Closing Chrysler dealers is logical

Re: “Chrysler dealers run out of time,” June 9:

“Why is this necessary?” Bailey Wood, a spokesman for the National Automobile Dealers Assn., said about Chrysler’s cancellation of 789 franchise agreements.

I’d like to take a crack at answering his question.

By closing down dealers, Chrysler reduces competition among its own dealers. Because competition drives down sales prices, this move is intended to drive up the price of each vehicle sold to the consumer.

Chrysler hopes that the higher sales prices will result in fewer dealer incentives offered by Chrysler and fewer rebates Chrysler will need to offer to bribe consumers to purchase its cars.

If this works as intended, Chrysler will becomes more profitable because consumers will pay more for each vehicle.

Richard Raffalow

Valley Glen