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Money and Main Street

Chrysler: Dealership letters in the mail

Chrysler announced the closure of nearly 800 dealerships, but some owners hadn't yet gotten the message.

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By Emily Maltby, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- Chrysler dealers nationwide were fearing the UPS guy on Thursday.

For 789 dealerships, the man in brown came carrying an overnight letter from Chrysler LLC indicating that they are being closed as part of the automaker's bankruptcy. Some dealers received additional phone calls from company representatives, while others discovered their fate after being contacted by reporters.

Those calls and letters informed dealers that on Thursday morning Chrysler had filed a plan with the bankruptcy court listing the 789 Chrysler, Jeep and Dodge dealers it selected to discontinue operations. Under the plan - which is still subject to review by the bankruptcy judge - the dealers have until June 9 to close their Chrysler franchises.

Frederick George, who is a partner in the Flint., Mich.-based dealership his grandfather founded in 1928, received his letter on Thursday morning. "The UPS truck came in this morning with a package," he said. "We're upset, stunned. We were not expecting it. We thought we were pretty safe, even in the area that we're in."

George Chrysler Jeep has 100 new Chrysler vehicles on the lot, along with 40 used vehicles. "They told us they weren't going to give us any monetary help, but they would help us get rid of the vehicles and the parts," George recounted.

The dealership has 31 employees, and George said layoffs are imminent; the partners will also be meeting to decide the future of the business.

"We've been in the car business since 1928, so it's devastating to us," he said.

James "Buddy" Jones, owner of Buddy Jones Chrysler, Dodge and Jeep in Greenwood, Miss., said he had no indication his dealership would land on the list. "We are not the problem," he said. "Their investments are their own. The cars and facilities and investments are strictly our own."

Jones said that after Chrysler declared bankruptcy, he threw caution to the wind and started scaling back on his inventory. Because he had already anticipated transferring some Chrysler staff to his Ford dealership across the street, Jones believes he will land on his feet.

"Scaling back may have played into our being cut, but we made the right decision and we won't look back," he said.

On a conference call with reporters, Chrysler executives acknowledged that they had sent letters notify the dealerships. But they did not address the lag time between the closures becoming public and the letters arriving.

"It is with a deep sense of sadness that we must take steps to end some of our Sales and Service Dealer Agreements," Steven Landry, Chrysler's executive vice president for North American sales, said in a prepared statement. "The decision, though difficult, was based on a data-driven matrix that assessed a number of key metrics."

About half the dealerships being closed sell fewer than 100 vehicles per year, Landry said in the conference call. About 44% also sell vehicles other than Chrysler products, he added. As a result, not every business receiving a letter will be completely shuttered.

CNNMoney.com staff writer Aaron Smith contributed to this report. To top of page

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