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With deadline near, 168 GM dealerships file for arbitration

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With deadline near, 168 GM dealerships file for arbitration

Neil Roland

Automotive News -- January 20, 2010 - 3:50 pm ET

WASHINGTON -- As of last Friday, 168 of the 2,000 rejected General Motors dealerships had given notice of their intent to seek reinstatement through arbitration, a General Motors Co. spokeswoman said.

The showrooms have until Monday to declare their intent to pursue neutral arbitration under a new law signed by President Barack Obama last month.

The preliminary GM figure was provided by company spokeswoman Ryndee Carney in response to a query from Automotive News. Chrysler declined to provide a similar figure for its 789 shuttered stores.

“I am surprised that by such an early date 168 had already filed,” said attorney Leonard Bellavia of Mineola, N.Y., who has about 50 arbitration clients.

Bellavia and two other dealer attorneys -- Mike Charapp of McLean, Va., and Eric Chase of Florham Park, N.J. -- said they expect between 500 and 1,000 GM dealerships to file for arbitration.

More to come

GM sent letters to 1,300 so-called complete wind-down dealerships notifying them of the criteria used to target elimination of all their GM franchises by October, Carney said.

The company also sent another 700 letters to partial wind-down stores marked to lose one or more GM franchises while allowed to keep at least one, she said. An example of a partial wind-down dealership would be one that sold both Chevrolets and Cadillacs and was targeted to lose just its Cadillac franchise.

The GM letters were received by rejected dealerships by Jan. 15, as required by the new law. The 168 dealer arbitration filings cited by Carney were for the close of business on the same day.

“I don't think the Jan. 15th figures are demonstrative at all of the number of total filings, particularly because we have been counseling attorneys and dealers not to file before receiving and discussing with counsel the letters setting forth the criteria used to reject and wind down dealers,” Bellavia said.

Chrysler declined to release any figures on dealership filings.

“We don't want to be seen as trying to influence the process,” Chrysler spokeswoman Kathy Graham said in a phone interview.

No wherewithal

Charapp said the number of rejected Chrysler dealership filings will be far lower than those that want to do so.

“Their businesses and lives have been so decimated that they just don't have the wherewithal,” said Charapp, who has more than two dozen arbitration clients.

GM's letters, unlike Chrysler's, offered brief explanations of the specific reasons why dealerships were targeted for elimination.

The letters “fully complied with the legislation,” Carney said.

Dealer attorneys said GM's letters were more compliant with the new law than Chrysler's.

“GM's notifications, while sparse, are much more meaningful than those provided by Chrysler,” said Charapp, a consultant to state dealer groups. “At least the GM notifications tell dealers specific reasons why they were not continued. Chrysler, on the other hand, gives no information to a dealer from which a dealer can tell specifically why he or she was not continued.”

Chrysler's mailings included a form letter with all the criteria used to consider a dealership's performance, as well as an individual scorecard of factors with a percentage figure.

Chrysler, like GM, has said that its mailing complied with the new law.


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