• May 14th 2009 at 1:00PM
  • 64
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, 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.

If you're wondering if your local Chrysler dealers are earmarked for closure, a complete PDF list is available by clicking here.

Official press release after the jump.

[Sources: Chrysler; Automotive News - subs. req.| Image: Scott Olson/Getty]


Chrysler LLC Files Papers to Retain Majority of U.S. Dealer Network as Part of Company's Sales Process

Auburn Hills, Mich., May 14, 2009 - Chrysler LLC today filed a motion with the U.S. Bankruptcy Court seeking to reject certain U.S. dealer agreements, and a list of U.S. dealer agreements to be assigned to the buyer of its business assets. Subject to Court approval, 2,392 Chrysler, Jeep® or Dodge dealers will continue with the new company in a global alliance with Fiat once the sale is complete. This action will help improve the landscape of the Chrysler dealership network following the sale and enhance the full line portfolio of Dodge, Jeep and Chrysler products for customers.

"We are in the process of revitalizing Chrysler's business to succeed as a viable enterprise under new ownership in the future," said Jim Press, Vice Chairman and President. "The unprecedented decline in the industry has had a significant impact on our sales and forced us to reduce production levels to better match the needs of the market. 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. We wish market conditions made it possible to keep everyone."

Chrysler plans to maintain "business as usual" with all of its dealers through the transition. The Company intends to honor warranty and incentive payments during the period that rejected dealers remain active. Chrysler is committed to working with these dealers to ensure a positive relationship with customers. To ease the burden on dealers whose agreements have not been assumed, Chrysler will work to assist in the redistribution of new vehicles and parts to the remaining dealer network.

"It is with a deep sense of sadness that we must take steps to end some of our Sales and Service Dealer Agreements," said Steven Landry, Executive Vice President, North American Sales and Marketing, Global Service and Parts. "The decision, though difficult, was based on a data-driven matrix that assessed a number of key metrics. In total, 789 dealers, which represents 14 percent of our sales volume, will be rejected and, subject to the court approval, they will discontinue selling Dodge, Chrysler or Jeep vehicles on or about June 9.

"The review was an objective and rigorous process that was both thoughtful and thorough. We plan to work to have an orderly transition. These are extraordinary times, and they call for an extraordinary response. It is important to our dealers and to our customers that these steps be completed quickly and seamlessly as we transition to a new Chrysler," Landry added.

Additionally, on May 12, the Court approved the motion regarding Chrysler LLC's agreement with GMAC Financial Services to provide the automotive financing products and services to the Company's dealers and customers moving forward. GMAC Financial Services will be the preferred lender in North America for Chrysler, Jeep and Dodge dealer and consumer business, including wholesale of new and used vehicles as well as retail. GMAC Financial Services will be able to offer the best long-term finance options for Chrysler dealerships and customers and is established as a bank holding company with access to a variety of funding sources.

While difficult, the actions to restructure its dealer network are a necessary part of Chrysler's viability plan and are central to the proposed sale transaction. These actions will help ensure that both remaining dealers and the new company will be stronger and more profitable going forward.

"A stronger dealer network supported by GMAC's long-term finance options provides an advantage to consumers, and that is what will ultimately drive the creation of a significantly stronger global competitor," said Press.

Additional information, including the motions filed, can be found at www.chryslerrestructuring.com.

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    • 1 Second Ago
      • 6 Years Ago
      As if any of the other dealerships would actually want to invest in Chrysler inventory let alone tools or equipment at this point. It needs to happen but this is going to be pretty painful for some people.
      • 6 Years Ago
      This sucks and makes no sense. Every freakin' ChryCo. dealer in our Metropolitan area of 250,000 is on the list. That's four separate Jeep, Dodge, and Chrysler dealers. The nearest dealer for any Chrysler brand will now be in the next county, 35 miles away from me, but nearly 50 miles from folks in the north of the county. Wouldn't a rational move be to consolidate all three brands under one roof rather than to do away with any ChryCo presence in a two-county area with this population?

      I'm pissed that the feds keep picking winners and losers here. I bought a Dodge minivan in February, trading in my 14 year old Suburban. I understood that Dodge was in precarious straits, but the warranty was guaranteed. Now I find out that not only could I have "saved" $4500 in a cash for clunkers deal if I'd waited two months, but also that I'm now looking at a situation where warranty service will be out of reach. What freakin good does a federally backed warranty do when there are no places to get warranty service? How am I supposed to act rationally in making decisions when the federal governments keeps distorting the market by these policies.

      Seriously, is this a decision based on marketing fundamentals or based upon some arbitrary threshold imposed by the fed car czars? Because if it's the later, we're SOL when the feds take on health care reform, energy reform, etc.

        • 6 Years Ago
        Ultimo - right.....

        normally yes, but not now. This 'bankrupcy' looks like the ones from the 20s and 30s where the assets were 'flipped' and the investors and bond holders got shafted.

        Steve Rattner is doing to Chrysler what he did to Blender magazine. Look it up.

        The whole thing stinks. We live under the rule of law, not the political charade we are seeing right now. Just wait until they try and screw the GM bondholders - just about every mutual fund in the country. I guess the chrysler bondholders are just a little less equal than everyone else.
      • 6 Years Ago
      Wow, in Cleveland we are losing nearly every Chrysler dealer. Seems like any conglomerate that sells cars from other makers got the axe. Spitzer is done, Great Northern Dodge is gone, Crestmont Chrysler is finished. Spitzer has been around as a company for over 100 years and they sell nearly every brand, pretty good people too.

      The only dealer off the list is Aurora Chrysler Jeep and Dodge. They are a pack of rats and treat customers like garbage. They should have been the first on the list to close.

      Ohio is losing a whole lot of dealers. There are a lot of people who will not purchase a vehicle from the dealers that are left.
      • 6 Years Ago
      I think Chrysler will be only a memory five years from now.
      • 6 Years Ago
      Chrysler should just admit it f**ked up and close shop and liquidate everything...the way this "new, new" company is heading it's just going to happen...the question really is "when."
      • 6 Years Ago
      USPS is recommended for smaller packages up to one pound, as the cost will be less. UPS or FedEx is recommended for larger packages up to 70 lbs.

      789 is only 25% of the dealers, and 100% of them will be receiving letters

      789 x 4 = 3156 dealers.

      USPS would cost 49 cents per letter (I think that's how much a stamp costs now) 3156 x .49 = 1546.44

      I would guess UPS will cost between 2 and 3 dollars per letter
      3156 x 2 = 6312
      3156 x 3 = 9468

      I guess 10,000 dollars is nothing to them, but since they have less than zero dollars, they should regard it as something.

      Stupid. E-mails are free.
        • 6 Years Ago
        44 cents
        • 6 Years Ago
        The first-class stamp just went up on Monday, from 42 to 44 cents.
        • 6 Years Ago
        Frank is correct. There are often legal reasons that force you to send paper.
        • 6 Years Ago
        It has to be old fashioned mail. Legal reasons.
        • 6 Years Ago

        But the article says it was UPS, not certified USPS.
        • 6 Years Ago
        Yep, but by old fashioned, I ment hand delivered. Even a courier would have sufficed.
        • 6 Years Ago
        I understand the legal reasons of not using an email, I just thought of "old fashioned mail" being USPS, or more specifically certified USPS, not UPS or Fed Ex.
      • 6 Years Ago
      Whew, my town's dealership survived.... THIS time.
      • 6 Years Ago
      Looking at some of these names....
      It probably isn't a good sign if you're business is still named as a Plymouth/Eagle dealer.
        • 6 Years Ago
        It costs money and is a big hassle to redo all that stuff, so even if you don't sell them anymore, the company names remain. Oldsmobile is still a part of a lot of "company names" although their DBA names will reflect what they actually sell.
      • 6 Years Ago
      Geesh! I have to question the logic of some of their choices.

      Union Dodge just merged with Chrysler- Jeep at a brand new facility right on the busy #22 freeway in Garden Grove CA.

      They're axing that prime location over South Coast Dodge??? South Coast just finished merging with Chrysler -Jeep as well, but they are buried on Harbor Blvd in Costa Mesa CA in an old run down facility.

      I guess, Chrysler - Fiat prefers to do business at the cheapest slum dwellings that they can unearth. Ugh. I hope this is not part of their overall business plan.
        • 6 Years Ago
        I don't think location was even under consideration.

        Three dealers all within 12 miles of each other . All are consolidated CJD dealers now: Tustin CJD, Union CJD and now Orange Coast CJD. Orange Coast actually sits right in between the other two.

        Tustin CJD has the highest quality and customer appreciation levels while the other two are greatly despised.

        Both Tustin and Union are in newer facilities and nicer neighborhoods to boot. Orange Coast is run down on a more seedy side of town.

        Seems to me that it would be more advisable to keep Tustin and Union and ditch the eyesore and headaches of Orange Coast.
        • 6 Years Ago
        Orange Coast JCD gives the best deals in the area. Gave me 12k off msrp on my ordered truck without haggling when the best the other dealers could do is 6k off. Glad to see they aren't going.
        • 6 Years Ago
        Location wasn't the biggest concern for Chrysler in this.

        They looked at multiple different qualifications, namely, what brands you sold (preferrably all 3), but also the shape of your facilities, the overall health of your dealer network (perhaps South Coast as a company is in much better financial shape), your overall customer satisfaction as shown through CSI scores, service facilities etc etc.

        Much more than just location went in to this decision. Apparently South Coast was seen to be in a better overall position than Union.
        • 6 Years Ago
        Forgot to mention that South Coast CJD also has its fingers in a few other pies as well. Yup, they sell foreign makes near their Harbor Blvd HQ. Naughty, naughty.
      • 6 Years Ago
      Just wait until the lawsuits start flying. State franchise laws are generally written to favor the franchisees.
        • 6 Years Ago
        You can't sue a company that is in Chapter 11.
      • 6 Years Ago
      Oregon got off relatively unscathed...only 7 closings in the whole state, and only 3 in the Portland metro area.

      Timberline surprises me, but maybe they'll just add the Dodge line to Alexander Chrysler Jeep, which is right next door.

      Alan Webb Dodge in Van-tucky is going away, too. Not too big a surprise.

      And Gresham Chrysler-Jeep will be gone, too.

      Interesting to note that none of the 3 Portland Metro closings were 3-brand dealers.
        • 6 Years Ago
        Yup, I just looked into it, and we've got 3 dealers gone in a 40-mile radius of Portland.

        Timberline Dodge is gone, but I doubt too many people are buying Dodge pickups in inner-city Portland. What's confusing is that this is one instance where Chrysler is taking the Dodge brand AWAY from a 3-brand store, and not replacing it with anything. It is in a separate building from the Chrysler-Jeep dealer, so maybe they'll just put everything literally under one roof.

        Alan Webb is confusing, too, because there won't be a Dodge dealer in Vancouver anymore. Unless they're planning to add the brand to Dick Hannah Chrysler-Jeep.

        And either the Chrysler and Jeep brands won't be represented in Gresham at all, or they'll be folded into the existing Gresham Dodge.

        Either way, that still leaves 12 dealerships within a 40-mile radius of downtown Portland. More than enough coverage.
      • 6 Years Ago
      Uh, it appears that *every* Chrysler Dodge or Jeep dealer within 50 miles of me is on that list... that's a bit ridiculous.
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