Chrysler Halts Franchise Awards in Rejected Dealers' Backyards

WASHINGTON - Chrysler Group, after congressional pressure and complaints from rejected dealers, said it will stop awarding new franchises temporarily in the markets of closed dealerships that are pursuing arbitration, Automotive News reported.

“Chrysler Group understands that the practice at this time may be a cause of concern among policymakers and among arbitrating dealers,” the automaker said in a statement. “As a measure of good faith, Chrysler Group will not proceed with network actions that directly impact an arbitrating dealer until the arbitrator has had a chance to rule in that case.”

Chrysler said the only exception would be if the company is “contractually obligated” to award a new franchise.

Rep. Pete Hoekstra, R-Mich., and Steven LaTourette, R-Ohio, asked Chrysler this month to stop the practice. They said shuttered dealerships could win reinstatement from an arbitrator but be prevented from reopening because a new franchise already had been awarded in that market.

Some rejected dealers also have complained about Chrysler's new franchise awards in recent weeks.

The moratorium on new franchise awards is Chrysler's second in recent months.