Chrysler has “rejected” 789 dealers, or about 25% of its network. The company says it will close these Chrysler/Dodge/Jeep dealers by June 9 as part of its Chapter 11 bankruptcy restructuring. The dealers are said to represent only 14% of Chrysler’s sales volume.
Subject to court approval, as many as 2,392 Chrysler, Jeep and Dodge dealers will continue with the new company in a global alliance with Fiat once the sale is complete.
Chrysler says it will honor warranty and incentive payments for as long as the dealers targeted to close remain in business. Owners who purchased vehicles from any of the 789 closing dealerships will receive notices about where they can get their vehicles serviced after June 9.
On the other hand, Chrysler has received money from Federal coffers, which means the top 25 executive salaries would be capped at $500,000 per year. However, it seems the bankrupt automaker’s new parent has found a way around the salary limitation by making the senior Chrysler officers Fiat employees. The Treasury Department, Chrysler or Fiat have not responded to questions about whether this convoluted plan is lawful.
This comes on the heels of news that Dodge, Chrysler, and Jeep models are facing rapidly-dwindling resale values according to a research group. In a report by the Automotive Leasing Guide, secondary values are down an average of 6% across the board for most three-year-old Chrysler vehicles.
On top of all this, Chrysler’s top ten creditors are owed about $400 million, involving mostly its numerous suppliers, but also including the $58 million it own to ad agency BBDO.
