Report: Chrysler warns weak dealers may be shut down

Reuters |
July 25, 2007

NEW YORK (Reuters) -- Chrysler Group is warning some of its dealers that it may try to shut them down if they don't improve their sales within six months, the Wall Street Journal reported on its Web site on Tuesday, July 24.

Chrysler, which is being spun off by German parent DaimlerChrysler in a $7.4 billion deal with Cerberus Capital Management, has about 3,700 dealers, compared with General Motors Corp.'s 6,900 and Ford Motor Co.'s 4,200, the paper said.

The paper reported that 40 to 50 dealers in the U.S. Great Lakes region who had been missing monthly sales goals received letters from Chrysler earlier this month.

The letters warned them that they must improve their performance within 180 days or Chrysler would begin the process to end their franchises, the paper said, citing two dealers who received the letters.

Similar letters are expected to go out to other dealers across the country in the next few weeks, the paper said, citing an unnamed source.

A company spokesman could not be reached immediately for comment.