GM Dealer Reinstatement Puts Pressure On Chrysler

Edward Niedermeyer
by Edward Niedermeyer
gm dealer reinstatement puts pressure on chrysler

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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  • Mtymsi Mtymsi on Mar 10, 2010

    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?

  • Jimboy Jimboy on Mar 10, 2010

    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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