrysler has stated it will work with the sacked dealers to redistribute their unsold stock. Under the provisions of the Chapter 11 restructuring bankruptcy the company is not obliged to do so.
Automotive News has also reported that beleaguered giant General Motors -- widely tipped to follow Chrysler into Chapter 11, perhaps as early as June 1 -- will this week inform up to 1000 US dealers that their franchise agreements will not be renewed when they lapse in 2010. In a GM bankruptcy the total dealer 'cull' would be substantially larger than Chrysler's action.
While Chrysler boasted around 3200 dealers before the latest round of cuts, General Motors has over 6000 franchised dealers around the USA. Contrast this to market leader Toyota's US dealer count of around 1200.
Chrysler says the 789 dealers that it seeks to discontinue are responsible for around 14 per cent of its US sales volume.
Read the latest Carsales Network news and reviews on your mobile, iPhone or PDA at www.carsales.mobi