DETROIT — About a quarter of Chrysler’s dealers are receiving letters Thursday telling them that the company plans to eliminate them by June 9.

Chrysler, which filed for bankruptcy protection two weeks ago, sent letters to 789 of its 3,200 dealers, revoking their franchises with the carmaker. It also filed a list of the dealers it is cutting in bankruptcy court Thursday.

Other dealers received letters welcoming them to the new Chrysler.

“It just says whether you’re in or out,” said Anthony Viviano, who owns two Dodge dealerships in Detroit’s suburbs and is 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.”

One of Mr. Viviano’s two dealerships was on the list.

But he said some dealerships could be saved by rulings from Chrysler’s bankruptcy judge or if other dealers decide to sell their franchises.

Chrysler said it needed to eliminate dealerships so that it could be viable in the future and the stores that remained could be more profitable.

On Friday, 1,000 to 1,200 General Motors dealers are expected to receive notices that they are being cut. Their franchises will expire in October 2010, a G.M. spokeswoman, Susan Garontakos, said.

Officials from the National Automobile Dealers Association are meeting Thursday with members of the Obama administration’s auto industry task force. The association is urging the task force to let G.M. and Chrysler keep more dealerships and is arguing that the cuts will cause the two companies to lose a significant number of sales in the months ahead. About 150 dealers flew to Washington on Wednesday to plead their case with members of Congress.

“We’re not objecting to consolidation. We understand the realities of the marketplace,” John McEleney, the N.A.D.A. president and owner of two G.M. dealerships in Iowa, said. “The situation’s going to get taken care of by natural market forces. To radically accelerate the process doesn’t seem to make sense in this environment.”

Separately, in a federal bankruptcy court on Thursday, Judge Arthur J. Gonzalez denied a motion by a group of Chrysler retirees to form a committee to oversee the protection of health care benefits for some of the company’s retired workers.

A lawyer for Chrysler said that the current plan was for these benefits to be assumed by the new Chrysler, to be formed through the asset sale to Fiat.

Source (article): NYTIMES

Source (picture): SERIOUSWHEELS

ROME (Reuters) - Italy’s government meets with car industry representatives on Wednesday amid mounting calls for help to stop sales sliding, in a crisis that threatens the survival of Fiat SpA, the country’s biggest manufacturer.

Ahead of the meeting due to start at 1730 GMT, Fiat (FIA.MI) executives met ministers late on Tuesday to lobby for incentives to get drivers buying cars again. Fiat CEO Sergio Marchionne has said 60,000 jobs are at risk if nothing is done to help.

Prime Minister Silvio Berlusconi has put together a package of incentives, including tax breaks for swapping old for new, less polluting models, according to local news reports.

The value of the incentive packages cited ranges from 260 million to 1.2 billion euros. Even the top of that range would be less than Italy’s competitors have stumped up.

Britain pledged on Tuesday to guarantee up to 2.3 billion pounds of loans to help support its industry, which along with those in Italy and elsewhere is going through a severe crisis due to the global recession and credit crunch.

Italian daily La Repubblica said Fiat executives left Tuesday’s meeting disillusioned by the government’s proposal.

One union leader said the government had to offer more than what it had given in the past.

“It can’t take on a crisis like this with band-aid measures like the ones it has used up until now,” the CGIL union leader Guglielmo Epifani was quoted as saying by the ANSA news agency.

After letting a previous round of incentives expire at the end of last year, the government had been largely unresponsive to the industry’s plight until European Union member states agreed earlier this month to coordinate aid.

Mindful of the need to contain public spending, Berlusconi has spoken of assistance that would not cost too much. But he has also expressed a desire to ensure Italy’s manufacturers do not fall behind foreign competitors who are getting state aid.

One of his ministers has warned, however, against giving Fiat preferential treatment.

Italy’s car industry, dominated by Fiat, employs 375,000 people directly and indirectly. With an annual turnover of 165 billion euros, it accounts for 10.7 percent of gross domestic product, according to the main auto industry association ANFIA.

With Fiat’s net industrial debt outweighing its market value, Marchionne has been shutting down production at plants in Italy for short periods to cut costs.

Trying to ensure Fiat’s survival, he plans a partnership with Chrysler CBS.UL and is talking with banks about a credit line to help cover 3.3 billion euros of debt maturing this year.

(Writing by Gilles Castonguay in Milan for Reuters)

As President Barack Obama rides about Washington in his new custom-made Cadillac, he should remember that the men and women who furnished his stylish ride need to hear from him, and soon.

The domestic auto industry’s outlook is brightened only modestly by Chrysler’s announced partnering with Italian automaker Fiat. It’s a reasonable move for Chrysler, offering an opportunity to diminish the company’s historical reliance on minivans and Jeeps. Fiat’s strength in small cars and high-end nameplates will bring balance in exchange for a 35% stake in Chrysler.

But Fiat’s reluctance to invest the first euro of its own money in Chrysler is telling. So is the unhappy history of Fiat’s short-lived partnership with GM, which began with a similar vision of geographic and segment synergy.

Chrysler’s desperate need for cash persists, and some doomsayers suggest its alliance with Fiat could even exacerbate that predicament by triggering a repayment provision in the terms of its emergency loan from Uncle Sam. In any event, the Fiat partnership does nothing to address Chrysler’s immediate problems.

Equally ominous is UAW President Ron Gettelfinger’s warning that it will be “almost impossible” for the Big Three to meet the Feb. 17 deadline the Bush administration ordained for the delivery of detailed restructuring plans. The new administration shouldn’t wait three weeks to find out if this is more than hyperbole.

Appointing a car czar with broad, proactive authority should be a priority on par with tackling the foreclosure crisis. It’s also consistent with the new president’s commitment to fiscal transparency and more energy-efficient automobiles.

In his inaugural address, Obama warned that “our time of putting off unpleasant decisions … has surely passed.” That is doubly true in the auto industry, and the new administration should seize the initiative now.

SOURCE: Freep.com