Chrysler LLC will eliminate 789 dealers, or 25 percent of its U.S. network, by June 9, according to a memo sent today to retailers in one sales region, obtained by Automotive News.

In addition, General Motors, which is preparing for a 40 percent cut in its dealer network by the end of 2010, this week will send warning letters to nearly 1,000 dealers, sources told Automotive News today.

The letters will be sent Thursday to about 1,000 “underperforming” dealers and will arrive at their dealerships on Friday, said one of the sources familiar with GM’s plan. The letters will warn dealers that their franchise agreements will not be renewed when they expire in October 2010, and will outline each dealership’s deficiencies and detail how the dealership failed to meet the requirements of GM’s sales and service agreements, said one of the sources familiar with the contents, the sources said.

Chrysler sent letters via UPS to dealers, which should be received today, according to the memo. 

Dealers will get 23 business days for a “court review” of their cases, according to the memo, from a sales manager to district dealers. 

“All of this information is subject to change,” the memo says.

“Chrysler will not be required [per bankruptcy law] to buy back the vehicles or tools and parts from rejected dealers,” the memo says. “We will match you with an accepted dealer(s) to buy your parts, tools and vehicles.”

The memo says Chrysler will send letters to 4 million customers of the rejected dealers after June 9, when the stores are to close.

In the memo, Chrysler says that after the closings, 80 percent of its dealers will carry all three brands under one roof, compared with 62 percent currently. Since early 2008, Chrysler has been consolidating its dealer body under Project Genesis, a plan to put the Dodge, Jeep and Chrysler brands under one roof wherever possible.

Chrysler officials said they could not comment until documents are filed in U.S. Bankruptcy Court.  For background on why dealers are being cut, click here.  Click here for a complete list of dealers targeted to be cut. 

Dealers affected in Virginia include Battlefield Jeep of Charlottesville, VA; Berrang Chrysler Dodge Jeep of Waynesboro, VA; Dominion Car Company in Salem, VA; Dulles Jeep in Leesburg, VA; Edinburg Motors in Edinburg, VA; Grafton Dodge in Grafton, VA; John P. Hughes Motor Company in Madison Heights, VA; Pearson Dodge in Midlothian, VA; Kern Motor Company in Winchester, VA; Airport Chrysler Jeep in Richmond, VA; Nelson Dodge in Martinsville, VA; Ourisman Chantilly Dodge in Chantilly, VA; Parsons & Parsons in Winchester, VA; Pohanka Chrysler Dodge of Leesburg in Leesburg, VA; Family Chrysler Dodge Jeep of Marion, VA; Scott Newcomb Chrysler Jeep of Bassett, VA; Britt Chrysler Jeep of Fredericksburg, VA; Tysinger Motor Corp in Hampton, VA; University Motors in Christianburg, VA;  Waverly Motors in Waverly, VA; and Cowles Chrysler in Woodbridge, VA. 

Dealers affected in North Carolina include:  Bob Mayberry Chrysler Dodge Jeep of Monroe, NC; Brown & Wood Jeep in Greenville, NC; City Motors of Greensboro, NC; D&E Car Exchange in Wilmington, NC; Edenton Motors in Edenton, NC; Serramonte Chrysler Dodge Jeep in Charlotte, NC; Stevenson Chrysler Jeep in Jacksonville, NC; Moore Motor Company in Washington, NC; Johnson Chrysler Dodge Jeep in Durham, NC; Metroliner Chrysler Jeep Dodge of Charlotte, NC; Southern States Dodge of Raleigh, NC; Stearns Chrysler Jeep in Graham, NC; and Williamson Motors in Clinton, NC.

Tags: franchise agreements, General Motors

This entry was posted on Thursday, May 14th, 2009 at 12:03 pm and is filed under Automobile industry, Chrysler Bankrutpcy, GM Bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.