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Chrysler feels vindicated by arbitration results

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Chrysler feels vindicated by arbitration results

Company cites Genesis strategy as crucial factor in its 70% success rate

Neil Roland

Automotive News -- August 2, 2010 - 12:01 am ET

WASHINGTON -- Chrysler Group said its success in arbitration is vindication for the company's strategy of consolidating all four of its brands in each dealership.

A final tally of three months of arbitration shows Chrysler prevailed in 70 percent of its 105 cases with rejected dealerships, the company said last week.

Many arbitrators who ruled for Chrysler accepted the company's Genesis plan to combine its four brands -- Chrysler, Dodge, Jeep and Ram -- in each store by the end of 2011. So dealerships that didn't sell all brands were at a disadvantage in many arbitration proceedings.

"The decisions of a great majority of the arbitrators reflect the belief that the company's dealer network decisions were not only appropriate but essential to its future success," Chrysler's statement said.

But while the company prevailed in most arbitration cases, the size and speed of Chrysler's dealerships cuts were called into question two weeks ago in an audit by the inspector general for the federal government's Troubled Asset Relief Program.

Some dealer lawyers speculated that many more stores would have prevailed in arbitration if this audit had been released while arbitration hearings were still going on, rather than after the process was completed.

"All Chrysler relied upon was unproved theory and tried to dress it up as fact," said lawyer Mark Ornstein of Orlando.

General Motors Co. is likely to release its final arbitration tally sometime this week, a company spokeswoman said.

Although Chrysler's arbitration cases are finished, it's unclear how many dealerships will sign letters of intent seeking reinstatement.

More than 80 dealerships have received letters outlining conditions for reinstatement, in some cases before their arbitration hearings were to begin.

Twenty-nine rejected Chrysler dealers have signed the letters. But some dealerships that won arbitration cases haven't signed the letters of intent because of the requirements they impose, some lawyers have said.

Two dealerships have filed lawsuits challenging Chrysler's terms. The company is contesting both suits.

Read more: http://www.autonews.com/article/20100802/RETAIL07/308029976/1422#ixzz0vSFyX78C

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