Today is a bad day to be a Chrysler dealer. The struggling company sent out letters to nearly 25% of its dealers today informing them that they will be eliminated in less than a month.
In all, 789 Chrysler dealers across the U.S. will get Dear John letters via UPS today and will have 23 business days for a court review of their individual cases. After June 9, the reviews will end, sales will halt and Chrysler will cease assisting them. According to statistics from the National Automobile Dealers Association, the average car dealership employs 48 people, so nearly 38,000 people are expected to lose their jobs in the closings.
Because Chrysler is under bankruptcy court protection, the company will not be forced to buy back vehicles, parts or tools from the closed dealers. However, to ease the burden, the company will help each closed dealer to find other dealers in the area that are willing to buy their inventory of parts, tools and unsold vehicles. Closed dealers will be allowed to continue selling their vehicles until June 9 and Chrysler will continue to pay incentive and warranty charges for those dealers until that date. The estimated four million customers of the closed dealers will be sent letters explaining the situation and directing them to another dealer.
After the closings, Chrysler expects to have 80% of its dealer operations consolidated and selling all three of its brands as part of Project Genesis. The project began last year and currently sees 62% of Chrysler's dealers consolidated. According to Chrysler, 25% of its dealers are responsible for half of the company's sales. Chrysler also noted that all of these details and decisions remain subject to change.
The Wall Street Journal has posted a PDF list of all 789 dealers that are facing closure, which you can access HERE. Did your local dealer receive the axe?
Stay tuned for more dealer blues, as GM is expected to send out letters by the end of the week to roughly 1000 dealers notifying them of closure as well.
Source: The Wall Street Journal, Automotive News (Subscription required)