Chrysler LLC has paid all U.S. dealers for incentive and warranty claims owed them yet can't yet say how many dealerships will survive the automaker's bankruptcy, co-President Jim Press said today.
"Unfortunately, there will be dealers who will not go forward,'' Press said on a conference call with retailers. "We do not have a finalized plan. We don't have identification of who. We don't know when. We don't know how. We have nothing to announce today other than this is all in flux."
Dealer concerns about the incentive payments heightened when bankruptcy court documents said only 75 percent of retailers would be paid for incentives. The company didn't elaborate.
"We paid all dealers who are open and doing business," Press said on the call. "We paid incentives, we paid warranty. We paid 100 percent of the dealers even though some of those dealers may not be going forward."
Press said the company should be able to pay dealers next week for incentives and warranties, within the bounds of bankruptcy court procedures, he said.
Eric Chase, a dealer attorney from Florham Park, N.J., said it was encouraging that Chrysler had paid dealers what they are owed. He said it's a sign Chrysler has been able to convince the court that the consequences of not paying some dealers would be detrimental to the entire dealer body and would hurt the company's chances of emerging from bankruptcy.
"If they're able to persuade the court that everybody has to get paid, I think the court will approve it," he said.
Chrysler also said it was adjusting its payment schedule during the bankruptcy period. Normally dealers submit claims to Chrysler at the end of each week and are reimbursed over the weekend so the money is in their accounts Monday morning.
"We'll run your incentive and warranty systems Monday and pay you Tuesday" during the bankruptcy period, Steven Landry, executive vice president of North America sales, told dealers on the call.
+ Chrysler Incentives May 2009 Officially Launched
+ May 2009 Chrysler Incentives for Deals online
+ Chryler's Incentives, Payments to Dealers, Suppliers Approval by Court
+ Chryler Seeks $753 Million Dealer Incentives During Bankruptcy
Chrysler executives also said that 2,500 of the dealer body of about 3,200 had signed and returned their paperwork to get retail loans from GMAC Financial Services, which will become Chrysler's designated lender once the company emerges from bankruptcy.
