Chrysler to cut quarter of dealers
AILING carmaker Chrysler is culling around a quarter of its retail showrooms, it said yesterday, and has asked for approval to terminate franchise agreements with almost 800 of its 3,100 dealerships, after it filed for bankruptcy last month.
Chrysler and rival General Motors (GM) are facing pressure to axe dealerships to bring their large sales networks in line with those run by more successful automakers, such as Toyota which only has 1,200 dealers.
Chrysler said 50 per cent of its US dealers made up for 90 per cent of its overall sales.
The carmaker said it would not repurchase any new vehicles, tools or parts inventory from terminated dealers but will assist in finding buyers for stock.
Dealers are independent businesses and are protected by state franchise laws that have prevented Chrysler and other US automakers from aggressively cutting dealers before now.
“The bankruptcy process that we are in allows us a once-in-a-lifetime chance to achieve a right-sized dealer body,” Chrysler’s vice chairman Jim Press said yesterday. “We do not have enough production or sales to keep all the dealers alive or prosperous,” he added. The US Treasury Department said Chrysler’s decision to shut down dealers was a “necessary” step to help the troubled carmaker rebound.