Auburn Hills, Michigan – Chrysler has outlined the process it will use to evaluate dealers, as it moves forward to eliminate 789 dealers from its current U.S. network. The company has not issued any statements on its Canadian dealer network so far.
“The automotive industry cannot support the number of dealers currently in the marketplace,” said Steven J. Landry, executive vice-president of North American sales and marketing. “From 1990 until 2007, the industry averaged roughly 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, paying incentive and warranty payments due.
“It was not an easy decision to ask the court to reject a portion of our dealer contracts, 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. If the sale to Fiat is not approved by the Bankruptcy Court, the stark reality is all 3,181 dealers will face elimination.”
Landry said that dealers were evaluated through a process that included such factors as minimum sales responsibility; a scorecard that measured sales, share, shipments, customer and service satisfaction index and warranty repair; the facility’s capacity and standards; location; if the dealer was dualed with a competing manufacturer; and the market’s total sales potential.
The company said that 44 per cent of the 789 rejected dealers are dualed with a competing new-vehicle franchise and can continue to sell those makes of vehicles, and that 83 per cent sell more used than new vehicles, and 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 ten years ago,” Landry said. “The company made the decision it was cost-prohibitive to continue to manufacture and market overlapping products. Going forward, we will not do that, so it is critical the majority of our dealers offer customers all three brands under one roof.”