SEARCH BLOG: AUTOMOBILES
As opposed to the Vulcan philosophy of Star Trek's Mr. Spock, Chrysler has argued that its needs outweigh the needs of many dealers.
Too many dealers mean extra support costs in the form of sales and service reps who might have to make a few extra stops each month or every other month.It is easier and better, according to the Chrysler thought processes, to simply cut the cord with several hundred dealers and let their multi-million dollar investments go down the drain.
It is not clear that the extra dealers' sales volumes don't pay for the incremental support costs. Sometimes the decision to buy or not buy a vehicle may depend on the proximity of a dealer to their home. You really have to want a vehicle to travel an extra ten or twenty miles for purchasing it and servicing it.In other words, so that Chrysler can quickly get through Chapter 11, it wants to force several hundred dealers into Chapter 7... total liquidation. Let the small businessmen and their work force take the brunt of the economic blast.
Now a couple of courts are saying, "Not so fast."
Wednesday, June 03, 2009
A hearing on Chrysler’s decision to sever ties with around a quarter of its dealerships was postponed until Thursday, Dow Jones reported.
The hearing was originally scheduled for Wednesday, but will now begin at 8 a.m. Eastern time on Thursday. Judge Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York will preside.
Evidence will be presented on Thursday and Friday, with oral arguments set for Tuesday, Dow Jones said.
Chrysler, which is trying to exit Chapter 11 bankruptcy protection and complete the sale of much of its business to Italian car maker Fiat, has made plans to close 789 of its more than 3,000 dealerships.
Executives from Chrysler and General Motors (GM: undefined, undefined, undefined%) are scheduled to testify on Capitol Hill Wednesday afternoon about why they plan to close dealerships. Chrysler has said that its dealerships overlap too much and that its dealer network is too big.
Separately, the U.S. Court of Appeals for the Second Circuit in New York has agreed to hear objections by Indiana pension funds to the proposed sale of Chrysler to Fiat. The hearing will begin on Friday at 2 p.m. ET, according to a court order.