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GM, Chrysler dealer cases differ

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GM, Chrysler dealer cases differ

Former's approach is more conciliatory



The first arbitration cases of terminated Chrysler and General Motors dealers are to begin next month, but the automakers are following starkly contrasting strategies to resolve the disputes.

Both companies reduced their dealer networks as part of their government-backed bankruptcy restructurings last year. But late last year, Congress passed and President Barack Obama signed legislation allowing the rejected dealers to challenge the decisions through arbitration.

Chrysler is moving aggressively, hiring high-powered national law firms, and it is not backing down from its plan to shrink its retail network by 25% or 789 dealers. Slightly less than 400 of those are pursuing arbitration to regain their Chrysler, Jeep or Dodge franchises, said Chrysler spokeswoman Kathy Graham.

Using a more conciliatory approach, GM sent letters offering to reinstate 661 of 1,160 dealers who filed for arbitration after GM initially decided to wind down their businesses. Those who want to keep their showrooms open have 60 days to meet conditions and pass a credit audit by GMAC.

But GM is continuing to talk with the 500 dealers that it didn't offer to reinstate and is open to some financial settlement in exchange for relinquishing their appeals.

"We want to get this behind us and get back to what we do best -- selling cars and taking care of customers," said GM spokeswoman Ryndee Carney.

Chrysler is convinced its turnaround requires a smaller dealer network.

"The industry itself is 40% smaller in the last two years, and we had too many dealers," said Graham. "Our network has been reduced 25%, but our manufacturing footprint, supplier base and total employment are smaller, too."

Chrysler's share of the U.S. new car and truck market fell to 8.9% in 2009 from 11% in 2008. Before Chrysler's restructuring, its average dealership sold 181 vehicles per store in 2008, compared with 1,523 for the average Toyota dealership and 1,104 for the average Honda dealership, according to the Automotive News Data Center.

The American Arbitration Association has scheduled preliminary meetings between the automakers and some dealers in the next two to three weeks. All cases must be resolved by June 23, according to Wayne Kessler, a spokesman for the AAA.

Joe Ricci, who lost his Dodge dealership in Dearborn, said he is still waiting to hear when his arbitration will proceed after paying $1,875 in filing fees with AAA.

"They could get rid of half of us right now by making reasonable settlement offers like General Motors is," said Ricci, who still wants to reopen his Dodge showroom in Dearborn.

"I still have my building and my territory," he said.

The new chairman of the National Automobile Dealers Association, Ed Tonkin, met Monday with the presidents of the Chrysler, Dodge and Dodge Ram brands. Tonkin, who owns dealerships in Portland, Ore., told Automotive News he urged Chrysler to reinstate "the great majority" of the terminated dealers.



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