Chrysler has responded to widespread concern and anger at its plans to use the Chapter 11 procedure to jettison a quarter of its dealers nationwide saying in a statement today that it simply has no choice but to reconfigure its current network if it wants to have its alliance with Fiat approved.

Chrysler has responded to widespread concern and anger at its plans to use the Chapter 11 procedure to jettison a quarter of its dealers nationwide saying in a statement today that it simply has no choice but to reconfigure its current network if it wants to have its alliance with Fiat approved. The statement has been attributed to Steven J. Landry, Executive Vice President, North American Marketing and Mopar Parts and Service.

"The automotive industry cannot support the number of dealers currently in the marketplace," says Landry. "From 1990 until 2007, the industry averaged 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, as well as paying incentive and warranty payments due.

"It was not an easy decision to ask the court to reject a portion of our dealer sales and service agreements, 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," Landry notes, adding that: "if the sale to Fiat is not approved by the Bankruptcy Court, the stark reality is all 3,181 dealers will face elimination.

"The process to evaluate dealers was a thorough, rigorous process that used a data-driven metric that included the following factors: Minimum Sales Responsibility; A scorecard that measured sales, share, shipments, customer satisfaction index, service satisfaction index and warranty repair; Facility (capacity, Millennium II standards); Location (optimum retail area); Dual (Dealer is dualed with a competing manufacturer); and the market’s total sales potential.

"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; and 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

"Chrysler began the process to consolidate dealerships and locate all three brands under one roof more than 10 years ago. The Company made the decision not to continue to manufacture and market overlapping products. It is critical the majority of our dealers offer customers all three brands under one roof," Landry's remarks conclude.