No Appeals Process for Rejected Chrysler Dealers

Contrary to earlier reports, there is no review or appeals process available for the 789 dealers on Chrysler LLC’s termination list, Vice President Steven Landry tells reporters in a conference call today.

“That list will not change,” he says.

Earlier this week, a group of Chrysler dealers hired law firm Squire, Sanders & Dempsey to represent terminated dealers, but Chrysler executives decline to speculate what effect their efforts might have on court decisions relating to the bankruptcy.

Chrysler President and Vice Chairman Jim Press says the auto maker’s actions are not prohibited by state-franchise laws while it is in bankruptcy.

The franchise agreements for the rejected dealers officially will end once the court rules on the termination motion the auto maker filed this morning. Landry estimates that will happen June 9 or earlier.

Chrysler will continue to pay incentives and warranty payments until that time. However, the auto maker will not buy back inventory or parts from rejected dealers.

There are about 34,000 new vehicles sitting on terminated dealers’ lots, 4,000 of which are ’08 models.

About 34,000 new vehicles sitting on terminated dealers’ lots.

Landry says Chrysler will work closely with the floorplan institutions to help terminated dealers redistribute inventory to surviving dealers. That process will begin immediately and should be completed in the next two to three weeks.

General Motors Corp. recently told dealers it will buy back inventory and parts but will not offer any other settlement to the 2,600 dealers it plans to terminate in the next year.

Chrysler filed a second motion assigning 2,392 of its dealers to a new company being formed in the bankruptcy with the Fiat Auto Group.

Press says the termination process was “rigorous and vetted by a number of people.” Although Chrysler informed Fiat and the U.S. Treasury Dept. of its actions, Press says the company did not ask for their input.

“We’re the ones solely responsible for these decisions,” he says.

Dealer council members told Ward’s in recent interviews they believe President Obama’s automotive task force pushed Chrysler to significantly reduce its dealer body.

“None of us want to eliminate dealers,” Press says. “We tried to identify the least number of dealers that will allow us to move forward as a company.”

Dealers being terminated represent only 14% of Chrysler’s sales volume. Of the 789, 392 sell less than 100 new vehicles annually, 658 sell more used vehicles than new, and 345 are housed with competitive brands.

Chrysler will assign 190 dealerships to other dealers as part of its Genesis initiative, combining its three brands, Chrysler, Jeep, Dodge, into single dealerships. Once the termination process is completed, 84% of Chrysler stores will have all three brands, up from 62% currently.

Related document: To view list of terminated Chrysler dealers, click here.

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