Part of the deal for the federal bailouts of Chrysler and General Motors was that both organizations were required to trim their vast array of dealerships. This move did not sit well with the people that would be losing out on franchises, though, and in Chrysler's case, 148 of the shuttered dealers have fought for money they feel they are entitled to.
Back in January, Chrysler opened Motor Village in downtown Los Angeles. The hope was that the automaker could create a modern dealership with a customer-focused mission that would help increase market share in LA. Instead, the dealership is costing Chrysler nearly a million dollars.
Chrysler is reportedly looking into selling Motor Village, its prized company-owned downtown LA dealership, to settle a dispute with franchise Chrysler dealers. According to California state law, a company-owned dealership cannot reside anywhere within a 10-mile radius of a franchise dealer. Chrysler's prized Motor Village is within 10 miles of three franchise dealers.
Arbitrators have finished wading through the 105 cases of rejected Chrysler dealerships, determining that Chrysler was right to send the lots packing in 73 instances. According to Automotive News, those who weighed in on the cases typically cited the carmaker's plans to sell all four of its brands through the same dealerships as reason enough for ousting those that couldn't come up with the facilities to do so.
Company representatives for Chrysler have been in contact with at least 50 dealerships regarding reinstatement into the the automaker's dealer network. According to a leader who represents the 400-plus dealerships seeking arbitration, the dealers contacted will receive intent letters to begin the lengthy reinstatement process.
So you're Chrysler, and you hop into the Chapter 11 pool to save your own skin. While you can wash away some of your past sins with a bankruptcy-protection filing, the deal with Chapter 11 is that you've got to come up with a way to get out of your financial pickle and return to profitability. Part of the Chrysler plan to keep its head above water was divestiture of 789 dealers, a very unpopular idea with the rejected sales organizations (and no small number of politicians, whose ears were subse
Chrysler's dealers haven't yet entered the portion of the game wherein they can catch a break. As if the dearth of inventory and lack of new vehicles weren't enough, nearly 150 dealers haven't been able to finalize floorplan financing. Since Chrysler Financial has exited that business, GMAC stepped in, but dealers are having a hard time meeting its terms: 85 have been turned down flat, another 60 or so are still working on it.
Chrysler's Project Genesis plan has been gaining traction as of late. The goal is to cut out redundant models between the Chrysler, Dodge and Jeep brands, which would also mean consolidating its entire product line into one dealership which offers all three marques. While there are some dealership owners fighting the strategy, The Detroit News reports that Chrysler already has fifty-eight percent of its dealerships offering its three brands, and its been able to cut out some smaller, less profit
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