CarSeekBlog

Automotive News is reporting on the latest snafu with the retail auto industry: an arbitration process for dealers to be reinstated. On the surface it sounds like a great idea – after all, there were hundreds of car dealerships forced to close as the automakers that supplied them declared bankruptcy.

The problem is that – so far – more than 1,500 car dealerships have said they intend to seek reinstatement through arbitration – and that number is three times the number expected by the American Arbitration Association, the organization tasked with overseeing the program.

While the association says everything is under control, and is planning ways to streamline the process, it’s likely that there will be clogs in states with high numbers of filings, like Ohio, Illinois, and Pennsylvania.

Attorneys representing dealers, many of whom have worked with the arbitration association on other cases, have much greater concern.

Mike Charapp, an attorney in McLean, VA, who represents more than twenty arbitration clients told reporters, “You’re going to be putting lots of cases through very small pipelines in a compressed time period. I’m concerned there could be delays and roadblocks.”

Charapp, who acts as a consultant to state dealer groups, also said that he’s worried there may not be enough case managers to process the number of intended filings, or enough arbitrators in each state to actually decide each case. In an interview, he said that he’d recently file two arbitration notices, and had still not received case numbers for them eight days later.

“Quite clearly, they’re struggling with processing at headquarters,” he said. “I am concerned that AAA does not have a real appreciation for the seriousness of these cases.”

But other lawyers are not having the same issues. Attorney Leonard Bellavia of Mineola, NY, who has also served as an arbitrator, said the association sent him a spreadsheet with all the necessary information for the 38 notices he’d filed. On the other hand, lawyer Leonard Bellavia said the association sent him a spreadsheet with all relevant filing information in response to the 38 arbitration notices he filed for clients.

“I was impressed,” Bellavia said. “I think AAA will administer these cases without a hitch. They run their operation like a business.”

The arbitration association was charged with the task of overseeing reinstatement cases in a law signed by President Obama last December. By the January 25 deadline, over half of the 2,789 eligible dealerships had given notice of their intent to seek reinstatement. Included among them are 409 of the 789 Chrysler showrooms that were forced to close.

Industry analysts are comparing the overwhelming response to this program to last year’s cash for clunkers plan, which gave rebates to customers who traded in used cars for new, more fuel-efficient vehicles.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100201/RETAIL07/302019921/1400#ixzz0eGHgQz4v

Filed under: Buying Trends, Economy, In the News by Mel