agent Entrepreneur logo
MenuMENU
SearchSEARCH

Chrysler Offered Settlements Below $100k to Terminated Dealerships

August 12, 2010
3 min to read


WASHINGTON - Chrysler sought to cut expenses by paying an average settlement of “significantly below” $100,000 to terminated dealerships that filed arbitration claims, a company spokesman said in an e-mailed statement reported on by Automotive News.


The statement by Chrysler spokesman Michael Palese sought to correct a report in The New York Times last week that said the company’s settlements averaged about $500,000, citing “people with direct knowledge of the terms.”

Ad Loading...


Chrysler settled 151 of the 418 arbitration claims filed by dealerships closed as part of the company’s bankruptcy proceeding last year. “Many” of these settlements involved cash payments, Palese said.


“It makes good business sense anytime we can settle a case for an amount significantly below the cost of litigation,” he said in an e-mail today. “This enables Chrysler to focus more resources into what’s truly important -- developing outstanding products.”


The figures would put Chrysler’s overall costs for settlement payments at “significantly below” $15 million. Palese declined to be more specific.


Dealer lawyers said Chrysler started making settlement offers in April, usually for $25,000.


Those offers increased somewhat as the arbitration process continued through July, though they never approached the typical size of General Motors’ offers, the lawyers said.

Ad Loading...


GM spokeswoman Ryndee Carney declined to disclose the company’s average settlement or total settlement payments.


Dealer lawyers said the differing settlement payments by the two companies, as well as what they described as GM’s more respectful overall treatment of arbitrating dealers, would have an impact going forward.


GM “was willing to settle for an amount more closely aligned with the value of the franchise being taken from the dealer,” said lawyer Richard Sox of Tallahassee, Fla., whose Bass Sox Mercer firm represented both Chrysler and GM dealerships.


He added: “Although both sets of dealers are approaching the relationship cautiously, our Chrysler dealers are much more wary of expending capital on their franchises as compared to our GM dealers.”


Chrysler’s Palese said the company’s dealers “are already enjoying increased profitability and are making significant investments in their dealerships.”

Ad Loading...


These investments are “on track with” the $500 million investment objective in Chrysler’s November business plan, he said.


Dealer lawyers said GM commonly offered settlements of two to three times the wind-down money it paid to dealerships to close by October.


Dealerships received as much as $1 million in wind-down money depending on their size, Jim Bunnell, GM’s general manager of dealer network support, said earlier this year.


That would mean some rejected GM dealerships received as much as $2 million in settlement payments, an amount consistent with reports by dealer lawyers.


GM reached individual “resolutions” with 408 of its 1,176 arbitrating dealerships. Most of these resolutions led to the store winding down in October, as originally planned. Carney declined to say how many of these resolutions involved settlement payments.

More Industry

Blue and white RV parked on beach facing the ocean.
Industryby Lauren LawrenceSeptember 3, 2026

RV Group Expands Carolina Footprint

Blue Compass RV Columbia Northeast is the 13th RV dealership owned by Blue Compass in the Carolinas.

Read More →
Photo of two men and one woman on a discussion panel
Industryby Hannah MitchellSeptember 1, 2026

Agent Acumen

An Agent Summit panel of people who’ve been supporting auto dealers for years gave both timely and timeless advice for those starting out or mulling the prospect.

Read More →
Gloved hand holding two wrenches next to “Turn Overdue into Opportunity” Graphic
Industryby Lauren LawrenceAugust 27, 2026

Missed Maintenance Creates Opportunity

As families get back on the road and into daily school routines, service drives have an opportunity to capture customers who are behind on recommended vehicle maintenance.

Read More →
Ad Loading...
Mitsubishi shadow line-up
Industryby Hannah MitchellAugust 25, 2026

Mitsubishi Unveils U.S. Plan

The automaker announced a strategy that includes an expanded lineup and dealership presence, along with more ‘rugged’ and electric models.

Read More →
Photo of a laptop, cellphone and eyeglasses on a desk next to an office window
IndustryAugust 24, 2026

Selling to Grow

The question of whether you should sell your agency and if so, when, is up to you. But it’s a question worth asking to ensure you keep the business on the right path for yourself, employees and clients.

Read More →
Mechanic holding a vehicle diagnostic device while standing above an open car hood
Industryby Hannah MitchellAugust 24, 2026

Recalled Vehicles Hit 5-Year High

Though the number of events has fallen so far this year, impacted units are up significantly. Meanwhile, regulators consider consumer notification changes.

Read More →
Ad Loading...
outside of car dealership with cars parked in front
Industryby Lauren LawrenceAugust 20, 2026

Auto Group Acquires Top-Performing Rooftop

Car Pros sold its Kia Huntington Beach location to Sutherlin Automotive Group, marking the buyer’s third location in Southern California.

Read More →
Cars from the rear on a Shanghai freeway
Industryby Hannah MitchellAugust 19, 2026

China as Pacesetter

Automotive leaders huddled on where North America stands in the global picture and how it can strengthen its position against the Asian juggernaut’s surging industry.

Read More →
Orange BMW car on empty road.
Industryby Hannah MitchellAugust 14, 2026

BMW Concept Car Makes Fuel to Burn

The prototype developed in concert with a South Carolina university engineering team generates more solar energy than it uses in a typical daily commute.

Read More →
Ad Loading...
Six men standing for photo outside of car dealership
Industryby Lauren LawrenceAugust 13, 2026

South Carolina Auto Group Downsizes

Florida-based group Holler-Classic has acquired four rooftops, its first in South Carolina, from Dick Smith Automotive Group.

Read More →
Ad Loading...