Inventory assigned to dealers cut loose by bankrupt Chrysler LLC is expected to be disposed of by week’s end, the auto maker’s top sales executive says.

When Chrysler announced May 14 that it is reducing its dealer network to 2,399 from 3,188, affected stores had 42,000 vehicles in stock. Since then, 16,000 units have been sold to customers and 23,000 were redistributed to dealers expected to remain with Chrysler after its alliance with Fiat Auto Group becomes official.

As of today, that left 3,000 vehicles in limbo as the clock ticks toward a June 9 deadline for redundant dealers to avoid getting stuck with inventory. Further redistribution will eliminate these stocks, says Steve Landry, executive vice president-North American Sales, Marketing, Service and Parts.

“We don’t see any problem,” he tells journalists and industry analysts during a conference call to announce Chrysler sales.

As of May 31, Chrysler’s total inventory consisted of 201,000 light trucks and 60,000 cars in stock for an 86-day supply. In May 2008, the auto maker counted 342,000 light trucks and 70,000 cars.

Chrysler’s May sales totaled 78,622, down 44.9%, compared with year-ago.

Landry attributes a significant share of the decline to Chrysler’s strategic withdrawal from low-margin fleet business and notes the auto maker’s retail-market deliveries accounted for 74,000 vehicles for a 20% improvement over like-2008. Industry-wide, retail sales were off some 35%, he says.

Chrysler’s performance, which outpaced April’s total by more than 3,000 unit-sales, was a pleasant surprise considering last month’s Chapter 11 filing hung like a cloud over dealers.

“Having the government back the warranty really helped,” Landry says, noting this measure was mentioned by numerous customers.

When President Obama announced April 30 Chrysler would partner with Fiat, enter bankruptcy and receive emergency government aid, he encouraged Americans to buy Chrysler products and assured them their warranties would be honored.

Landry says Chrysler actually increased its share of the retail market to 9.6% last month. This compares with 9.1% in April and 9.0% in May 2008.

Dealers enjoyed good margins and offered good deals, but “not the extent of a fire sale,” he adds.

Of the 24 Chrysler nameplates still in production, just one – the Jeep Wrangler midsize SUV – saw its sales jump last month. Deliveries rose 4.2% as fullsize SUV buyers sought to downsize, Landry says.

May marked the fifth consecutive month the Wrangler saw increased sales.

Meanwhile, Landry confirms Chrysler will resume production next month as total inventory shrinks because of its decision to suspend output while in bankruptcy.

Ward’s reported Monday that several plants were set to restart June 29.

emayne@wardsauto.com