Chrysler may sue to challenge arbitration for rejected dealers, Marchionne says
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He expressed annoyance that Chrysler's time and money would be diverted to defend arbitration claims after the automaker went through bankruptcy proceedings that cut 789 dealerships last spring.
“Ask me what fairness is involved in all this,” Marchionne said in an interview with Automotive News editors and reporters at the Detroit auto show. “Why doesn't anyone ask what's fair to Chrysler?”
Chrysler will make a final decision on a suit by the third week in January, he said.
Marchionne also acknowledged that the automaker is trying to award franchises in the markets left by rejected dealerships, as dealer groups have alleged. But he said Chrysler is trying to fill these points not to deter arbitration claims from these showrooms, as dealer groups have claimed, but to increase sales in areas where business is lagging.
“We have a right to sell Chrysler products,” said Marchionne, clad in his trademark open-neck shirt and sweater. “As of today, (rejected dealers) have no right.”
Dealer response
Today, a leader of a group of rejected dealers said Marchionne has ignored dozens of overtures from the retailers seeking to open a dialogue about dealer and corporate issues.
Tamara Darvish, co-leader of the Committee to Restore Dealer Rights, said Marchionne hasn't responded to any of her phone messages, personal e-mail or letters sent to him or his aides between July and December.
“Maybe we can find a compromise or ways to help make Chrysler successful,” Darvish said in an interview. “Let's find a way to put the rejected dealer issue behind us.”
The rejected-dealer group led the successful lobbying effort for passage of legislation to set up neutral arbitration for more than 2,000 rejected Chrysler and GM dealerships. President Barack Obama signed the bill a month ago.
Kathy Graham, a Chrysler spokeswoman, said going through Marchionne is “an inappropriate avenue.”
“Chrysler does no business with rejected dealers,” Graham said. “Our relationship is with the current dealer body.''
Darvish's letters to Marchionne were forwarded to Fred Diaz, who oversees Chrysler's sales organization, and Peter Grady, who runs the dealer network, Chrysler spokeswoman Graham said.
Neither has responded to Darvish, Graham said. Graham said the Committee to Restore Dealer Rights should approach Chrysler's dealer councils rather than its executives.Regulatory issues
Meanwhile, last week, a state regulator threw a wrench in one of Chrysler's plans.
The Arkansas Motor Vehicle Commission deferred the automaker's plan to award a Little Rock franchise in the market of a closed dealership. The franchise award must wait until after the shuttered dealership has a chance to go through arbitration, the agency said -- a process that could take until June under the new law.
Marchionne struck a defiant tone in the face of persistent criticism about Chrysler's tactics from dealer groups. The wave of negative publicity has been hurting the automaker's image in the marketplace, he conceded.
“But I can't be tortured into capitulating,” he said with his arms crossed. “They've got the wrong guy.” He later said: “I couldn't have done more.”
The interview showed a Marchionne who is wrestling with conflicting goals and sentiments.
On the one hand, he said, his main goal is to put the rejected-dealership issue behind him.
At the same time, though, he feels aggrieved that Chrysler has to participate in an arbitration process that he deems deeply unfair.
The CEO acknowledged that a suit challenging the constitutionality of the law could prolong the issue rather than shorten it.
Wait and see
It's also possible, he said, that not as many dealerships will file arbitration claims as he fears, especially since many of them lack the financial wherewithal to re-open a showroom.
So before deciding whether to sue, Chrysler plans to wait to see how many dealerships give notice of their intent to seek arbitration by the Jan. 25 deadline.
“We'll probably wait until the last minute,” Marchionne said.
Hundreds of claims will likely be filed by closed Chrysler dealerships, dealer advocates have estimated.
While stressing that no final decision has been made on whether to file a suit, Marchionne said Chrysler is considering three legal arguments about the constitutionality of the new law: Congress can't undo bankruptcy court orders, impair Chrysler's sale order to Fiat S.P.A., or force the company to enter into contracts with certain dealers.
He said last month that the automaker would “follow the lead of General Motors” in deciding whether to challenge the new law. At the time, GM also indicated it was considering filing such a suit.
But since then GM Chairman Ed Whitacre has struck a more conciliatory tone with dealers. He said Monday he wants “a lot more” rejected showrooms to be restored “if they are good dealers.”
Marchionne said Chrysler might go it alone in filing a suit.
