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Chrysler's Rejected Dealers Sold Over Half Their Stock

DETROIT -- The 789 auto dealers Chrysler LLC plans to drop from its retail network have sold more than half the 44,000 vehicles they had on the lots, a sign the company may face less of an inventory problem from the move than had been feared.

The so-called rejected dealers have sold roughly 26,000 vehicles in the last two weeks, a Chrysler spokeswoman Carrie McElwee said on Thursday.

"We think this is good news for the dealers who aren't going to be moving forward with the company," said Ms. McElwee. "It allows for a softer landing for some of them."

Some dealers were worried they would be unable to sell all of their cars before June 9, the date Chrysler expects their franchise contracts to end.

Chrysler is reorganizing under Chapter 11 protection and has asked the U.S. Bankruptcy Court in Manhattan to allow it to drop the 789 dealers from its network of about 3,200 stores.

Many of the affected dealers have slashed prices to sell to customers. Some have reported a dramatic increases in both sales and customer traffic as car-buyers shop for bargains.

Dealers would have difficulty selling off their stock after June 9 because they would no longer be eligible to offer rebates and incentives Chrysler is offering or extras like extended warranties.

More than 300 rejected dealers have appealed to the bankruptcy court to block Chrysler's plan, saying they were unfairly singled out by the auto maker. But so far the court does not appear to be swayed.

On Thursday, Chrysler Chief Executive Robert Nardelli said the court could approve the sale of most of Chrysler's assets to Fiat SpA by Friday, a key step toward exiting the bankruptcy process.

LINK:Chrysler's Rejected Dealers Sold Over Half Their Stock -
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