Page last updated at 15:49 GMT, Thursday, 14 May 2009 16:49 UK

Chrysler to close 25% of dealers

Chrysler sign
Chrysler has filed for bankruptcy in New York

US carmaker Chrysler has told a bankruptcy court that it plans to close about one quarter of its dealerships.

Chrysler said it wants to shut down 789 out of its current 3,200 dealers.

Chrysler filed for bankruptcy protection in April, allowing it to carry on trading while protected from its creditors.

At the time, it warned some dealerships would close. A spokeswoman said the company would be notifying its dealers before commenting publicly.

The carmaker said the sales at many of its dealers were too low.

Just over half of the dealers account for about 90% of the company's US sales, it added.

'In or out'

"In addition, as suburbs grew and the modern interstate system continued to evolve, long-standing dealerships no longer were in the best or growing locations," the company said in its filing.

"Many rural locations also served a diminishing population of potential consumers. Some dealership facilities became outdated. Other locations faced declining traffic count and declining populations."

As a result, the troubled carmaker has written to those dealers it wants to close down.

GM car dealers await closure news

"It just says whether you're in or out," said Anthony Viviano, president of the Detroit Dodge dealers association.

"Some of my fellow dealers have already called and said they're out. They got the poison letter."

Chrysler has been hit hard by a slump in sales during the economic downturn and has taken billions of dollars in aid from the US government.

This was not enough, however, to prevent the company from filing for bankruptcy protection last month.

It is currently in discussions with Italian carmaker Fiat in an attempt to secure its survival.

Car dealers from both GM and Chrysler are in Washington trying to lobby Congress to help preserve their jobs.

GM is expected to announce its plans to close dealerships shortly.

It is facing a deadline of 1 June to agree reorganisation plans with the US government or face bankruptcy.

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