Chrysler LLC filed documents in a Manhattan bankruptcy court today that could imperil several area auto dealerships. As it works to restructure and become profitable once again, the company aims to cancel 789 dealership agreements, including only one in west central Minnesota.
Scott-Preusse Inc. of Redwood Falls is on the Chrysler dealer cancelation list.
Approximately 75 percent of Chrysler's agreements with its 3,188 dealers would be left intact if the company has its way.
Chrysler's management no longer appears to be doing the driving. Citing sources close to the proceedings, it is being reported that Fiat SpA, not Chrysler management, decided which dealers to keep. Fiat is in the process of purchasing Chrysler.
Spurned dealerships won't necessarily fold. Many may be able to survive selling remaining lines, other than Chrysler, as well as used vehicles. Some may also be able to endure by continuing to provide service to longtime customers.
The proposed contract cancellations would take effect June 9.
We can expect more bad news for dealerships in the near future. General Motors Corp. revealed in April that it plans to discontinue more than 40 percent of the 6,200 dealership agreements it had nationwide at the end of last year.