Thirty-five terminated Chrysler and GM dealers in Minnesota are seeking immediate reinstatement of their franchises through federal binding arbitration. The dealers filed the necessary paperwork as of Monday and asked both automakers to immediately restore their rights to sell GM and Chrysler vehicles, the Minnesota Automobile Dealers Association (MADA) announced Wednesday.
Last spring, amid massive government bailouts, a bankrupt GM said it would cancel 2,600 franchise agreements across the country, including 36 dealerships in Minnesota, by October 2010. Meanwhile in June of last year, Chrysler terminated 789 dealerships, including 18 in Minnesota.
Many dealers cried foul, saying that some of the stores forced to close were profitable and had recently won awards from the manufacturers. About 800 dealers of both car brands appealed the decision and hundreds lobbied Congress for intervention. After losing a court battle that would have prevented Chrysler from shutting targeted franchises last year, all dealerships were given until Monday to apply for federal arbitration.
"Dealers fought hard for these arbitration proceedings to happen and are grateful to Congress for acting on their concerns," said MADA Executive Vice President Scott Lambert. "I am confident that we will be successful."
However, he cautioned MADA members during a meeting Wednesday that arbitration is a "stressful and expensive process. Dealers and the manufacturers will spend millions if each arbitration is played out. It strikes us as ultimately a waste of time, energy and money." The association did not release names of dealers who applied for arbitration.
But several dealers have some thinking to do. George McGuire of Shakopee Chevrolet and Steve Whitaker of Whitaker Buick Pontiac GMC are scheduled to have their franchises end this fall.
To date, Paul Walser is one of only four dealers in Minnesota to win a reprieve. GM reversed its decision last summer and will allow Walser's Buick Pontiac GMC store in Bloomington to stay in business after October 2010.
However, the future is less clear for Scott Preusse. He learned last May that Chrysler and GM planned to terminate his franchise agreements for his Redwood Falls, Minn., store. He was forced to stop selling Chrysler products at the store in June.
