NADA Brokering Deal To Reinstate Some Chrysler, GM Dealers

September 9, 2009
Chevrolet dealership

Chevrolet dealership

Not so long ago, congress considered forcing Chrysler and General Motors to reinstate dealers eliminated from their networks during their respective restructurings. Today, those legislative efforts may have stalled, but the National Automobile Dealers Association is pushing hard to address the elimination situation in another way.

Specifically, NADA wants Chrysler and GM to disclose their criteria for cutting 2000+ dealers from their rolls. If the automakers do so -- and if they agree to an arbitration arrangement -- NADA and a committee of terminated dealers will evaluate eliminations one by one and reinstate any that exceeded Chrysler/GM's termination thresholds. Dealers that aren't reinstated after the review can appeal to an arbitration panel, which will consist of one rep from the auto company in question, one rep from the terminated dealer, and a third-party agreed upon by the first two. The arbitration panel will consider not only the elimination criteria set out by the automaker, but also additional factors like the dealership's financial viability. The panel's decision will be binding.

So far, the only groups that have signed onto the proposal are NADA and the Committee to Restore Dealer Rights, which consists entirely of terminated dealers. Neither Chrysler nor GM are officially onboard, but given the choice between arbitrated reinstatement on a case-by-case basis or a federal law forcing reinstatement across-the-board, we think we know which they'll prefer.

Side note: arbitration should also please taxpayers, who won't have to endure all the posturing and brimstone that typically accompanies this sort of contentious legislation. Nor will we shoulder the cost of any resulting lawsuits under federal law. Which is great, since it seems like we're going to be losing a lot of money on the bailout and restructuring anyway.

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