Nardelli Told to Avoid Fighting With Dealers

Chrysler LLC dealers are awaiting minor franchise changes in connection with the sale of the auto maker to the Cerberus Capital Management Group.

So says Dan Feeny, owner of a Chrysler-Dodge-Jeep dealership in the Chicago suburb of Elgin, IL.

Most state franchise laws prohibit use of auto maker ownership changes as a pretext for altering terms in the franchise agreement that could be inimical to dealer franchisees, says Feeny, a former president of the Chicago Automotive Trade Assn.

“Fair treatment” or “anti-coercion” clauses in franchise laws are applicable whether either the owner of the dealership or the franchisor changes, according to dealership attorney specialists.

Meanwhile, dealer fears of tougher demands by the new owners of Chrysler were eased when Cerberus Chairman Stephen Feinberg and Chrysler CEO Robert Nardelli met with members of the Chrysler national dealer council.

Nardelli told council members he wasn't about to “risk any conflicts with you, our dealer customers, over issues like overdealering or under-ordering.”

He says first on his 5-point agenda is “putting customers first, which means dealer customers for us and consumer customers for yourselves.”

The reclusive Feinberg has told key dealers that Cerberus is dedicated to rebuilding Chrysler and not selling it down the road for a quick profit.

A National Automobile Dealers Assn. spokesman says it has been advised that Chrysler LLC would be issuing new franchise agreements with its new name as the franchisor.

But the upcoming NADA chairwoman, Annette Sykora, owner of Chrysler-Dodge-Jeep and Ford-Lincoln-Mercury stores in Texas, says, “We have no reason to expect anything but technical changes in the Chrysler franchise.”

Nardelli says he had sought advice from his old friend, Roger Penske, chairman and CEO of Penske Automotive Group, and former Chrysler Corp. CEO Lee Iacocca.

Both advised him “not to start out fighting with dealers,” says Nardelli.

Dan Feeny's brother, Bob Feeny, a Chrysler, Dodge and Jeep dealer in Michigan, says he had entertained “some doubts” about a new private-equity owner. But, he adds, “the overtures of Feinberg and Nardelli, combined with Chrysler's recruitment of dealer-respected Jim Press from Toyota, are win-win for Chrysler dealers.”