By on March 10, 2010

GM’s recent reinstatement of 661 culled dealers has put pressure back on Chrysler to come to arrangement with the dealers it shed during last year’s bankruptcy and bailout. Rep. Chris VanHollen, the sixth ranking Democrat in the House or Representatives, tells Automotive News [sub] that with GM buckling to dealer pressure, the time has come for Chrysler to follow suit. “There’s no quicker or easier way to build this network than to reinstate its terminated car dealerships,” says VanHollen, who drafted much of congress’s dealer arbitration legislation. The Committee to Restore Dealer Rights contacted Chrysler CEO Sergio Marchionne “to discuss the reinstatement of the rejected dealers who had their franchises so abruptly taken and were unfairly terminated.” The response?

We believe that all communications concerning the subject matter of the arbitration should be between counsel and request that your clients follow this procedure in the future. Please ask them not to send such communications to Mr. Marchionne or any other Chrysler personnel.

Oh snap! Chrysler isn’t going down without a fight… even if that means taking on the representatives who have oversight of the government’s eight percent stake in the automaker.

GM’s justification for reinstating dealers was that Chairman and CEO Ed Whitacre wanted more sales volume at all costs, a goal that should probably resonate with Chrysler, considering the firm’s terminally moribund sales. But apparently Chrysler would rather pick a political fight to axe its old dealers.

Chrysler’s argument: unlike GM, which gave its dealers time to wind down their operations, Chrysler made its dealer cull effective upon exiting bankruptcy. As a result, the New, New Chrysler is able to make the argument that technically these dealers have never had a franchise agreement with the company in its current form. You can’t legally reinstate something you never had a contract with,” anonymous Chrysler sources tell Automotive News [sub]. “Dealer appointments will be a function of the arbitrations.”

Culled dealers aren’t buying it though. “Chrysler’s looking for technicalities to hide behind,” says Alan Spitzer of the CtRDR. “The law allows them to negotiate outside arbitration.” Interestingly, both GM and Chrysler have dropped their campaigns against a Colorado dealer reinstatement bill.

Meanwhile, Chrysler Canada dealers are eying Chrysler’s reborn Five Star incentives with envy [via The Windsor Star], as apparently the mothership has seen fit to not include Canadian dealers in the program.With dealer-related challenges at every turn, Chrysler’s “transition year” is going to be even more fraught with difficulties than we had initially thought.

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5 Comments on “GM Dealer Reinstatement Puts Pressure On Chrysler...”


  • avatar
    dmrdano

    If I were a dead Chryco dealer, I could never trust a corporation that had already thrown me under the bus once. If I had the capital to stay in the new car business, I would go after a Hyundai dealership agreement. The problem for many of these dealers is that it wasn’t enough for Chrysler to just pull the plug; in many cases they administered the lethal cocktail. Most of these dealers are too broke to get back into business.

  • avatar
    panzerfaust

    Thanks a bunch, now I’m going to have “If you wanna buy a car go see Cal.” Running through my head all day. Wonder how many steaks Earnhardt auto centers made out of their mascot?

    The sign is rather prophetic, though strange to see above two Fords and a ‘bego.

  • avatar
    windswords

    Sergio is my kinda of guy. “Who this? Congressman who? F#*K you! I gotta car company to run! Go bother somebody else!”

    “If I had the capital to stay in the new car business, I would go after a Hyundai dealership agreement.”

    And therein lies the rub: They don’t have the capital, they don’t have the location, they don’t have the business, they don’t have the facilities to get a Hyundai or whatever franchise. If they did they would have by now. There only hope is to go back with Chrysler. Now I know somebody is gonna say they have this fantastic dealer with a fancy showroom and service bays that Chrysler let go. I’m sure there are some. But how was their sales? Service? Reputation? Most of them were deadwood. Good riddance. It’s either that conclusion or we’re back to the conspiracy that Obama told Mopar to axe all the “Republican” dealers. You want to go back to that?

    It’s starting to look like the Chrysler BR was better executed than the GM one. Their legal standing with regard to the dealers is much better than GM’s. That and I think that their execs are better too, especially at the top (Whitacre vs Marchionne).

  • avatar
    mtymsi

    As stated, the big difference between the culled GM dealers and those of Chryco is most of the GM stores are still open and I think all of the Chryco stores are closed. Big difference. Unless there was a change in Chryco’s thinking why would Marchionne or anybody else at Chryco want to get involved?

  • avatar
    jimboy

    I’ve said it before and I’ll keep saying it. Chrysler didn’t cull enough dealers. The level of service and customer satisfaction at Chrysler/Dodge/Jeep dealerships is horrific, and the way to kickstart change is to scare the sh*t out of the remaining ones. The only chance for Chrysler to survive is to get people back into their showrooms, and most of us won’t go near a current dealership. My own experience’s with the local dealers have only reinforced that opinion. While I love Chrysler’s and have owned many, My next Chrysler purchase will be a private transaction, and I’ll take care of the vehicle with non-dealer service, warranty be damned!


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