Auburn Hills, Michigan – Chrysler LLC has filed a motion with the U.S. Bankruptcy Court, seeking approval to retain 2,392 U.S. dealers but give up 789 others under a new alliance with Fiat.

The motion seeks to reject certain U.S. dealer agreements and includes a list of Chrysler, Jeep or Dodge dealer agreements that will be assigned to the buyer of Chrysler’s business assets. The company said that the action will “help improve the landscape of the Chrysler dealership network following the sale,” and enhance the full-line portfolio of products for customers.

“We are in the process of revitalizing Chrysler’s business to succeed as a viable enterprise under new ownership in the future,” said Jim Press, vice-chairman and president. “The unprecedented decline in the industry has had a significant impact on our sales and forced us to reduce production levels to better match the needs of the market. With the downsizing of operations after the sale and reduction of plants and production, similar reductions must be made to the size of the dealer body. We appreciate the support of our dealers and regret this painful action. We wish market conditions made it possible to keep everyone.”

Chrysler said it plans to maintain “business as usual” with all of its dealers through the transition, and will honour warranty and incentive payments during the period that rejected dealers remain active.

The 789 dealers, which represent 14 per cent of the company’s sales volume, will be rejected under the motion and, subject to court approval, they will discontinue selling Dodge, Chrysler or Jeep vehicles on or about June 9, 2009.

On May 12, the Court approved a motion regarding Chrysler LLC’s agreement with GMAC Financial Services to provide automotive financing products and services to the company’s dealers and customers moving forward. In North America, GMAC will be the preferred lender for dealer and consumer business, including wholesale and retail of new and used vehicles.

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