Chrysler Moves To Relocate Reinstated Dealers
Chrysler’s bailout-era dealer cull has ended up being something of a nightmare, with a number of dealers successfully fighting for reinstatement as federal investigators look into possible criminal wrongdoing. And whereas GM has basically rolled back much of its dealer cull, Chrysler has consistently used arbitrary calculi for closing dealers and has resisted giving dealers the opportunity to reclaim their franchises. Now, the dealers that have won reinstatement in congressionally-mandated arbitration hearings are facing a new threat: relocation. Automotive News [sub] reports that Chrysler’s method of dealing with reinstated dealers is to force them to relocate wherever Chrysler wants them to go. Chrysler has filed a request in a Michigan District Court, asking for the ability to relocate some 20 dealers in 6 Midwestern states, a move it says it must undertake in order to protect its non-culled dealers. But, having picked the winners and losers among its dealers only to see some of them reinstated, shouldn’t these reinstated dealers be afforded the same rights as the dealers who weren’t culled in the first place?
Of course, like everything else involved with the dealer cull, this conflict isn’t a simple one. The conflict centers around Livonia Chrysler Jeep, of Livonia, MI, which lost its market to Crestwood Dodge Chrysler Jeep Ram. According to Chrysler’s request
(Livonia Chrysler Jeep’s) interpretation of the (dealer arbitration) Act contradicts the plain language of the Act, and its civil action… seeks to fashion a remedy that is nowhere to be found in the Act, (So) Chrysler respectfully requests … a declaration that the Act limits the arbitrator’s power to the determination of whether or not the covered dealership should be added to the (OEM’s) dealer network…What Chrysler is referring to as the remedy not found in the reinstatement Act is, according to AN, the right to have their old locations and markets back. As Chrysler sees it
reinstated dealers have won back a right to be dealers again, but not necessarily to the same locations and market conditions as before. They also may have to satisfy other state regulations or meet market conditions before they can reopen…
Livonia Chrysler, for example, may not be able to reopen in its old location because it would compete too closely with Crestwood Dodge Chrysler Jeep Ram in nearby Garden City and run afoul of a state law governing “like-line” dealers in overlapping markets.
The response from Livonia and other reinstated dealers:
It (the new counterclaim) was a strange thing for Chrysler to do because a lot of this ruling is going to come down to how you view state franchise law, which is different in Michigan from these other states…Our position in litigation is, we have to be put back to the way life was. You have to give back (to Livonia) what you took and gave to Crestwood. Why else would Congress have created this process for reinstatement? Not to just put us into a whole new other fight in courtA messy mess, to be sure. There are several motions pending to have Chrysler’s request summarily dismissed, although those motions won’t be heard until March. And as this conflict with no winners drags on, it becomes more and more clear with every bit of nasty news that the whole dealer cull (as it was implemented) probably should have been avoided. Dealer reduction was working prior to the bailout as a long, slow, deliberative process… accelerating the shutdowns arbitrarily just as the OEMs were receiving billions for their failures will go down in history as one of the worst elements of the great auto bailout.
More by Edward Niedermeyer
Comments
Join the conversation
Within a 35 mile radius we now have two Hyundai dealerships, but only one Chrysler / Dodge, go figure. Go another 100 some miles to find another Chrysler dealeship, I think, unless Lompoc has one, or another 135 miles or so from San Luis Obispo to find a Mitsubishi dealership ( rare cars i guess ).
What a system State owned car manufacturing State regultred dealerships next up will be law on which car you must buy and how often. The only one to get really screwed is the poor sod who is told to buy an Italian shit box Lada and can only find a Caddy.