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Arbitration ends, dealer challenges continue

by Bill Cawthon on

The federally mandated arbitration process for dealers terminated by Chrysler Group during its bankruptcy has ended with the automaker prevailing in the majority of hearings. Of 108 decisions, the arbitrator sided with Chrysler in 76. The remaining dealers, along with about 50 other dealers were or will be offered letters of intent. Chrysler spokesman Mike Palese said most of the 29 dealers who have accepted the terms are already back in business.

418 of the 789 terminated dealers originally filed for arbitration. 310 of those case were settled, withdrawn, abandoned or dismissed before coming to the arbitration hearing.

In a statement, the company said, “Chrysler Group LLC is pleased that hearings in the dealer arbitration process have concluded and is looking forward to completing its dealer network plans. The decisions to select dealers for the Company’s optimized dealer network were carefully considered as part of Chrysler’s Genesis Project. The decisions of a great majority of the arbitrators reflect the belief that the Company’s dealer network decisions were not only appropriate, but essential to its future success. What is needed are more profitable, better performing dealers to provide better customer service. Indeed, plans to place all of our brands under one roof in well-located facilities has already resulted in enhanced dealer profitability and greater investment by existing dealerships on track with the $500 million investment plan Chrysler announced on November 4, 2009.”

However, the coast is not yet clear. Some dealers who received letters of intent are now filing lawsuits, complaining the new terms and conditions are too difficult to meet. Chrysler says the original contracts remained with the old Chrysler in bankruptcy and that dealers must essentially start over with the new company. The automaker also maintains arbitrators do not have the authority to require contracts with conditions different from those for current franchises. Gualberto Ranieri, Chrysler’s executive vice president for communications, said the offers of reinstatement contained stricter terms because the terminated dealers were not meeting Chrysler’s performance standards. In a recent audit of the government bailout of the auto industry, it was determined that Chrysler used a consistent set of standards when it was identifying which dealers should be terminated.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.

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