WASHINGTON -- Chrysler LLCs planned dealership cuts are necessary for this company and the industry to succeed, the U.S. Treasury Department said today.
Treasury, which agreed to provide more than $11 billion in financing for Chrysler after its April 30 Chapter 11 filing, did not endorse Chryslers specific plan to eliminate a quarter of its 3,188 dealerships. It said the government had no role in deciding which dealerships, or how many, would be eliminated.
But Treasurys statement said dealers are among the groups -- including workers, suppliers and creditors -- that must make sacrifices if Chrysler is to emerge stronger from bankruptcy.
Chrysler is now positioned to move forward with a plan that retains 75 percent of its dealers -- representing 87 percent of Chrysler sales, the statement said.
Chryslers plan has to be approved by a federal bankruptcy judge in New York. It seeks to stop 789 dealerships from selling Dodge, Chrysler or Jeep vehicles after June 9.
The Obama administration plans to continue its significant efforts to help ensure that financing is available to creditworthy dealers and to try to boost domestic demand for cars, Treasury said.
The Small Business Administration has expanded its program of lending working capital to dealers. And President Barack Obama has endorsed a cash-for-guzzlers bill aimed at spurring auto sales that is now before the House Energy and Commerce Committee.