The end may be near for a campaign by rejected General Motors and Chrysler dealers to force reinstatement of their franchises.
Plans by the companies to let up to 2,100 rejected dealerships appeal their terminations to third-party arbitration signal the end of settlement talks between the automakers and terminated dealers.
The spotlight now shifts back to the legislative arena, where dealers' prospects are dicey.
Congress is focused on health care legislation, and leading senators are lukewarm about bills to reverse dealer terminations.
Instead, House leaders are trying to cobble together a bill that would provide for third-party arbitration. In considering dealer claims, arbitrators would use criteria for store closures that differ from those envisioned by GM and Chrysler.
GM said that under its proposal, arbitrators "will expressly be limited to whether GM selected the dealer to receive the wind-down agreement on the basis of its business criteria."
Peter Grady, Chrysler's vice president of network development, said the company will apply the same criteria used for the initial dealer terminations to determine whether any closures were "arbitrary or capricious."
Dealer advocates say the GM and Chrysler plan sets up a circular, self-fulfilling process in which few dealerships likely would be restored.
"They used flawed criteria to target dealerships for wind-down, and now they want to use the same criteria in arbitration," said Jack Fitzgerald, a leader of the Committee to Restore Dealer Rights. The group represents rejected dealerships.
But the National Association for Minority Automobile Dealers applauded GM's plan as "an example of true compromise and making the best of a difficult situation."
The association says dealers who have the resources to stay in business and fight for survival should be allowed to do so. But the economic meltdown in the second half of 2008 devastated many small and minority dealers, says NAMAD President Damon Lester.
"This is a fair way to allow dealers to receive additional wind-down compensation or seek reinstatement," he says.
Both GM and Chrysler indicate that they're breaking off talks with the rejected dealerships that began in September. Those talks were requested by lawmakers who wanted an alternative to legislation.
Last summer, the House passed a bill to reverse the 789 Chrysler terminations and the 1,350 GM dealerships targeted for closure by October 2010. That measure has stalled in the Senate.
Last week, Rep. Chris Van Hollen, D-Md., assistant to House Speaker Nancy Pelosi, said he would "redouble my efforts to enact legislation." He said the automakers' plans "don't go far enough to help get profitable dealers reinstated."
House leaders likely will try to amend the ambitious original bill once it reaches a conference of House and Senate leaders, a congressional aide said. The House leadership views a more limited arbitration bill as more acceptable to Senate leaders.
The original legislation was attached to a spending bill that passed the House. A similar spending measure will likely pass the Senate, and differences between the two bills will have to be resolved in conference.
In the end, rejected dealerships probably will have to settle for a process that calls for automakers to release the criteria used to target them for closure, face-to-face reviews with GM and Chrysler officials and, ultimately, third-party arbitration.
That falls short of the broad reinstatements sought by dealer advocates but would give them more than what they got from the GM and Chrysler bankruptcies last spring.
Arlena Sawyers contributed to this report