Committee to Restore Rejected Dealers Rights to Assist Dealers in Arbitration Process

The Committee to Restore Dealer Rights has announced that it will assist rejected GM and Chrysler dealers as they undergo what could be an expensive and complicated arbitration process in hopes of being reinstated by the automakers.

A total of 789 Chrysler Group franchises were revoked, and GM has announced plans to shutter 1,350 of its dealers by the end of next October. The closures and planned closures were mandated by the automakers’ government-backed bankruptcy proceedings this past summer.

The Committee to Restore Dealer Rights is headed by Maryland auto dealers Jack Fitzgerald and Tammy Darvish and Ohio dealer Alan Spitzer.

The group was formed this past June and was instrumental in negotiations that took place between GM and Chrysler, Congressional members and the National Automobile Dealers Association. Those talks sought to avoid the need for legislation to address what many viewed as inequities in the methods used to determine which dealers would be stripped of their franchises.

Following the failure of those talks, Congress passed new legislation which provides rejected dealers the right to third party arbitration. The bill was signed into law by President Obama last Thursday and provides a 30 day window in which automakers must inform rejected dealers of their rights and cite the specific criteria used in targeting them for closure.

The Committee intends to continue working with rejected dealers throughout the arbitration period which is expected to last into early next summer. It plans to continue working with dealers independent of the NADA.

According to committee co-head Jack Fitzgerald, NADA does a lot of things well, but it would be useful if there was another entity that has no relationships with manufacturers, that doesn’t need anything from them, that gets all its revenue from dealers, and has one purpose: to protect dealer rights.

Fitzgerald says the committee has a long-term agenda beyond assisting rejected dealers involved in the arbitration process. It also seeks to set up new captive finance entities at both Chrysler and GM and to place individuals with expertise and experience in auto manufacturing who can’t be spun by management on their boards.

Fitzgerald claims, Dealers can survive without captive finance companies, as they do now, but GM and Chrysler can’t survive without them because banks will ultimately pull back from floorplan financing.

Last year, GMAC Financial Services teetered on the brink of bankruptcy before converting to a bank holding company with the blessings of the Obama administration. The company received over $12 billion in federal assistance and was appointed as the primary lender for Chrysler and its dealers following the company’s emergence from bankruptcy last summer.

Chrysler Financial, which had been serving as the primary lender for the company’s dealers, also received $1.5 billion in federal assistance but has been downsizing ever since. The company plans to wind down all business operations by 2012.

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