Eagle fears Chrysler “demands”

07/08/2010 12:00 AM |

A week after learning he was one of only 15 Chrysler dealers in the country who were given back their Chrysler Jeep franchise by a federal arbitrator, Eagle Auto Mall owner Mark Calisi is sensing foul play.

Mr. Calisi and Congressman Tim Bishop (D-Southampton) held a press conference Tuesday “calling on Chrysler to stop dragging out the process” of restoring the franchise to the Riverhead dealer.

Eagle Auto Mall on Route 58 was one of 789 car dealers nationwide that lost their Chrysler franchises as part of the automaker’s bankruptcy process last year.

But since the U.S. government now owns 10 percent of Chrysler, Congress interceded and set up a binding arbitration system by which dealers could appeal. Eagle was one of only 15 that were awarded back their franchise. (The United Auto Workers and Fiat also now have ownership interest in Chrysler.)

But Mr. Calisi says a letter of intent sent by Chrysler to the successful dealers includes about 15 “onerous” conditions that are very difficult to meet and could end up being grounds for revoking the franchise. These conditions include demands that dealers build a new building and give Chrysler site control for the next 30 years and a stipulation that if anyone, even a competing dealer, contests the franchise restoration, Chrysler can withdraw the letter of intent, Mr. Calisi said.

Mr. Calisi said Chrysler is requiring that the new building be started in 90 days, which he says is impossible, since town and other approvals processes would determine how soon construction can start.

“I don’t know anywhere in the country where you can get a permit in 90 days,” Mr. Calisi said. “We knew they were going to be difficult and we’re up for the fight.”

“And I’m signing on for the fight also, because this is not what Congress had in mind,” Mr. Bishop added.

Mr. Calisi said that when General Motors restored franchises it had cut in bankruptcy, it simply restored them without conditions.

“Chrysler exists in part because of the generosity of the taxpayer, and now, because the decision didn’t go their way, they are trying to thwart the process through other means,” Mr. Bishop said. “Chrysler is basically wanting to have their cake and eat it too. They want the taxpayers support to keep them alive, but they want to set their own terms and conditions.”

The letter of intent seems to be similar to ones sent by Chrysler to other dealers across the country who are seeking their franchise back, Mr. Calisi said.

Chrysler spokesman Michael Palese responded that Chrysler “is complying with the federal statute by issuing a customary and usual Letter of Intent to dealers who prevailed in arbitration and is looking forward to discussions with these dealers. These discussions are — and will remain — private business matters.

“We invite the prevailing dealers to engage in thoughtful and constructive discussions with us about the future, not to pursue trial by media.”

Mr. Palese added, “While difficult, the actions to reduce Chrysler’s dealer network were a necessary part of its viability and central to the interim financing and proposed sale to Fiat. Among the requirements placed on Chrysler was to reduce its dealer network by 25 percent. As such, on June 9, 2009, Bankruptcy Court Judge Arthur Gonzalez approved Chrysler’s motion to ‘reject’ the contracts of 789 dealers. In its approval, the court concluded the company used sound business judgment, and affirmed the rationale used by the company to determine which dealers were affected.”

[email protected]