- The Washington Times - Wednesday, December 16, 2009

Sam Darvish sold Chryslers for 24 years.

But when the company closed 789 dealers as part of its bankruptcy in June, Darcars Chrysler of Fairfax, Va., where he is general manager, could no longer sell new Chryslers and Jeeps. The only thing left to do was to string up a plastic sheet saying simply “Darcars” and to try to make a go of it selling only used cars.

Now he’s looking forward to the chance to sell Chryslers again.

Terminated Chrysler and General Motors dealers would win the hard-fought right to challenge their franchise rejections through binding arbitration under a provision of the federal government’s omnibus funding bill that President Obama is expected to sign into law soon.

“We are surviving, but you know, we want the franchise back,” Mr. Darvish said. “A heck of a lot of customers” are upset at losing the Chrysler dealership. “We’ve been here so long, we have been a Five Star dealer for customer satisfaction. Those customers feel very bad.”

Under the bill, dealers can make their case face to face with the automakers and have the merits of their case for staying open heard by a panel of three independent arbitrators appointed by the American Arbitration Association.

Rather than the narrower set of criteria the automakers had proposed for arbitration, the bill allows dealers to bring any relevant information they want to the table, such as money invested in facilities and inventory, said Rep. Chris Van Hollen, a Maryland Democrat and House leader who has been deeply involved in the issue.

Dealer advocates don’t know how many in the Washington area will pursue arbitration. They said that up to 500 franchises nationwide could be restored, although other estimates are far lower.

However, hundreds of Chrysler dealers that have gone out of business won’t be helped by the legislation because they would need to prove they have access to credit to fill their lots.

So far, GM has notified 1,300 dealers that their franchises will be wound down by the end of October. Those dealers have the benefit of staying in business while appealing their franchise rejections if they choose.

Auto dealers felt that the franchise terminations were arbitrary and unfair - and bad business for the automakers. If they couldn’t be reopened, they wanted compensation for their lost business.

Automakers and the Obama administration - which led them through an extraordinary pair of bankruptcy proceedings - argued that shedding dealers was essential to the companies’ economic viability.

The heads of GM and Chrysler testified to Congress that they could save $2 billion by closing the dealers - though former Chrysler President Jim Press has since reversed himself and said closing stores hurts sales.

The manufacturers also said only underperforming dealerships were closed, but dealers disputed that.

The government had sunk $81 billion into the auto bailouts and said it did not intend to spend any more, such as on compensation for closed dealers.

Dealers rallied behind the newly formed Committee to Restore Dealer Rights, a nationwide lobbying group led by two of the Washington area’s largest dealers, Tammy Darvish, president of Darcars Automotive Group of Silver Spring, Md., and cousin of Sam Darvish, and Jack Fitzgerald, owner of the Fitzgerald Auto Malls in Bethesda, Md.

The two gained the ear of the Maryland U.S. House delegation, led by House Majority Leader Steny H. Hoyer and Mr. Van Hollen, which this summer won passage of a bill seeking the restoration of all franchises.

With prospects dimmer in the Senate, the House leaders and a bipartisan group of congressmen and senators including freshman Rep. Frank Kratovil Jr., Maryland Democrat, encouraged a negotiated solution.

The talks, which sometimes included administration representatives, dragged on for months. The Committee to Restore Dealer Rights dropped its demand for full restoration and settled on binding arbitration for all affected dealers.

As the two sides haggled over the criteria for arbitration, automakers pulled the plug on the moribund talks Dec. 4.

That, dealer advocates and congressional observers say, was the best thing for the dealers that GM and Chrysler could have done.

“That’s what precipitated Congress to really take a look at this, when GM and Chrysler announced they were going to call the talks off,” Ms. Darvish said. “I think they thought when they pulled out it would be over.”

Darcars will seek to have all three of its rejected franchises restored, she said, including the one run by her cousin Sam. Mr. Fitzgerald wants 11 franchises back.

“This unilateral withdrawal from the talks after they had not offered anything at all convinced [the House leadership that] the manufacturers weren’t interested in doing the right thing,” Mr. Fitzgerald said.

Mr. Van Hollen praised the dealers’ grass-roots lobbying effort and said the manufacturers seemed inflexible.

“They didn’t go far enough. Their latest proposal fell short of what we felt was a fair compromise. The fact that they broke off negotiations meant that we had to pursue legislation,” he told The Washington Times on Tuesday.

“The end result is one that ensures that everyone will have a fair hearing. It’s hard to see how the manufacturers can complain.”

GM spokesman Greg Martin said in an e-mailed statement that the company would work toward a fair resolution. He offered no comment on the legislation or the negotiations.

“GM values its dealer body and recognizes the contributions they are making to the future viability of the company, the critical role they play in satisfying customers and their importance to communities across the country,” he said.

A Chrysler spokeswoman did not return a call seeking comment.

Mr. Van Hollen said the published comments in recent months of Mr. Press, the former Chrysler president, were influential.

“He argued that [closing dealers] was a cost savings. Now that he’s no longer with Chrysler, he’s made a number of public statements indicating that he did not think it was a smart move for the manufacturers to shut down so many of their distributors,” Mr. Van Hollen said.

In fact, Mr. Press testified to Congress that closing stores was “absolutely necessary” for Chrysler, while in private he was opposed the terminations and their terms and echoed the dealers’s argument that fewer stores would hurt sales, according to a report in AutoNews, a trade publication.

Amid differences with a Democratic Congress, Mr. Obama might have been reluctant to sign the dealer provision into law, but he is expected to sign it as part of the larger funding bill, Mr. Van Hollen said.

“They’re not going to fight it,” he said.

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