Chrysler Group LLC Confirms Company-released Final Results of the Dealer Arbitration Process

Clarification:  On July 26, 2010, Chrysler Group LLC reported final results of the dealer arbitration process. In that report (which appears below), the Company noted that it prevailed in 76 of 108 arbitration decisions. On July 27, the trade publication Automotive News -- citing the Company as its source -- misreported these results. ("Arbitrators sided with the company 73 times and with dealerships 32 times, Chrysler said today.”) This was incorrect and unethical. Unfortunately, this attribution was never corrected and created confusion among other media outlets. Chrysler Group LLC confirms the final arbitration results posted to this web site on July 26.

For the record, Chrysler Group LLC notes further that it prevailed in seven of the remaining eight arbitration decisions that were rendered in the span of time between publication of the SIGTARP report on July 19 and the conclusion of the arbitration process for the Company on July 26.

Original media release: Chrysler Group LLC is pleased that hearings in the dealer arbitration process have concluded and is looking forward to completing its dealer network plans. The decisions to select dealers for the Company's optimized dealer network were carefully considered as part of Chrysler's Genesis Project.  The decisions of a great majority of the arbitrators reflect the belief that the Company's dealer network decisions were not only appropriate, but essential to its future success. What is needed are more profitable, better performing dealers to provide better customer service.  Indeed, plans to place all of our brands under one roof in well-located facilities has already resulted in enhanced dealer profitability and greater investment by existing dealerships on track with the $500 million investment plan Chrysler announced on November 4, 2009.

Chrysler prevailed in 76 of 108 arbitration decisions. Abour 4 percent of the 789 dealers rejected during the bankruptcy process prevailed in arbitrations.

About the process:  The actions to optimize Chrysler’s dealer network were part of its viability and central to the interim financing and proposed sale to Fiat. Among the requirements placed on Chrysler Group LLC was to reshape its dealer network to better meet the requirements of the market.  As such, on June 9, 2009, Federal Bankruptcy Court Judge Arthur Gonzalez approved Chrysler’s motion to “reject” the contracts of 789 dealers. In its approval, the Court concluded the Company used sound business judgment, and affirmed the rationale used by the Company  to determine which dealers were affected. On December 16, 2009, the U.S. Congress passed H.R. 3288 enabling the 789 affected dealers to pursue binding arbitration in order to secure an opportunity to join Chrysler's dealer network. The bill stipulated that dealers who prevailed in binding arbitration would receive a customary and usual Letter of Intent to enter into a sales and service agreement with Chrysler Group LLC provided they meet financial and operational prerequisites. The arbitration process began in May, 2010 and concluded on July 26, 2010.