General Motors Co. and Chrysler Group LLC is are facing a raft of arbitration claims from dealers that were rejected from their retail networks last year. The arbitration is to decide whether they can win back their franchises.
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Some 1,550 dealers had called for arbitration by early this week, about half of all the dealers eligible to file.
GM and Chrysler’s plans to axe the dealers were approved by bankruptcy courts last year as the two companies tried to slash costs and improve their under-performing retail network. However, hundreds of dealers contend that their franchise rights were violated in bankruptcy court.
With dealers appealing to lawmakers late last year, Congress in December passed a law creating an arbitration scheme to settle the disputes. The process could result in some car dealerships being reinstated.
Chrysler CEO Sergio Marchionne is understood to still be considering challenging the legality of the whole process. He argued recently that reinstating dealerships could “cause havoc within Chrysler.”
The arbitration process is expected to begin at the end of next month. It is scheduled to finish by 14 June, it is understood.
