Chrysler to trim dealer network

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NEW YORK (CNNMoney.com) -- Chrysler LLC unveiled plans Friday to reduce the number of dealerships in its network, a move that will enable the company to more easily drop unprofitable products.

The goal of the plan, which the company calls Project Genesis, is to have a smaller number of dealers, with each selling all three of the company's brands: Chrysler, Dodge and Jeep.

Company executives recently completed an eight city tour during which they explained the strategy to local Chrysler brand dealers, the automaker said.

"In the end, we will have a more viable dealer body focused on the customer," Press said in a company statement.

"When that happens, the customer, dealer and company wins. That builds commitment, drives profitability and builds franchise value," he said.

Until last fall, Press led the U.S. operations of Toyota Motor Co. (TM) He is now co-president at Chrysler along with former Chrysler CEO Tom LaSorda.

Chrysler and its parent company, private equity firm Cerberus Capital Management, have already begun sending teams of lawyers and accountants to various major metro areas to negotiate with dealers, according to industry newspaper Automotive News.

Combining the brands into single dealerships would make it easier for Chrysler to cut models from its line up, since it would reduce pressure on the company to produce essentially the same vehicle with modest design changes - something automakers do to ensure that each brand gets a good mix of vehicles for dealers to sell.

Chrysler currently has several car and SUV models that are, in effect, the same vehicle sold under different brands. These include the Chrysler Sebring and Dodge Avenger sedans, the Dodge Caliber and Jeep Compass small cars and the Chrysler Town & Country and Dodge Caravan minivans.

The company wants to reduce the number of different models it makes by as much as half and the number of dealers by up to a third, Alan Helfman, vice president of River Oaks Chrysler Jeep in Houston, told the Associated Press.

The company plans to add some new models to cover areas of the market in which it does not currently compete, Press and Steven Landry, executive vice president of North American sales, told Automotive News.

Chrysler said the company had not set a timeline for the strategy. Because most car dealerships are independent businesses, not directly owned or controlled by the car company, dealership closures must be negotiated one at a time - a process that can take years.

General Motors (GM, Fortune 500) instituted a similar strategy with its Pontiac, GMC and Buick brands starting more than 10 years ago. Today about 80% of Pontiac, GMC and Buick sales go through combined dealerships but there are still many independent dealerships remaining, GM spokesman Dee Allen said.