WARWICK – Rhode Island’s seven Chrysler dealerships are awaiting news of their fate amid reports that the bankrupt automaker plans to eliminate a quarter of its franchise agreements on Thursday.
Chrysler LLC filed for bankruptcy protection on April 30. Stephen Lerner, a bankruptcy attorney who is representing the company, told dealers in a conference call on Tuesday that the car company plans to shed at least 800 of its 3,200 dealer agreements this week, The Associated Press reported, citing a dealer who listened in on the call.
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Chrysler plans to file a list of the dealers it wants to keep with the U.S. bankruptcy court where its case is being heard, the dealer told The AP. Chrysler spokeswoman Kathy Graham told the news agency that Chrysler does not “have any finalized list as of this point in time.” She declined to say when the list would be finished.
Rhode Island has seven dealerships that sell Chrysler vehicles, with 14 franchises among them, according to the Rhode Island Automobile Dealers Association. (Some dealerships have more than one franchise, meaning they sell multiple brands, such as Dodge and Jeep, at the same location.)
Jack Perkins, executive director of the Warwick-based dealers’ group, told Providence Business News last week that dealers were trying to continue with business as usual as they await more information on Chrysler’s plans. He said they have no idea which franchises could be on the chopping block.
“All of that is up in the air,” Perkins said.
Perkins said he has “seen a lot of consolidations, a lot of closings” among the state’s dealerships in recent years. Rhode Island had more than 100 dealers before the credit union crisis and recession of the early 1990s, but now has around 60, he said. Most of the sellers who have closed were selling domestic vehicles, he said.
Two dealerships have closed since the end of last year, and one more is in the process of shutting down now, Perkins added.
The National Automobile Dealers Association already has begun lobbying in Washington to prevent major cuts in dealership numbers, The AP reported. But the presidential task force charged with restructuring the automobile industry has said that both Chrysler and General Motors, which is still negotiating with lenders and other stakeholders in an effort to avoid filing for bankruptcy, need to shed dealerships in order to remain viable companies.
