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Chrysler May Re-Hire Nearly 100 Dealers

Maker reportedly backing off on hard-line stance.

by on Mar.25, 2010

Chrysler could reinstate as many as 100 dealers fired last year. The termination left outlets, like this one in Mt Clemens, MI, scrambling to find ways to stay in busiess.

Chrysler is reportedly ready to bring back as many as 100 of the dealers that it terminated, last year, as part of its bankruptcy.

The news – still unconfirmed by the smallest of the Detroit makers – comes just three weeks after General Motors also reversed course, re-hiring 661 of the dealers it fired in an effort to consolidate its retail network.

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The Detroit Three, as a group, have been trimming their distribution chains, in recent years, taking a page from import brands, like Toyota and Mercedes-Benz, which have found that fewer showrooms can actually improve sales and profitability.

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GM Agrees to Rehire 661 Dealers

Another 439 retailers still face arbitration.

by on Mar.05, 2010

It's time to move on, says GM President Mark Reuss.

In a sharp reversal of course, General Motors has agreed to reinstate 661 of the more than 2,000 dealers it had planned to eliminate after its bankruptcy, last year, though more than 400 other retailers may yet be reprieved through a Congressionally-mandated arbitration process.

The final GM dealer count is yet to be determined, company officials cautioned, during a conference call with reporters on Friday afternoon, but it will likely approach 5,000 by the time all is wrapped up.  That’s significantly more than the 4,100 retailers the automaker had hoped to go forward with, but still far less than the 6,150 dealers that were representing General Motors in the U.S., as recently as December 2008.

“We are eager to restore relationships with our dealers, and get back to doing what we do best – selling cars and taking care of customers,” said Mark Reuss, President, GM North America.

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When GM filed for Chapter 11, last year, the maker said it would streamline its retail network, in part reflecting the fact that it planned to eliminate four of eight brands during the bankruptcy process.  The strategy also reflected conventional wisdom that since there’d be more sales per showroom dealers, in turn, would be willing to invest more in the surviving General Motors brands.

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Over 1,200 Ousted Dealers File for Arbitration

GM’s Whitacre says, “We’ll get through this.”

by on Jan.25, 2010

"We'll get through this," says GM CEO Ed Whitacre as ousted dealers get ready for arbitration.

They have until midnight to file their claims, and General Motors’ new, full-time CEO expects there’ll be some more dealers rushing in to demand aritration before time runs out.  But as of mid-afternoon Monday, more than 1,200 ousted GM and Chrysler dealers have taken the first critical steps necessary to winning back their franchises.

As part of their bankruptcy filings, earlier this year, the two automakers announced plans to eliminate more than a third of their dealers, in a bid to streamline their retail operations.  But the politically well-connected dealers didn’t go quietly into the night and Congress passed legislation giving the retailers a chance to fight back.

The final tally seeking arbitration could come close to half of the roughly 2,000 dealers cut by GM and 789 Chrysler slashed.  The numbers were growing rapidly, the industry trade publication, Automotive News, noted, reporting that as of Friday, only 959 dealers had paid at least $500 of the $1,625 filing fee.

How many of those dealers will actually pursue reinstatement is unclear.  Records show that only a third of business arbitration cases go to conclusion, not all favorably for the filers.  But considering the potential multi-million dollar losses involved in the closing of a showroom, observers say it’s a safe bet to at least begin the arbitration process while there’s still time.

It’s unclear how long it will take for the suits to work their way through the system, though Congress set a six-and-a-half month deadline for the process.  It’s possible that some dealers will settle while others will abandon their efforts.

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Earlier this month, GM CEO Ed Whitacre acknowledges that “mistakes” were made in the system the automaker used to choose which dealers to cut.  At the time, he suggested “hundreds” could be reinstated, though he later suggested that might mean a number of around 150.   (more…)