• May 13, 2009
Chrysler has a lot of work to do in bankruptcy court to be eligible to receive another $6 billion in loans from the U.S. government. Among the many tasks requiring completion is the reduction of its dealer body. Chrysler hasn't set a timetable or announced how many dealers will be cut, but one lawyer claims to know the number and the date. Stephen Lerner from the law firm Squire Sanders reportedly said in a conference call that Chrysler is planning to cut 800 of its 3,200 dealers by Thursday of this week.

Chrysler calls the figure pure speculation, with spokeswoman Kathy Graham telling the Associated Press, "We do not have any finalized list as of this point in time." Few doubt that retail stores will be cut, though. The expected criteria for escaping the chopping block includes sales volume, profitability, available capital, strength of facilities and having all three Chrysler family brands. What hasn't been answered is whether dealers will be compensated for more than just existing inventory if the bankruptcy court agrees to tear up their franchise agreements.

We also don't know whether Stephen Lerner actually has any inside information regarding dealership closings. Squire Sanders is reportedly offering to represent any dealer that feels it could be on the closing list for $4,000. While that sounds like small change, the law firm could make millions if a large number of dealers participate in the suit. We'll find out tomorrow if Lerner is right.

[Source: MLive, Photo by Justin Sullivan/Getty]


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  • 26 Comments
      • 5 Years Ago
      Wow - 17 dealers closing in my state of MD. I grew up in OH: 47 dealers closing there.

      Lots of names I recognize, too...
      • 5 Years Ago
      awesome.

      so, because tomorrow is my day off, should i wait for a phone call or should i just come in to work on friday and be all like, "so, do i have a job still?"

      guess statistically my odds are about 3 in 4 that i WOULD have a job still, but jeez....
        • 5 Years Ago
        could be worse, it could be 200 more like GM on friday.
      • 5 Years Ago
      Ohhh look a classy salesman is walking towards us
      • 5 Years Ago
      not so much that, sea urchin, it's more like i'd have to go and find EVERY customer that i've sold, tell them where i'm going, and HOPE they will follow.

      i know i can find a job someplace else. it's just the uncertainty that's somewhat bothersome.
      • 5 Years Ago
      The KEY for Chrysler is to do this smartly, i hope that they have a detailed plan, because they may end up cutting some real good dealers in good areas and leaving some bad ones. They need to do this slowly and accurately so they do not end up in disadvantaged situation later on.

      Yes it's painful. No one wants to see people lose jobs and their investments. However the reality is that the car market has shrunk, and there's simply no need for so many dealers.
        • 5 Years Ago
        Here is hoping "Yvonne Hubbel's East Tulsa Dodge" bites the big one today!
        • 5 Years Ago
        So why not let the market decide which dealers die? Survival of the Fittest. Really difficult to see how fewer dealers will help Chrysler.
      • 5 Years Ago
      Sorry,

      I didn't see any listing in East Tulsa.
      • 5 Years Ago
      For those that questioned it, fewer delaers accomplishes two things:

      1) Few dealers mean fewer corporate employees needed to interface with these dealers.

      2) Many markets are oversaturated with dealers, which means they end up competeing against each other. This is a throwback to decades past when people would only drive a short distance to the dealer. These days people are willing to drive 20-30 miles for a deal.

      While I agree that Dodge needs to slash dealer count, due to the higher truck sales, they will probably need more dealers than Toyota in the rural areas.
      • 5 Years Ago
      bah! lose not loose
        • 5 Years Ago
        im just haing oen of those days ... disregard my ramblings :|
      • 5 Years Ago
      So how does this save Chrysler money? Do they own all the inventory. I fail to see how this is going to save them large amounts of money. Are the dealerships not independently owned.
      • 5 Years Ago
      Great idea, Chrysler! How many potential buyers of a brand that's at the bottom of the heap for quality are willing to drive an hour or so for the privilege to buy and service a Chrysler? Paging Hyundai/Kia - here's your opportunity to increase market share by picking up some new dealers.

      Then again, I'd find it pretty hilarious if the 1,000 dealers Chrysler plans on cutting off simultaneously file for a non-surgical, time consuming bankruptcy. Can you imagine the fun as GMAC/Chrysler Financial tries to salvage their inventory from 1,000 individual court filings? The frosting on the cake would be that is by the time they get their inventory back they'd be stuck trying to sell tens of thousands of 2008 and 2009 cars during the 2010 model year.
      • 5 Years Ago
      well that's hopefully the point.
      • 5 Years Ago
      So, how long to the remaining Chrysler dealers have? Six more weeks before Chapter 7?
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