Ailing
Chrysler LLC yesterday announced plans to cut 789 of its brand
dealerships, while struggling General Motors is expected to cut more
than 1,00 of its dealers by the end of next week.
In
a motion filed in U.S. Bankruptcy Court in New York, Chrysler listed
the dealers it wants to eliminate, claiming their sales were too low.
While many of the dealers also offer other non-Chrysler brands, it is
expected that some may take the issue to court.
Dealers were informed via letter – delivered via UPS – that they would lose their Chrysler, Dodge or Jeep brands.
A
bankruptcy court hearing is scheduled for June 3 to decide Chrysler’s
motion to eliminate the dealers. Under bankrutpcy, a company is allowed
to vacate contracts, such as car dealer franchise contracts.
GM
is expected to tell 1,100 of its brand dealers that they will lose
their franchises when agreements end in September 2010. That situation
could be messy for GM because it is not presently in bankruptcy.
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