DETROIT (Reuters) - Chrysler LLC notified all U.S. dealers on Thursday about its plans to eliminate 25 percent of its retail showrooms and is seeking permission from a U.S. bankruptcy court to terminate franchise agreements.
The automaker sought approval in a bankruptcy court filing to terminate franchise agreements with 789 of 3,181 dealerships as of June 9.
Chrysler, which filed for bankruptcy on April 30, and larger rival General Motors Corp have faced pressure to cut struggling dealerships to bring their large sales networks in line with those run by more successful automakers led by Toyota Motor Corp.
Chrysler said 25 percent of its U.S. dealers account for 50 percent of overall sales, according to court documents.
The U.S. automaker said it would not repurchase any new vehicles, tools or parts inventory from terminated dealers but will assist in finding buyers for stock, according to a memo to dealers that was obtained by Reuters.
The news comes as dealer representatives stepped up lobbying in Washington to try to slow down closures they estimate would cost 200,000 dealership jobs.
More than 100 members from the National Automobile Dealers Association, a group representing the country's 20,000 new car dealers, met members of the House of Representatives and Senate in Washington on Wednesday, asking them to intervene with the Obama administration's autos task force on planned reductions.
(Reporting by Poornima Gupta, editing by Gerald E. McCormick and Matthew Lewis)
