Chrysler to close 789 dealerships

Chrysler LLC plans to shutter 789 dealers by June 9, representing 14 percent of sales volume, as part of its ongoing restructuring effort. The closings will eliminate about 38,000 jobs and 25 percent of the carmaker’s dealer network.

According to a memo circulated to dealers, as reported by the Automotive News, Chrysler says affected dealers have 23 business days for a court review of their cases and bankruptcy law protects the company from having to buy back vehicles, tools, or parts. Chrysler says it will work with dealers to sell their inventory to dealers unaffected by the announcement.

"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, in a released statement. “The decision, though difficult, was based on a data-driven matrix that assessed a number of key metrics.

Letters will go out to approximately four million vehicle owners affected by the closings to explain the situation.

Company officials said they could not comment on specifics of the closings until documents are filed in bankruptcy court, and that all information in the memo is subject to change.

If you own a Chrysler or are thinking of buying one, and are concerned about your local dealership closing, check out our advice for what to do if your dealer closes.

We will continue to monitor this fast-moving story, reporting here in the Cars blog and also updating advice and news on the Auto Crisis hub.

—Jim Travers

Comments

[Mike Wyman]

Am I the only one who finds the whole new car dealer franchise system terribly anachronistic? One which only increases the cost of automobile ownership? Why can't I buy a car over the internet directly from the manufacturer? Why can't I buy a car from an auto "supermarket" (like a Wal-Mart?) Instead, these archaic dealership franchise agreements protect a method of selling cars which should have died a long time ago.

Properly designed and manufactured new cars are very reliable and do not require that much servicing any more. That's why, should you visit a dealer for servicing, they will attempt to sell you a bunch of un-needed, and not recommended, service. How else can they pay for the expense of maintaining a service department?

We now have potentially impacted dealers lobbying the Obama administration to preserve their dealerships. While I truly feel sorry for those whose livelihood is impacted by this consolidation, I don't feel the government should be providing life-support for an obsolete business model.

[Humty Dumpty]

Wake up. You can contact any good dealer's internet sales office by email, submit your choice of car and accessories, and they will email you a firm offer you can compare with other dealers. You will find them competitive and lower than what is offered by a floor salesman.

It's even better than the "family discount."