More than 1,500 GM and Chrysler dealerships challenge closings

More than 1,500 out of nearly 3,000 cut by GM and Chrysler have filed appeals ahead of the midnight deadline set forth by congress not too long ago. A final number of appeals filed will not be known until Friday, as any application postmarked before midnight will be accepted. As of this afternoon however, there were between 1,550 and 1,560 already filed.

GM chairman and CEO Ed Whitacre, Jr., said on Monday that any decision to reinstate dealers would not hurt the company; between 500 and 600 GM dealers have filed appeals with the American Arbitration Association thus far. Acknowledging that perhaps GM did in fact err with regard to some of its dealer closings, Whitacre has said that GM is likely to reinstate hundreds of dealers, though he later said it may be as few as one hundred.

While Chrysler has so far been in compliance with the law, it has not publicly ruled out a legal challenge. House Majority Leader Steny Hoyer commended GM and Whitacre, “With this decision, GM Chairman and CEO Ed Whitacre has demonstrated GM’s commitment to having the strongest possible dealer network. It is also a recognition that GM must solidify that network as soon as possible so it can return to profitability and keep Americans on the job. It is my hope that Chrysler will follow GM’s lead.”

Originally vehemently fought against by automakers, the legislation passed in December that gave closed dealers the opportunity to appeal and receive a decision in six-months. The law gives the automakers until some point in June to hand down their decisions, and the automakers must pay their share of the arbitration cases, which are all to be handled separately and could top $100,000 each.

GM has reinstated about 80 dealers so far and has set aside $600 million to pay closing dealers. Those dealership will have until October to wind down their businesses.

Chrysler however has heard no cases yet, and offered no cash compensation to its dealers, and gave them each just one month to close their doors.

– By: Stephen Calogera

Source: Detroit News