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Lawmakers to GM, Chrysler: No New Stores in Disenfranchised Markets

March 05, 2010

WASHINGTON — United States Congressmen Pete Hoekstra of Michigan and Steven LaTourette of Ohio have sent a strongly worded letter to General Motors Corp. Chairman Ed Whitacre and Chrysler LLC CEO Sergio Marchionne, asking the OEM heads to halt new franchises in markets where formerly franchised dealers are awaiting reinstatement hearings.

"It has come to our attention that closed dealerships, who have filed for arbitration and are awaiting a hearing, have had new franchises awarded ... in their market area to other dealers," the letter stated, in part. "It is clear this action attempts to avoid the intent of the law and that [the manufacturers] may not be entering the arbitration process with an open mind."

The arbitration process in question was established by the Consolidated Appropriation Act for Fiscal Year 2010. Signed into law by President Obama in December, the act was designed to offer disenfranchised dealers the opportunity to win back their agreements. Hoekstra and LaTourette want the manufacturers to see that process through before naming any new franchisees.

"A closed dealership could be reinstated by an independent arbiter based upon the criteria of the law," they wrote. "However, in many cases, the closed dealer would be prevented from reopening because of the establishment of a new franchise in the market area."

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