Dealers' Armageddon: 789 Legal Complaints against Chrysler

As we told you last week, Chrysler announced that no more than 789 dealers will be rejected in the United States, which means that, according to a statement by NADA, 40,000 employees will be affected. The closing procedure is far from being over - despite that Chrysler said it would take a while to complete the process - because the dealers affected by the decisions are now joining forces for a legal action against the American manufacturer.

The reason? They think the company has "asked for too much freedom from state laws protecting dealer agreements," as a report by freep.com notes.

Basically, dealers are pointing to regulations available in other countries that require companies who want to get rid of certain dealerships to provide them several months for selling the remaining models and make the closing process as smooth as possible. Furthermore, some laws even require automakers to buy back cars and offer reimbursements, the aforementioned source noted.

Chrysler announced last week it plans to reject 789 dealers in the United States as part of the restructuring process and rely on the remaining 2,392 Chrysler, Jeep and Dodge dealers.

“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.”