Former Chrysler Dealerships to take Automaker to Court

We all know that Chrysler is in chapter 11 bankruptcy and we also all know that it wants to close down 789 of its dealerships. Well, the owners of the dealerships affected have responded. And they intend to fight.


It’s not as if anyone didn’t expect it.

Owners, according to the Detroit News, are hiring lawyers to fight the terminations of their franchise agreements. Interestingly, said lawyers will help also figure out ways to deal with inventory of unsold cars left to them to get rid of after June 9.

Dealers want the bankruptcy court to rule that it won’t neglect state franchise laws and allow Chrysler to close dealerships. Instead, attorneys for the dealers are calling for the court to rule that Chrysler cannot close the dealerships until after it emerges from bankruptcy.

Dealers also object to being stuck with unsold vehicles. They argue that they were given only a month’s notice to sell their inventory during one of the worst economic times the country has ever faced. Attorneys are calling for the court to take steps to avoid a so-called "fire sale" . Dealers argue that such a situation will cause a glut of reduced cost vehicles in the market and price wars will result which will devalue brands and make it harder for Chrysler to sell new vehicles.

Our take? Keep in mind that General Motors will soon be in Chrysler’s shoes. No doubt, its dealers will fight, too. So one can expect a real mess to transpire and it may last for awhile.