Dealers Protest Chrysler Closings, But Can Congress Help?

Last Updated Jul 27, 2009 12:58 PM EDT

Some Chrysler dealers continue to protest being cut off by Chrysler, but testimony before Congress shows that for some dealers, it may be too late to turn back the clock.

For instance, just about all of the unsold inventory of the 789 dealers that Chrysler terminated in May is already gone.

The terminated dealers had 42,000 vehicles in stock as of May 14, according to Louann Van Der Wiele, Chrysler vice president and associate general counsel.

She told the House Judiciary Subcommittee on Commercial and Administrative Law on July 22 that 39,500 units have already been sold to customers or transferred to dealers that Chrysler kept. The remaining 2,500 units were to be transferred to other dealers by July 24, she said.

Other than that detail, Chrysler's testimony before Congress stuck closely to the script Chrysler has followed for months: that Chrysler was achieving its restructuring goals on its own, until the recession hit last year; that ultimately Chrysler had to seek a partner, specifically Fiat; that Chrysler based its 789 dealer terminations on objective criteria that should have been clear to the dealers; that as much as bankruptcy hurts, liquidation would have been worse.

It's difficult to see how Congress could put things back the way they were.

Nevertheless, some dealers are determined at least to force Chrysler to give some justification for individual terminations.

"In fact, it seems closure was decided based on personality and relationships, not performance," said Jim Tarbox, the owner of Tarbox Motors, North Kingstown, R.I. Tarbox, who owned two dealerships, one in Rhode Island and one in Massachusetts, said Chrysler terminated him not based on performance, but because he had run-ins with Chrysler before. He said he successfully sued the company, citing state franchise laws, when Chrysler tried to install a competing dealer nearby.

"In my case, my businesses will go bankrupt and I may have to go bankrupt personally as well. There is no fall back plan â€" this dealership was my plan. It is my livelihood. As dealers, our property rights have been violated," Tarbox said in written testimony.