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Update on Appeals Process for U.S. Auto Dealers

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On: Fri, Jul 16, 2010 at 10:45AM | By: Sherry Christiansen


Update on Appeals Process for U.S. Auto Dealers

Literally hundreds of U.S. auto dealers faced with closure of their dealerships filed an appeals process in order to stay in business. The appeals court will soon be over for many dealerships, but the Chrysler Group may still have to tackle months of litigation with its dealers in various states.

According to a recent Associated Press article by DeAnne Durbin there are only 35 cases left unresolved out of nearly 1,600 General Motors and Chrysler disputes that were initially brought to arbitration. Final hearings are set for this week and the decisions will be handed down by the end of the week.

The arbitration hearings were ordered by Congress after U.S. automakers filed for bankruptcy last year, and then announced plans to close 2800 GM and Chrysler dealerships. U.S. automakers were saying that there were too many dealerships and made reference to Toyota, which is the world’s largest automaker, having only 1200 dealerships in the U.S.

The dealerships argued that franchises have been family-owned for many generations, and requested that consumer buying trends dictate which dealerships stay open.

Since the hearings began in February, many of the dealerships have already been reinstated, and some voluntarily closed, or opted to sell other auto brands, so many of the cases have already been settled. GM has been overall more lenient in closing franchises, allowing most dealerships that were scheduled to close with a year’s notice. Chrysler on the other hand, attempted to close many franchises right away, causing long-term legal complications, as some dealerships that won in arbitration have already had their franchise rights given away to other locations by Chrysler.

Mike Palese, Chrysler spokesman, told the Associated Press, “Of the 418 cases filed by Chrysler dealers, 56 have been decided in the company's favor. Dealers have prevailed in 21 cases. 150 cases were settled and 130 were abandoned or dismissed.” GM has announced that more than 600 dealerships have been reinstated and, as of June, the company was waiting on decisions from 300 cases.

Dodge dealer, Deland Dodge in Florida, was one of the Chrysler franchises that received an early arbitration ruling for reinstatement; unfortunately, Chrysler had already given Deland Dodge’s franchise agreement to a dealership located just across the street. According to the general manager Jeremy Kiel, Deland Dodge filed a motion to get the court to impose the ruling on Chrysler allowing the franchise to re-open. "We just want what the law was intended to do," he said. "We just want to start selling cars again."




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