Chrysler LLC said Friday it would take a short-term sales hit after announcing plans to cull a quarter of its U.S. dealer network by early June.

The auto maker is using bankruptcy protection to push through the move, which drew protests from some affected dealers who are not being compensated for cars or spare parts left on their lots.

Chrysler said remaining dealers are expected to take the bulk of the 44,000 cars left with those targeted for closure.

Leo Jerome, owner of Story Chrysler Jeep in Lansing, Mich., and targeted for closure, said he has about $2 million in inventory and Chrysler informed him that the company will not buy any of the cars or parts back.

The company had pleaded with dealers to order more cars earlier this year in an effort to generate revenue and demonstrate its viability to the U.S. government and Fiat SpA (FIATY), its prospective partner.

Chrysler has requested a June 3 court hearing to approve dropping 789 of its 3,188 U.S. dealers by June 9. They account for about 14% of its total sales by volume, and vice chairman Jim Press admitted on a conference call that sales will be affected in the short term, though the move will improve its competitive position.

Chrysler and General Motors Corp. (GM) are both looking to reduce distribution networks that sell fewer cars per location than overseas rivals. GM is expected to tell some dealers Friday that they face closure.

"We will have a more profitable network going forward," added Press. He said there is no appeal process, despite warnings from some dealers that they may take legal action to challenge their selection for closure.

A patchwork of state laws had made trimming the distribution network more difficult outside of Chapter 11. Chrysler said the dealer decisions were its own and not driven by Fiat or the U.S. Treasury, which is providing the company with emergency loans.

Some Chrysler dealers questioned the methodology used in the process. "Chrysler's analysis is wrong," said attorney Scott Silverman of McCarter & English in Boston. He is representing about a dozen Chrysler dealers, some of whom are on the closure list.

"They established a blue-print for the network a long time ago. This is a function of Chrysler changing its mind. This analysis wasn't performed in anything but a tight constrained time frame that often leads to mistakes."

Urban dealers are particularly hard hit by the planned cuts, reflecting demographic changes that have reduced inner-city business.

Press said the goal is to ensure that all of its dealerships carry the Chrysler, Dodge and Jeep brands under one roof. Currently about 60% carry all three.

-By Jeff Bennett; Dow Jones Newswires; jeff.bennett@dowjones.com; 248-204-5542

(Alex P. Kellogg of the Wall Street Journal contributed to this story.)