Chrysler In Breach Of Arbitration Law Already, Allege Dealers

Even with a government-mandated arbitration process in place, the battle between Chrysler and its 789 culled dealers is a low-down, dirty dogfight. Last week, Chrysler sent out letters to all of its rejected dealers, in its attempt to comply with the arbitration law’s disclosure requirements. But, dealers tell Automotive News [sub], those letters are justifications, but not explanations. Absent concrete evidence for why their franchises were closed (something GM has provided to its culled dealers), lawyers for some 65 rejected dealers are fighting back.

AN [sub] reportedly got its hands on several of the rejection letters, and describes them thusly:

Each Chrysler mailing consists of a four-page form letter that lists criteria used to reject dealerships as a whole, as well as a personal scorecard of how the individual dealership performed in a variety of categories… The form letter lists 22 criteria, including sales volume, market share, customer service and working capital. The scorecard has 13 factors, including minimum sales responsibility, customer satisfaction index and sales satisfaction index.

Crucially, however, “the Chrysler scorecard doesn’t say which score was considered deficient by Chrysler, nor does it say which categories were used to decide that a dealership should be closed.” This issue has dogged Chrysler’s dealer cull since day one, with rejected dealers arguing that testimony from Chrysler’s bankruptcy like the clip above prove that the dealer cull was arbitrary and not performance-based.

Now that the arbitration process is in place, backed by the force of congressional mandate, culled dealers finally have some recourse… as long as federal arbitrators go where the bankruptcy court wouldn’t and make a definitive ruling on Chrysler’s cull process. The new law requires OEMs to provide culled dealers with, “the specific criteria pursuant to which such dealer was terminated, was not renewed or was not assumed and assigned to a covered manufacturer.”

Dealer lawyers tell AN[sub] “we’re going to make an issue of this early on and explain that they’re not in compliance with the law. There are consequences to that. We’ll have to ask the arbitrators to decide what the consequences are.”