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Chrysler sends reinstatement letters to some dealers

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Chrysler sends reinstatement letters to some dealers

Some terminated dealers expect to get letters detailing offer to skip arbitration, be reinstated

Alisa Priddle / The Detroit News

Some terminated Chrysler Group LLC dealers expect to receive, as early as today, letters outlining terms for reinstatement.

The letters are expected to be similar to those General Motors Co. sent to more than half of the 1,160 GM dealers it marked for termination, but are appealing through a federally approved arbitration process.

To be reinstated, dealers must meet Chrysler's criteria: location, facilities, inventory financing and working capital.

A Chrysler spokeswoman said she could not comment on dealer reinstatement.

An offer by Chrysler to bypass the arbitration process for some of its terminated dealers is significant because the automaker has shown little willingness previously to compromise.

"So far, Chrysler has opted not to do the right thing at every turn," said Alan Spitzer, CEO of Spitzer Management Inc. in Elyria, Ohio, whose seven Chrysler dealerships are among the 789 that were terminated in June.

While he doesn't expect to get a reinstatement letter, Spitzer is among almost 400 Chrysler dealers who notified the American Arbitration Association that he wants his case heard.

Under legislation passed in December, arbitration hearings are to be completed in June. Hearing dates for some have been set.

As part of its bankruptcy restructuring, GM planned to close more than 2,000 dealerships by late this year, as it sheds four brands and shrinks its overall dealer network.

GM gave its dealers substantially more notice than Chrysler did, and its executives have appeared more open and conciliatory in efforts to resolve outstanding issues with dealers it targeted.

Some dealers have been told by Chrysler to expect to receive letters of intent today, said Tammy Darvish of Silver Spring, Md., who lost two of her eight Chrysler franchises. Like Spitzer, she is on the Committee to Restore Dealer Rights but does not expect to receive a letter.

The reason some dealers and attorneys were contacted in advance is that Chrysler needed mailing addresses to send the packages in cases where the old businesses are no longer in operation, Darvish said.

Darvish said some who are expected to receive letters did not apply for arbitration. She speculated they could be in rural areas where the automaker has found it needs additional dealers.

Chuck Eddy, a dealer in Austintown, Ohio, and leader of the Chrysler Dealer Council, said he has heard talk of reinstatement letters, but has not been told officially of the reinstatements without arbitration.

He said some who are offered reinstatement may question whether the struggle to reopen is worth it.

Spitzer and Darvish say they do not see the letters as a softening of Chrysler's stance, so much as the automaker recognizing it has 400 arbitration cases to ready in a short time.

"In reality, Chrysler probably looked at the tremendous number of arbitrations it is facing and is trying to reduce it down to size because they have a daunting task in front of them," Spitzer said.

Darvish said the number receiving letters could range from 50 to fewer than 100, figures that were echoed by Spitzer.

In a concession last week, Chrysler agreed to stop giving dealerships additional brands to sell in areas where former dealers have filed for arbitration.

The automaker has been trying for years to get dealers to sell all brands. In areas where there were more than one dealer -- each with only one or two brands -- the strategy has been to close operations and award their franchises to the remaining local dealer.

Otherwise, Chrysler has been "completely nonresponsive all along and been ornery and difficult to work with," Spitzer said of dealings with the committee and dealers.

"Chrysler has been the proverbial junkyard dog over this," said Jack Fitzgerald, who had five Chrysler franchises terminated in the Washington, D.C., area.

From The Detroit News: http://detnews.com/article/20100326/AUTO01/3260336/1148/auto01/Chrysler-sends-reinstatement-letters-to-some-dealers#ixzz0jHjgNG00

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