Chrysler Group sends letters to 789 rejected U.S. dealerships

Article by Christian Andrei, on August 29, 2010

Letters from Chrysler Group have been sent to 789 rejected US dealerships, a move that kicks off a legislated process that could restore the franchises through arbitration.

The letter states that dealers now have until Jan. 25 to notify Chrysler they intend to seek arbitration. These were actually the terms of a measure signed into law on Dec. 16. What the letter does not have is Chrysler's list of criteria for rejection.

Spokeswoman Kathy Graham said that Chrysler is required by law to outline those terms in individual letters to be sent before Jan. 16.

These dealers lost their franchises on June 9 at the end of Chrysler's six-week, U.S.-directed trip through bankruptcy court. President Barack Obama signed the arbitration process as part of a $446 billion appropriations bill.

General Motors Co., which is also affected by this legislation, had announced plans to terminate 1,350 dealerships in May in advance of its bankruptcy.

Spokesman Greg Martin said GM is working on its administrative next step and that it plans to communicate with dealers soon.

According to the letter from Chrysler, the carmaker is "assessing its rights and remedies with respect'' to the legislation. Arbitration has to be wrapped up in six months, according to the law.

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