Chrysler LLC Update Regarding Current Condition of Chrysler LLC Dealer Network


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AUBURN HILLS, Mich., May 21, 2009 -- The following are details on the current condition of Chrysler LLC dealer network.

Comments can be attributed to Steven J. Landry, Executive Vice President, North American Marketing and Mopar Parts and Service - Chrysler LLC:

"The automotive industry cannot support the number of dealers currently in the marketplace. From 1990 until 2007, the industry averaged roughly 16 million new vehicles sold each year. In 2009, new vehicles sold are expected to be 10.5 million units.

"In 2008 Chrysler dealerships did not make a profit. The average loss was $3,184 per dealer.

"Chrysler is treating the rejected dealers fairly by assisting in the redistribution of remaining vehicle and parts inventory, paying incentive and warranty payments due.

"It was not an easy decision to ask the court to reject a portion of our dealer contracts, but the reality is Chrysler's viability depends on a vibrant, profitable dealer network. As presently configured, Chrysler's dealer network does not meet that test. If the sale to Fiat is not approved by the Bankruptcy Court, the stark reality is all 3,181 dealers will face elimination.

"The process to evaluate dealers was a thorough, rigorous process that used a data-driven metric that included the following factors:

  --  Minimum Sales Responsibility
  --  A scorecard that measured sales, share, shipments, customer
      satisfaction index, service satisfaction index and warranty repair
  --  Facility (capacity, Millennium II standards)
  --  Location (optimum retail area)
  --  Dual (Dealer is dualed with a competing manufacturer)
  --  The market's total sales potential

"Under this plan, 2,392 dealers across the United States move forward with the new company. It doesn't mean that the 789 rejected dealers will close if this motion is approved by the Court:

  --  44 percent of the 789 "rejected" dealers are dualed with another
      (competing) new vehicle franchise and can continue to sell those makes
      of vehicles
  --  83 percent of the 789 "rejected" dealers sell more used than new
      vehicles, many of these dealers will continue selling and servicing
      pre-owned vehicles

"Chrysler began the process to consolidate dealerships and locate all three brands under one roof more than 10 years ago. The Company made the decision it was cost prohibitive to continue to manufacture and market overlapping products. Going forward, we will not do that, so it is critical the majority of our dealers offer customers all three brands under one roof."

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