Negotiations Could Lead to Reinstatement of Rejected GM and Chrysler Dealers

Senator Richard Durbin is attempting to reach a compromise between The National Automobile Dealers Association and General Motors Company in an effort to avoid new legislation that would allow Chrysler to reinstate 789 rejected dealerships and allow GM to keep 1,350 stores slated for termination.

According to NADA Chairman, Senator Durbin is seeking to arrange for negotiations between GM, Chrysler, the White House and key lawmakers. Negotiations may also include an independent group of auto dealers that has been pushing for a reversal of the previous legislation that required the dealership terminations.

House Majority Leader Steny Hoyer (D-MD) has been pressuring dealer groups to engage in talks in hopes that the parties can avoid the need for new legislation. Both GM and Chrysler have indicated their willingness to engage in the proposed negotiations.

Representative Steve LaTourette (R-OH) has been actively involved in efforts to bring the parties together and said, “If we can resolve this situation without legislation that would be wonderful.”

A key question before lawmakers and the automakers at this point is whether or not to include the independent group of auto dealers known as the Committee to Restore Dealer Rights in the talks.

The group has spent in excess of $300,000 in aggressively lobbying for new legislation. It has also taken a tougher stance than the NADA. GM had previously indicated its willingness to negotiate only with the NADA based on that organizations broad-based dealer representation.

Maryland auto dealer, Jack Fitzgerald, who is a key organizer in the Committee to Restore Dealer Rights said he had not been contacted by Senator Durbin but indicated that he would participated in the negotiations if invited.

Both the Committee to Restore Dealer Rights and the NADA have advocated third-party arbitration along with potentially millions of dollars for dealers who were rejected in the initial legislation, but they disagree on the criteria which any arbitration panel would use in determining whether or not rejected dealerships would be reinstated.

The NADA advocates having the automakers automatically offer reinstatement to any dealers that meet or exceed their previously disclosed criteria for reinstatement. Under this proposal, all disputes between dealers and the automakers would be decided through arbitration.

However, Fitzgerald claims that under that proposal, “very few, if any, dealers would get their franchises back.” His group has called for arbitrators to “decide whether terminating the dealers is fair and reasonable based upon the affected dealer’s financial viability and other factors proposed by the affected dealer and manufacturer.”

The issue is expected to be taken up by Congressional members when they return from recess after the Labor Day weekend.

Posted in In the News

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