AUBURN HILLS, Mich. – More than one quarter of Chrysler dealerships yesterday received overnight letters that told them the automaker has declined to keep them as part of the Chrysler dealership network, post-bankruptcy. 
Chrysler filed a motion with the U.S. Bankruptcy Court seeking to reject certain U.S. dealer agreements but asked to retain 2,392 Chrysler, Jeep or Dodge dealers with the new company in a global alliance with Fiat once the sale is complete. These dealerships, which will have to take on inventory from the dealerships that will close, have the option to accept or decline the offer to continue as Chrysler dealers, if the motion is approved by the bankruptcy court.
"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 said it intends to honor warranty and incentive payments, during the period that rejected dealers remain active.
"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.
The National Automotive Dealers Association (NADA) yesterday issued a statement saying this “marks a very sad day in retail automotive history.”
"These dealers and their more than 40,000 employees have done nothing but proudly represent the Chrysler brand through good times and bad, and today find themselves left behind as the company reorganizes itself in bankruptcy court," NADA stated.
"While NADA understands the realities of the current marketplace, we also know that dealers didn’t cause the situation that Chrysler finds itself in today. Furthermore, we believe that these draconian dealer cuts are not only misguided but counterproductive. Fewer dealers mean less revenue for the automakers. Dealers are the manufacturer’s customer; they buy the cars and parts and even the signs in front of their dealerships."
