WASHINGTON -- General Motors Co. and Chrysler Group said they plan to institute binding arbitration for rejected dealerships in an attempt to settle talks with dealer groups.
GM said in a statement today that this plan would likely lead to some reinstatements while saying that result would hinge on the halt of legislation to reverse dealer terminations.
Both the National Automobile Dealers Association and a group of rejected dealers said the automakers' proposals were inadequate.
“Under their plans, a dealer would have had a better chance at winning the Powerball lottery than getting back in business,” said Tamara Darvish, one of three heads of the Committee to Restore Dealer Rights.
With today's initiative, GM is breaking off participation in the talks, which were organized by lawmakers as an alternative to the legislation, GM lawyer Joe Lines said.
"It's very clear that with a new board and a new CEO, we need to take action, we need to move quickly," he said. “We were unable to come to an agreement that was acceptable to all dealer groups.”
The GM plan will start in mid-January unless the legislation moves forward, the company said.
It was approved both by former CEO Fritz Henderson and interim CEO and Chairman Edward Whitacre, GM spokesman Greg Martin said. Henderson was ousted Tuesday after eight months in the post.
Both the GM and Chrysler plans call for rejected dealership to be told of the criteria used in selecting them in May to cease operations. Rejected dealers also would be entitled to a review in meetings with corporate officials.
Dealers dissatisfied with the outcome of the review can elect arbitration from an independent panel, both companies said.
Unlike GM, Chrysler is not closing the door to a resumption of talks, Chrysler spokeswoman Linda Becker said.
Chrysler will send its offer to all 789 rejected dealers by Thursday, Dec. 10, the company's statement said.
Similar, not coordinated
The companies did not coordinate their nearly identical plans, Martin and Becker said.
The plans make no mention of compensation for rejected dealers, which was part of the dealer groups' proposal in September.
The talks began in September at the request of senior lawmakers who saw them as an alternative to the legislation, which passed the House but stalled in the Senate.
Lawmakers such as Rep. Steny Hoyer of Maryland, the No. 2 House Democrat, had criticized the process used by Chrysler to close the 789 stores and by GM to wind down 1,350 dealerships by October 2010. The automakers made dealership closings part of restructuring efforts tied to U.S.-directed rescues that included spring bankruptcy filings.
The Committee to Restore Dealer Rights has been urging members to lobby for the legislation.
Leaders of this group said they would continue to press members to push for the bills out of dissatisfaction with GM's and Chrysler's plans.
The criteria applied by GM in arbitration would be the same that it used to target rejected dealers, Committee leader Jack Fitzgerald said. It relies on flawed databases on sales performance and customer satisfaction, he said.
The Chrysler statement does not say what criteria arbitrators will use.
“Chrysler believes that the process it offers today fully addresses concerns that Congress and the discontinued dealers have raised,” the statement said.
The National Automobile Dealers Association said that, like the rejected dealers group, it would continue to contact lawmakers.
“GM's announced plan to address the issue of dealership closings is a positive step, but we do not believe it establishes a sufficiently meaningful process that provides for a reasonable opportunity for dealer reinstatement,” NADA said.
As for Chrysler, NADA said, “We look forward to working with Chrysler to further understand the proposal.”
Darvish said some congressional leaders told the Committee that they plan “to move forward” with the legislation.
Rep. Chris Van Hollen, assistant to House Speaker Nancy Pelosi, said he plans to "redouble" efforts to enact the legislation.
"The measures announced today by the two auto companies don't go far enough to help get profitable dealers reinstated," said Van Hollen, a Maryland Democrat.
A spokesman for Hoyer did not immediately respond to requests for comment.
The plan announced by GM today is virtually identical to one it submitted recently at dealer talks, Darvish said.
She said she recently asked GM representatives how many rejected dealers would be eligible to have their franchises restored under the automaker's criteria.
The response was between 39 and 51, Darvish said.
The Committee launched a grassroots lobbying campaign last summer that successfully pressured House members to pass the legislation.
Jamie LaReau contributed to this report.