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Nearly one-quarter of GM, Chrysler dealers on closing lists have appealed

More than 600 General Motors and Chrysler dealers have filed for arbitration, challenging their closing, ahead of Monday's deadline.

In December, Congress passed a provision signed into law by President Barack Obama that grants dealers on the automakers' closing lists a chance to appeal and receive a decision within six months.

The provision was strenuously fought by automakers during a six-month battle in Congress that cost them considerable political capital - largely because dealers have significant clout and often are campaign contributors. More than two-thirds of House members, including many allies of GM and Chrysler, co-sponsored legislation that would have been even tougher on the automakers.

As of Thursday, more than 600 dealers had filed for arbitration, said India Johnson, a senior vice president at the American Arbitration Association. That's almost a quarter of all dealers impacted by the automakers' closing decisions.

Based on the current pace, Johnson said, the association expects at least 700 to 800 dealers to request arbitration by the filing deadline of midnight Monday imposed by Congress. She said that number may be greater if the automakers haven't submitted all the arbitration requests that they have received.

Alan Spitzer, head of the Spitzer Auto Group and co-founder of the Committee to Restore Dealer Rights, said he has filed for 10 separate arbitrations for seven closed Chrysler dealerships and three GM dealerships.

"I think many dealers have a very good chance of getting their dealerships back," said Spitzer, who has dealerships in Ohio, Pennsylvania and Florida.

He predicted about one-third of the nearly 3,000 dealers impacted would file for arbitration.

GM said this month that 2,000 dealers it ordered to close are eligible for arbitration, if they choose to fight to remain open. That figure includes 1,300 to close outright by October 2010 and 700 losing at least one GM brand.

The legislation also applies to 789 dealerships that Auburn Hills-based Chrysler closed in June -- or one-quarter of their network. Both companies, which spent brief stays in bankruptcy last year, ordered the shutdowns to thin costly dealer networks that were larger than those of their foreign automakers.

Dealerships that sell only one of the four closing GM brands -- Saturn, Saab, Hummer or Pontiac -- are ineligible for the appeal process.

Under the law, decisions generally are to be made by June 14.

Each arbitration case will be separate, and dealers must pay their share of costs of the process that could top $100,000.

Johnson said the actual arbitration fees are not a huge cost issue, compared with attorneys and experts that dealers may need to retain to help argue that they should stay open because they remain economically viable.

GM Chairman CEO Edward Whitacre Jr. said this month that GM is likely to reinstate "hundreds of dealers," but then backpedaled and said it could be as few as 100. He has taken a more conciliatory approach to the dealer issue, acknowledging GM likely made some mistakes in its dealer closings.

Chrysler CEO Sergio Marchionne defended the dealer closings during a roundtable interview last week at the North American International Auto Show in Detroit. He said the closings were a good decision in hindsight and it was "fair and equitable and designed to yield a healthier distribution network for Chrysler."

Chrysler is working to rebuild its dealer network and adding some new dealers, Marchionne said.

GM and Chrysler wouldn't give a tally, but as of last Friday, 168 GM dealers had filed for arbitration. The companies also declined to say if they would reinstate any dealers without going through arbitration as the law allows.

GM already has reversed its decisions on about 80 dealers. It set aside $600 million to pay closing dealers.

Chrysler heard no appeals and offered dealers no cash compensation.

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