Second chance near for GM, Chrysler dealers

Washington -- House and Senate leaders finalized language Tuesday that gives more than 2,000 General Motors and Chrysler dealers a process to fight their closings.

Leaders expect to vote on the measure, which provides broad grounds for challenging the closures, as part of a spending bill as early as Thursday. The measure was brokered by House Majority Leader Steny Hoyer, D-Md., and Sen. Dick Durbin, D-Ill.

Last week, General Motors Co. and Chrysler Group LLC offered a deal that included a much narrower appeal process that would look only at whether the automakers followed their own criteria for dealer closings. Chrysler closed 789 dealers in June, while GM plans to close at least 1,350 by October 2010. Automakers have threatened to withdraw the proposed deals if Congress approves legislation. Dealers say they can't get a fair shake under the automakers' terms.

The Durbin-Hoyer language expands the binding arbitration offer by requiring an arbitrator to balance the economic interests of the terminated dealership, the company and the general public when considering reinstatement.

"Closed dealerships across the country deserve a transparent review of their termination and the right to get back in business if they were terminated on faulty grounds," Durbin said. "GM and Chrysler have the right to determine the size and scope of their business. But Congress has a responsibility to protect taxpayer's money when addressing the future of companies like GM and Chrysler."

Hoyer said the automakers must have transparency to avoid "possibly unfair reasons" for a dealership closing.

Dealers would have 45 days to seek binding arbitration and an arbiter would have six months to issue a decision.

"The arbitrator shall balance the economic interest of the covered dealership, the economic interest of the covered manufacturer, and the economic interest of the public ...," the language says.

Other factors would include dealers' profitability in 2006-09, the automaker's overall business plan and the dealer's "current economic viability" and its performance and customer satisfaction ratings. It also requires an arbitrator to consider local conditions that have contributed to poor dealership performance like local economic conditions.

GM declined to say if it would fight the proposal but vowed to work with Congress and dealers "on a resolution that balances the interests of GM and its dealers," GM spokesman Greg Martin said.

Chrysler said it was working with Congress to reach a deal.

"We agree with Congress that arbitration is the best way to resolve the issues involving discontinued dealers," Chrysler said.

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