Chrysler 'rejects' 789 dealers nationwide, works to pare network by 25% by June 9
Chrysler has just announced that it will 'reject' some 789 of its dealerships by June 9 as it works to downsize through Chapter 11 bankruptcy restructuring. That represents a 25% cut in its dealer networks, leaving 2,392 Chrysler, Jeep, and Dodge dealers to carry on if the automaker is able to successfully emerge from bankruptcy with its new partner, Fiat.
Auburn Hills reiterated that it will be "business as usual" with its entire dealership body throughout its bankruptcy proceedings, with plans to honor warranty and incentive payments "during the period that rejected dealers remain active."
According to information obtained by Automotive News, individual dealers will learn whether they are rejected or accepted via UPS letters delivered this morning. At that point, dealer owners will have 23 business days for a 'court review' of their individual cases.
The same memo that disclosed the planned UPS letter disbursement also details that after the 789 dealers are rejected, that 80% of its remaining dealers will carry all three of the company's brands (that figure presently stands at 62%). According to that communiqué, Chrysler does not expect for many of those dealers to close just because their franchise contracts are being rejected – about 345 of those rejected operations are paired with other competing brands, and according to Chrysler executive vice president of sales, Steven Landry, fully 83 percent of the disenfranchised dealers currently sell more used vehicles than they do new ones.
Thanks to the protections afforded under bankruptcy, Chrysler will not be legally required to buy back any vehicles, parts, or tooling from rejected dealers, but the automaker says it will work to pair the disenfranchised with remaining dealers who may be willing to buy those assets.
Chrysler vows to contact the more than 3.5 million customers who have purchased cars and trucks through the rejected dealers to give them additional information on how to get their vehicles serviced.
http://www.autoblog.com/2009/05/14/breaking-chrysler-rejects-789-dealers-nationwide-moves-to-pa/