May 7, 2009 at 1:00 am

Chrysler dealers worry about their survival

New incentives may help automaker weather bankruptcy, but some sellers will be terminated

New incentives Chrysler LLC announced Wednesday should help sustain sales during bankruptcy, but dealers are more worried about whether they will be around to offer them.

"Incentives are great," said Tammy Darvish, vice president of DARCARS Automotive Group in Silver Spring, Md.

"But are we going to get them if we're on the list to be terminated?" she asked, referring to Chrysler's plan to cut dealers and emerge from bankruptcy with only those determined to add value to the new company being formed with Fiat SpA.

Chrysler is not saying how many of its 3,200 dealers must go. The Rev. Jesse Jackson said this week that he had spoken with minority dealers who told him 1,200 retailers would be cut, the same figure Darvish and other dealers have heard, but other sources say that figure is too high.

Dealers expect to hear their fate as early as Friday.

Chrysler spokesman Rick Deneau would not comment Wednesday on timing or how many dealers must be dropped. He said dealers who have consolidated the Chrysler, Dodge and Jeep brands under one roof will be viewed more favorably.

Darvish, who has a position on the creditors committee established in Chrysler's bankruptcy proceedings, said dealers with one or two brands should be afforded the time and opportunity to consolidate privately.

The new incentives Chrysler rolled out Wednesday offer as much as $6,000 off a new Chrysler, Jeep or Dodge.

The automaker is offering up to $4,000 off a new 2009 model, plus a $1,000 loyalty discount on most 2008 and 2009 models for returning buyers.

An additional $1,000 can be saved if consumers finance their purchase with a credit union participating in the Invest in America program, which offers lower rates on loans for Chrysler and General Motors Corp. vehicles.

"Consumers are telling us that the net purchase price of the vehicle is the most important factor right now,," said Steven Landry, Chrysler's executive vice president in charge of sales and marketing.

The incentives are valid through June 1.

They replace a program that offered employee pricing, discounts and low financing rates.

The automaker could not continue zero-percent financing because that was a deal through Chrysler Financial. As part of the Chrysler's bankruptcy, GMAC LLC is taking over retail financing of Chrysler vehicles.

"It's not blowout sale pricing," product analyst Stephanie Brinley of AutoPacific in Troy said of the new incentives.

But Darvish said even with standard financing rates, the rebates are as much as double on some vehicles and that is an easy message to deliver.

"Given that so much of the population understands Chrysler is in trouble, there is only so much they can do in bankruptcy," Brinley said.

Offering ridiculously low prices hurts the retail value of the brands and the automaker "needs some level of profit and must make some money on its vehicles," Brinley said.

"They can't give them away for two months," and they will not bring in uncertain buyers anyway.

Chrysler's incentives in April were $4,383 a vehicle, the highest of any carmaker, said Chintan Talati of Edmunds.com, which tracks car prices.