If Chrysler can't close deal with Fiat, it may close all its dealers instead
Chrysler has said it will close 789 of its dealers, which is about 25 percent of the entire network. The cost of maintaining the delivery network and marketing for so many locations is not feasible now that the No. 3 US car company sells so few vehicles, in some months a mere 40 percent of what it sold last year. The shuttering of the dealers will cost the economy thousands of jobs and may hurt the firm's sales by eliminating locations that handle sales and service for parts of the current Chrysler customer base.
Now, Chrysler is hinting that if it cannot close a deal to sell a large part of its assets to Fiat, it may not be able to keep any dealers at all. Chrysler executive warns in a statement that, "If the sale to Fiat is not approved by the Bankruptcy Court, the stark reality is all 3,181 dealers will face elimination."'
The action seems improbably because Chrysler could not operate without a dealer network. The statement may even be a prod to hasten the bankruptcy court's activity and Fiat's work to finalize a deal.
But the statement is, at the very least, an indication that Chrysler's future as a viable operating company may be in jeopardy. and that the government's Chapter 11 plan is flawed.
Douglas A. McIntyre is an editor at 24/7 Wall St.