Chrysler Seeks to Drop 25% of its Dealers

Chrysler has 3,298 dealers while Toyota has 1,242 and Honda has 1,030

Chrysler asked a bankruptcy court on May 14 to shut down 789 dealers, nearly one-fourth of its sales outlets, saying this will cut costs and boost the odds for the success of its alliance with Italy's Fiat.

The company, which is aiming for a quick court restructuring to start fresh under a partnership with Fiat, said the large dealer network compared with its rivals "substantially increases expenses and inefficiencies in the distribution system."

The large number of dealers creates costs for "training, new vehicle allocation personnel, processes, and procedures, oversight" as well as other expenses, Chrysler said in a court filing.

The filing said that Chrysler sold some one million vehicles last year through 3,298 dealers, for an average of 303 per dealer. By contrast, Toyota sold 1.6 million new vehicles in the United States through 1,242 dealers and Honda sold 1.2 million through 1,030 dealers.

"This effort to strengthen the domestic dealer network is a critical component of the proposed Fiat transaction both to improve the viability of the domestic dealer network and position New Chrysler for viability and long-term success," the filing said.

Chrysler now has 3,181 dealers in the U.S., down from a high of 6,500 in the 1960s and 4,320 in 2001, according to the court documents. Court approval of the plan would leave Chrysler with 2,392 domestic auto dealers.

Copyright Agence France-Presse, 2009

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