Chrysler Plans to Reinstate Dozens of Dealers
AUBURN HILLS, Mich. — Apparently, Chrysler Group has already sent 36 letters of intent or sales and service agreements for reinstatement to dealers whose contracts were rejected under the bankruptcy proceedings last year.
And now, the automaker is looking to reinstate 50 additional dealers and is in the process of sending out another round of letters of intent. The key is that the dealers offered reinstatement will have to represent the entire automaker line.
This is a bit of a reverse course by Chrysler. The automaker had originally threatened a lawsuit to nip arbitration proceedings in the bud, but ultimately decided to stay the course through arbitration.
Chrysler also made it clear that it had no intention of following in General Motors' footsteps of reinstating hundreds of dealers prior to arbitration. However, it appears there has been a shift in thinking. Now it looks like up to 86 dealers will be reinstated.
"In an effort to find a mutually beneficial resolution in situations that make sense for the customer, the dealer and the company, Chrysler Group announced today (Friday) it is offering letters of intent to 50 arbitrating dealers to join its dealer network as full-line representatives," Chrysler said in a statement.
Furthermore, the company indicated, "The 50 dealers are in locations that offer customer service benefits and will have limited adverse impact on the dealers within our current network. Discussions to find mutually beneficial alternatives to arbitration with other dealers are underway."
Commenting on the letters of intent that were already sent, Chrysler said, "The actions announced today are in addition to the 36 letters of intent or sales and service agreements previously awarded to dealers whose contracts had been rejected by OldCarCo."
National Automobile Dealers Association chairman Ed Tonkin called this a move in the right direction.
"This, coupled with previous contracts or letters of intent awarded to 36 other closed dealerships, brings the total to 86 dealerships that could be reinstated," Tonkin said.
"NADA views this as a good faith effort and hopes that this carries forward in Chrysler's continuing settlement and arbitration discussions with terminated dealers," he continued.
Prior to this latest announcement, Chrysler had said in mid-March, "Restructuring of Chrysler Group's dealer network represented an exercise of sound business judgment and was vital to the company's viability in challenging market conditions.
"The alternative — liquidation — would have had far more devastating effects on our dealers, our communities and our business partners," the company added.
Back in mid March, Chrysler said it would not award new franchise agreements in markets where there was a dealer seeking reinstatement via arbitration. The company called this a "good faith" measure.