14 May 2009

Still Too Many Chrysler Dealers?

Chrysler LLC wants to eliminate roughly a quarter of its 3,200 U.S. dealerships by early next month, saying in a bankruptcy court filing Thursday that the network is antiquated and has too many stores competing with each other.

The company, in a motion filed with the U.S. Bankruptcy Court in New York, said it wants to eliminate 789 dealerships by June 9. Many of the dealers' sales are too low, the automaker said. Just over 50 percent of dealers account for about 90 percent of the company's U.S. sales, the motion said.

From here. By comparison, Toyota, which is on the verge of surpassing Ford to be #2 in North American automobile sales and sells far more vehicles than Chrysler, manages with just 1,200 dealers, about half the number of dealers that Chrysler will have after this wave of dealership shutdowns.

Twelve of the Chrysler dealers proposed to be cut are in Colorado, out of forty-four Chrysler dealers in the state overall, a number roughly typical of the national average.


Dave Barnes said...

It is just a start.
Chrysler does not want to do it all in one day as it will look really bad.

Death of a thousand cuts.

Each month they will terminate a few more citing "changed business conditions".

Andrew Oh-Willeke said...

Laws that make it hard to terminate franchise relationships and franchise contract terms that would have to be affirmed if they are not modified in the bankruptcy, give Chrysler a very powerful incentive to take all of its pain in the dealership department all at once, rather than dribbling it out.