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Saturday, May 9, 2009
Chrysler will pick dealer cuts by Thursday

Chrysler LLC dealers are expecting to learn their individual fates by Thursday as the automaker chooses which dealerships will be part of a new and leaner company that emerges from bankruptcy.

The assets of Chrysler will be sold to a new company allied with Fiat SpA. Bankruptcy Judge Arthur Gonzalez will hear the motion to approve the sale May 27 in a deal that could close June 15 with the goal of emerging from bankruptcy a few weeks later.

Dealers are to be notified of their status with the new company 13 days prior to the sale date. Initially the key asset sale hearing was to be May 21, which had dealers expecting news Friday. But when Gonzalez pushed back the hearing date, all other deadlines were adjusted accordingly.

Chrysler Vice Chairman Jim Press and Steve Landry, head of sales, held a conference call with dealers Friday, but would not go into how many dealers would be kept, insisting plans have not been finalized.

Documents filed with the court say only that the company will reduce its incentive payment to dealers by 25 percent in May and by 50 percent in June.

LINK:Chrysler will pick dealer cuts by Thursday | detnews.com | The Detroit News
 

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Fiat Will Decide Which Dealers

Fiat Is Said to Make Decision on Cuts of Chrysler Dealerships


May 11

Fiat SpA will decide which Chrysler LLC 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.

An initial list of the retailers to be retained will be filed in U.S. Bankruptcy Court by May 14, according to documents in those proceedings. Some dealers may be added after that filing, said the people, who didn’t want to be identified because the discussions aren’t 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, and had a plan last year to trim the number in major metro areas by as much as 50 percent.

“I disagree with terminating dealers, but if that’s what’s happening then Fiat should be involved,” said Chuck Eddy, an owner of Bob & Chuck Eddy Chrysler-Dodge-Jeep in Youngstown, Ohio, and a member of the U.S. automaker’s national council.

Gualberto Ranieri, a Fiat spokesman, declined to comment on plans for Chrysler dealers. Fred Spar, a Chrysler spokesman, also wouldn’t comment.

Fiat would manage the new company that plans to buy most of the assets of Auburn Hills, Michigan-based Chrysler. Terms of the U.S. Treasury’s $4.5 billion bankruptcy loan to help Chrysler reorganize require the company to complete an asset sale to Fiat or close a comparable deal in less than 60 days.

Chrysler gets 90 percent of its sales from 50 percent of its dealers, according to bankruptcy documents. The automaker hasn’t said which outlets it will cut, and President Jim Press told dealers on a May 8 call that the list was evolving.

The reductions “won’t be a huge catastrophic number,” Press told reporters on a call with reporters two weeks ago.

Pushing Consolidations

The automaker had been trying to reduce the number of dealers that sold only Chrysler and Jeep or Dodge brands, and had been encouraging consolidations that would put all three brands at one location.

General Motors Corp., which may follow a path similar to Chrysler’s in bankruptcy, plans to start notifying dealers later this week on which outlets the company wants to eliminate. The Detroit-based automaker intends to chop its dealer network by 42 percent to 3,605 stores by the end of 2010.

The case is: In re Chrysler LLC, 09-50002, U.S. Bankruptcy Court, Southern District of New York (Manhattan)

LINK:Trying to keep its momentum, Ford plans a stock offering | Money & Company | Los Angeles Times
 

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800 Dealers to be cut?

AP Source: Chrysler to cut 800 dealers on Thursday


DETROIT – Chrysler LLC plans to fire up to 800 of its 3,200 dealers on Thursday, a lawyer seeking to represent the dealers said on a conference call.

The lawyer, Stephen Lerner, who heads the bankruptcy and restructuring practice of the law firm Squire Sanders, told dealers on the Tuesday call that the automaker plans to reject at least 800 franchise agreements, according to a dealer who listened to the call.

Chrysler will file a list of dealers it wants to retain with the U.S. bankruptcy court, said the dealer, who asked not to be identified because the call was confidential.

A Chrysler spokeswoman said Tuesday that the automaker is working to reduce the number of dealerships along with other restructuring actions. Spokeswoman Kathy Graham said the 800 number was just speculation.

"We do not have any finalized list as of this point in time," she said. Asked if the company would soon have a list, she said: "It's too early for us to say. We're not through that process yet."

Chrysler, which has received $4 billion in government loans, filed for Chapter 11 bankruptcy protection on April 30. The company has asked a bankruptcy judge to approve the sale of all its assets to a new Chrysler controlled by Italy's Fiat Group SpA.

With Fiat as a partner, the U.S. government has said it will provide up to $6 billion more in financing to help Chrysler get through the bankruptcy process.

A message was left for Lerner.

The dealer said the law firm asked the dealers who think they might lose their franchises to post $4,000 each so the lawyers could begin the legal fight.

Despite losing 400 dealers since early last year, Chrysler still has too many showrooms too close together, especially within metro areas. Merging them would leave nicer and better-staffed franchises which would be more profitable. Industry analysts say there still will be plenty of competition between dealers, from other automakers, and on the Internet.

Dealers say the company is picking which franchises to keep based on whether they have met sales goals, their profits, how well capitalized they are, the condition of their facilities and whether they have all three brands, Chrysler, Dodge and Jeep.

Chrysler for several years has been trying to consolidate its dealerships so all its brands are under one roof, but still many dealers remain with just one or two brands.

David Kelleher, who owns two Chrysler dealerships in the Philadelphia area, said he is trying to stay optimistic amid the uncertainty. He said he has built as strong a business as he could, and hopes that will be enough to keep him going.

One dealership sells only the Dodge brand, while the other sells Chrysler and Jeep.

"This is craziness," he said. "You're talking about 800 or 1,000 small-business owners being knocked out of business, I guess to serve the greater good."

Nonetheless, he said his sales have gotten a boost in May, which he suspects may be because of all the publicity surrounding Chrysler and the deals on its cars.

"We're actually having a wonderful month, relative to the market," he said. "Maybe it's the old axiom, all press is good press.

The federal government's auto task force mandated dealership cuts in exchange for loans to Chrysler, but the National Automobile Dealers Association has begun lobbying in Washington against the cuts.

Dealers will meet with members of Congress on Wednesday and with the auto task force on Thursday, the NADA said in a statement.

Article:AP Source: Chrysler to cut 800 dealers on Thursday
 
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