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Closed Chrysler dealers can appeal to Fiat

November 15, 2010

Twenty-two area dealerships are among 789 Chrysler, Dodge and Jeep stores targeted to be eliminated by June 9, according to a May 14 bankruptcy filing by Chrysler LLC.

Ultimately, though, Fiat SpA and not Chrysler would decide which dealers will be brought along to the new company to be formed under the U.S. automaker’s bankruptcy process, people familiar with the situation said days earlier.

Nothing is final for the 789 dealerships until the bankruptcy judge signs off on the filing. Some dealers may be restored, said people who didn’t want to be identified because the discussions were not yet public.

Trimming Chrysler’s 3,188 retail outlets would be among the first management actions by Turin, Italy-based Fiat affecting the U.S. automaker. Chrysler wants fewer dealers so those remaining will be more profitable. It had a plan last year to trim the number in major metro areas by as much as 50 percent.

Chrysler President Jim Press described the 25 percent total reduction as not "a huge catastrophic number." Chrysler gets 90 percent of its sales from 50 percent of its dealers, according to bankruptcy documents.

Fiat would manage the new company that plans to buy most of the assets of Chrysler. The U.S. Treasury’s $4.5 billion bankruptcy loan to Chrysler requires the company to complete an asset sale to Fiat or close a comparable deal in less than 60 days. Chrysler will have an auction for its assets on May 27.

 

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