Chrysler Could Kill ALL Dealers if Fiat Alliance Not Approved

Since the American ailing manufacturer announced last week that it plans to end its contracts with 789 dealerships across the United States, Chrysler has been severely criticized from all around, no matter if we're talking about NADA or dealers per se.

Well, in order to put things straight and clarify the whole dealership cut process, Steven J. Landry, Executive Vice President, North American Sales and Marketing, Service and Parts - Chrysler LLC, stepped in front of the media representatives and issued a statement, emphasizing that the company is forced to reduce the number of dealerships to be sure it will survive. Furthermore, he assured involved dealerships that Chrysler will closely work with them to help redistribute or sale the remaining vehicles and parts inventory.

Last but not least, Landry revealed a matter all dealerships were afraid of: in case the Bankruptcy Court does not approve the sale to Fiat - which is quite impossible as far as we're concerned - Chrysler would be forced to end contracts with ALL 3,181 dealers.

Here are the main paragraphs of the Chrysler statement attributed to Steven J. Landry:

The automotive industry cannot support the number of dealers currently in the marketplace. From 1990 until 2007, the industry averaged roughly 16 million new vehicles sold each year. In 2009, new vehicles sold are expected to be 10.5 million units.

Chrysler is treating the rejected dealers fairly by assisting in the redistribution of remaining vehicle and parts inventory, paying incentive and warranty payments due.

It was not an easy decision to ask the court to reject a portion of our dealer contracts, but the reality is Chrysler's viability depends on a vibrant, profitable dealer network. As presently configured, Chrysler's dealer network does not meet that test. If the sale to Fiat is not approved by the Bankruptcy Court, the stark reality is all 3,181 dealers will face elimination.

Under this plan, 2,392 dealers across the United States move forward with the new company. It doesn't mean that the 789 rejected dealers will close if this motion is approved by the Court:

• 44 percent of the 789 "rejected" dealers are dualed with another (competing) new vehicle franchise and can continue to sell those makes of vehicles
• 83 percent of the 789 "rejected" dealers sell more used than new vehicles, many of these dealers will continue selling and servicing pre-owned vehicles