Now that it has notified 789 dealerships they would be terminated, Chrysler must sell the 44,000 vehicles sitting on their lots in the next few weeks without driving prices to fire-sale levels for remaining dealers.
“It’s going to be a challenge even with the factories closed to redistribute that number of vehicles and sell them in a short period of time,” said Mike Jackson, CEO of AutoNation, the nation’s largest auto retailer. Even a giant like AutoNation will lose seven Chrysler, Jeep and Dodge dealerships that employ 400 people.
Despite that, Jackson called the closings painful, but necessary. “If you’re over-dealered, you can’t compete successfully for capital and talent,” Jackson said. “Over the last 20 years, there has been a migration of capital and talent from the domestic franchises to the Asians, and that has to be reversed.”
Chrysler said it would move the inventory from the rejected dealers to those that stay open and try to sell most of it over the next four to six weeks. But it’s unclear who gets the money from the sale of those vehicles. “Chrysler LLC is unable to repurchase your new vehicle inventory,” the company said in a letter to the closing dealers. “Chrysler LLC is unable to repurchase your motor parts inventory.”
Chrysler’s Steven Landry, executive vice president of North American sales and marketing, said there would be no compensation to those dealers who owe various amounts to Chrysler Financial for that inventory.
Dealers can contest process
Dealers no longer have protection from state franchise laws because Chrysler is in Chapter 11 bankruptcy, but they can contest the process by which Chrysler chose the survivors, said Scott Silverman, a Boston attorney representing four terminated Chrysler dealers in Massachusetts.
“What dealers need to do is look at the criteria Chrysler said it used and look at how you performed on those metrics,” said Silverman. Those criteria included sales volume, customer service scores, local market share and average household income in the immediate area.
“It’s going to be a challenge even with the factories closed to redistribute that number of vehicles and sell them in a short period of time,” said Mike Jackson, CEO of AutoNation, the nation’s largest auto retailer. Even a giant like AutoNation will lose seven Chrysler, Jeep and Dodge dealerships that employ 400 people.
Despite that, Jackson called the closings painful, but necessary. “If you’re over-dealered, you can’t compete successfully for capital and talent,” Jackson said. “Over the last 20 years, there has been a migration of capital and talent from the domestic franchises to the Asians, and that has to be reversed.”
Chrysler said it would move the inventory from the rejected dealers to those that stay open and try to sell most of it over the next four to six weeks. But it’s unclear who gets the money from the sale of those vehicles. “Chrysler LLC is unable to repurchase your new vehicle inventory,” the company said in a letter to the closing dealers. “Chrysler LLC is unable to repurchase your motor parts inventory.”
Chrysler’s Steven Landry, executive vice president of North American sales and marketing, said there would be no compensation to those dealers who owe various amounts to Chrysler Financial for that inventory.
Dealers can contest process
Dealers no longer have protection from state franchise laws because Chrysler is in Chapter 11 bankruptcy, but they can contest the process by which Chrysler chose the survivors, said Scott Silverman, a Boston attorney representing four terminated Chrysler dealers in Massachusetts.
“What dealers need to do is look at the criteria Chrysler said it used and look at how you performed on those metrics,” said Silverman. Those criteria included sales volume, customer service scores, local market share and average household income in the immediate area.
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