DETROIT -- Chrysler LLCs plan to eliminate a quarter of its U.S. dealerships by June 9 means the vast majority of the surviving stores will sell the Jeep, Dodge and Chrysler brands under the same roof -- a longstanding goal of the bankrupt automaker.
Under the strategy outlined today, 789 dealerships will be shut down and 2,392 will survive to become part of Chrysler's planned alliance with Fiat S.p.A. (See lists at right.)
About 80 percent of the remaining dealers will carry all three brands, compared with 62 percent currently, the automaker said in court filings. That will help meet the goals of Project Genesis, the 2008 strategy to put the brands in the same showrooms.
The cuts are being made "with a deep sense of sadness,'' Steven Landry, Chrysler's executive vice president of sales, said in a statement. He said Chrysler used a "data-driven matrix" to make the decisions. The dealers targeted for closing account for 14 percent of Chrysler's U.S. sales volume, he said.
The remaining dealers will be left to battle the worst U.S. market for auto sales since 1981 as the longest recession since the Great Depression continues to take its toll. So far this year, Chrysler dealers have sold 323,890 vehicles in the United States, down 46 percent from a year earlier and 64 percent below the four-month total of 1999, when the operation was on its way to its peak sales year.
Chrysler President Jim Press told reporters during a conference call that there is no appeal process. Chrysler executives also said bankruptcy laws dont require them to buy vehicles, parts and tools from terminated dealerships.
A memo from one Chrysler district manager to dealers in one district said that through June 9, the targeted stores would operate business as usual under a court review period. Warranty and incentive payments would be made through June 9, the memo said.
Chrysler executives said the rejected dealers have about 44,000 new vehicles in inventory. Of those, about 4,000 are 2008 models and the rest are 2009s.
We expect to redistribute the majority of the 2009s over the next three to four weeks, said Landry. We have no plans to go to auction with the vehicles.
Landry said Chrysler will help broker the transactions.
Since Chrysler factories are shut down during the bankruptcy period, Landry said he believes surviving dealers will pick up the inventory.