A group of activist dealers rejected in the Chrysler and General Motors bankruptcies is contemplating going back to Congress to seek justice after a federal audit questioned the criteria used to terminate dealers, as well as the automakers’ claims the moves were necessary to help restore profits.

The report issued today said GM failed to apply the criteria uniformly. It also said cost savings were not the reason for the dealership closings, even though GM and Chrysler told Congress the terminations would speed recovery from their 2009 bankruptcies.

The report found that Chrysler, which made decisions on a case-by-case basis, followed the criteria for targeting dealers for termination. But it criticized Chrysler for not providing dealers with an appeals process. GM, however, did not follow this criteria.

Chrysler said that same month it was offering new franchises to 50 dealers who applied for arbitration, in addition to 36 previous offers or new agreements. Chrysler terminated 789 dealers in June of 2009 and said in January that 409 had applied for arbitration.

Chrysler, in a statement today, continued to defend the terminations, calling it “rightsizing” the dealer network.
“This optimized dealer network is already contributing to improved vehicle sales for Chrysler and will be a vital part of the Company’s success as we continue to deliver outstanding products to our customers,” the statement said.

Rightsizing…hmm. Regardless of the outcome, w hope that Chrysler sticks to their plan of reopening their dealerships, maybe all of them one day.

Source: Automotive News

How effective can this move be? So far the outcome is unclear, personally we don’t see too many of these dealers taking on the big dog and winning. As the dealerships are ordered to stop selling cars on June 9th, the pissed off dealerships are using the argument that laying them off with only three weeks notice is unethical.

Again, this will not be an easy sell – according to the Wall St. Journal: “Bankruptcy laws give the courts wide latitude for tearing up existing contracts like dealer licenses. A group of Chrysler creditors also formed a committee to fight a plan to slash its secured debt, but almost all have now relented and the committee has been disbanded.”

It’s available to view at The Huffington Post and also for download there. (Sorry, was having trouble uploading it to your server – darn you Wordpress!)