DETROIT -- Chrysler Group will proceed with arbitration in the cases of 789 dealerships it cut during bankruptcy last spring.
As of yesterday, 409 former Chrysler dealers had filed for arbitration, the company said in a statement.
“The company looks forward to the expeditious completion of the process. A robust dealer network is a critical component of the group's strategy of rebuilding a strong and resilient American automaker,” the statement said.
The announcement marks a change in Chrysler's tone toward arbitration. During the Detroit auto show this month, CEO Sergio Marchionne told Automotive News he was considering challenging the process on constitutional grounds.
Chrysler cut 789 dealers during its trip through bankruptcy, a move sanctioned by Judge Arthur Gonzalez of U.S. Bankruptcy Court in New York. In response to pressure from rejected Chrysler and General Motors Co. dealers, Congress passed a bill allowing dealers to appeal their franchise terminations through arbitration.
President Barack Obama signed the bill into law in late December.
In a statement today, House Majority Leader Steny Hoyer, D-Md., applauded Chrysler's decision.
"By reaching this conclusion, Chrysler is affirming its commitment to a strong dealer network that keeps Americans on the job and gives its products the best chance at success so the company can return to profitability," the statement said.
Filing for arbitration will cost dealerships $1,625 apiece. A filing signals intent but does not obligate the dealer to actually pursue arbitration. Dealers can get a 50 percent refund of the filing fee if they withdraw their submission in time.
The American Arbitration Association, which is overseeing the process for terminated Chrysler and GM dealerships, has started assembling lists of dozens of potential arbitrators in each state. The association has started sending the lists to the two parties in particular cases.
Both parties ultimately must agree on a single arbitrator after reviewing arbitrators' backgrounds, expertise, potential conflicts of interest and availability, said India Johnson, senior vice president of the arbitration association.
If they can't agree, the association will try to pick an arbitrator in each case by the end of February, she said. Arbitrators' reinstatement decisions are due by June.
Let arbitration begin
Tammy Darvish, a founder of the Committee to Restore Dealer Rights, said she thinks many Chrysler dealers will win reinstatement through arbitration. Her family's Darcars Automotive Group, based in Silver Spring, Md., lost three dealerships during the bankruptcies of Chrysler and GM: a Dodge store in Jacksonville, Fla.; a Chrysler store in Fairfax, Va.; and a Chevrolet outlet in Lanham, Md. Darcars has applied for arbitration in all three cases.
Darvish is waiting to see what kind of posture Chrysler will adopt as it goes through the cases.
“Are they going to go forward and do the right thing?” she said. “Or are they going to go forward and raise as many obstacles as possible?''