Chrysler plans to close about a quarter of its dealerships.
The automaker has told a bankruptcy court it wants to shut 789 out of its current 3200 dealers in the United States.
Chrysler filed for bankruptcy protection on 30 April, allowing it to carry on trading while protected from its creditors.
At the time, it warned some dealerships would close. The company said the sales at many of its dealers were too low.
Just over half of the dealers account for about 90% of the company's sales in the US.
Chrysler has now notified the dealers concerned.
The BBC reports Chrysler has been hit hard by a slump in sales during the economic downturn.
It is currently in discussions with Fiat of Italy in an attempt to secure its survival.
The National Automobile Dealers Association estimates that each Chrysler dealership employs about 48 people on average.
That would mean that the cuts by Chrysler could lead to a potential loss of almost 38,000 jobs.
