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Chrysler On The Move: Automaker Welcomes 86 Dealerships Back To The Fold

March 29, 2010
The image reveals a much more upmarket look for the interior of the 2011 Chrysler 300

The image reveals a much more upmarket look for the interior of the 2011 Chrysler 300

2011 Chrysler 300

2011 Chrysler 300

After a very long dry spell, the good news for Chrysler fans is finally flowing again. First we heard that the automaker was ratcheting up its production timeline on the eagerly anticipated 2011 Chrysler 300. Then, Fiat mentioned that it's on-track to assume a 35% stake in Chrysler within the next two years -- which might not be great news for purists, but it proves that Fiat still foresees a very lucrative future for Chrysler.

Now, Chrysler has doled out another welcome update: as of today, a total of 86 former Chrysler dealers have now been invited back into the company fold.

You probably recall that Chrysler eliminated 25% of its dealership network during the automaker's bankruptcy and restructuring last year. There's been a good bit of contention around those eliminations, and Chrysler -- along with its bailout buddy, General Motors -- recently entered arbitration to resolve the situation. Over the course of the arbitration process, Chrysler must demonstrate that it had established clear elimination criteria and applied those criteria uniformly when it trimmed the company's roster of dealers.

Of the 789 dealers cast out of the Chrysler family, roughly 400 applied for arbitration hearings. Chrysler has already offered to reinstate 36 of those dealers, and over the weekend, it extended 50 more invitations. Even better: we'll probably see several more batches of invites hit the mail before the proceedings wrap up on June 14.

That, of course, is the optimist's view. Pessimists will point out that Chrysler's reinstatement of 86 dealerships isn't anything to crow about: it's less than 11% of the total number of dealers Chrysler cut, roughly half of whom decided they didn't have the time/energy/financial resources to deal with the hassle of arbitration. Furthermore, word from the inside indicates that Chrysler is attaching some fairly severe clauses in its reinstatement contracts. No word on what those might be just yet, but they could include additional restrictions on selling dealerships or property. According to a report in Detroit News, "One stickler could be what is known as site control, where Chrysler can veto a dealer's sale of property for 30 years. That tactic would prevent a dealer from selling to a competitor, for example...." While we understand the point in Chrysler making such demands from its network, those strictures are apt to make dealers think twice before signing on the dotted line.

We won't pass judgment on Chrysler's position on this matter until the arbitration process wraps upĀ  or until more details leak out. The one thing we know for certain, though -- and the one thing we're happy about -- is that Chrysler's beleaguered PR team can finally exhale just a bit.


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