Tarbox settles dispute with Chrysler over shuttered dealerships

Jim Tarbox’s fight against Chrysler Group LLC is over.
After more than a year of battling a decision by the once-bankrupt carmaker to close his two dealerships as part of its national restructuring, Tarbox confirmed last week that he has agreed to accept a financial settlement ending the dispute.
Both Tarbox and Chrysler said they were barred from talking about the specifics of the settlement, which was reached just days before Tarbox was due to appear before an independent arbitrator in June to argue that his franchise licenses should be returned to him.
Tarbox, who has seethed with anger for months over what he says was unfair treatment, said the final outcome came down to a business decision.
“I wanted to win for spite,” Tarbox told Providence Business News last week. “But their number [to settle] kept going up significantly because they knew I was going to win.”
Adding to the pressure on Tarbox to end the dispute before arbitration: He had heard from other dealers who had prevailed in the hearings that Chrysler was raising its requirements for restored franchises, calling for more capital reserves and expensive amenities such as a café and building additions.
Still grappling with millions in debt from the two closed dealerships, Tarbox said it would have been impossible to finance the improvements to his property in North Kingstown, where he now runs Tarbox Motors Inc., a used-car lot.
Although he couldn’t talk about the specifics, he said the settlement doesn’t get him fully out of his financial hole. He still owes more than $2 million in business loans, mostly related to buying a Chrysler dealership in Attleboro three years ago.
In fact, Tarbox said he’s in negotiations to open a new dealership affiliated with a foreign carmaker he declined to identify.
Since receiving notice in May 2009 that his dealerships were on the chopping block, Tarbox has argued that he was wronged, that his dealership in North Kingstown was one of the highest-volume Jeep sellers in the region.
He suspected the closures were in retaliation for Tarbox’s objections to Chrysler’s efforts to add a Jeep franchise to a nearby dealership. It’s a charge that Chrysler denied, saying it was interested, among other things, in keeping dealerships that sold Chrysler, Dodge and Jeep “under one roof.” Tarbox also pointed to the report in July from an auditor of the federal Troubled Asset Relief Program that criticized the Obama administration’s handling of Chrysler and General Motors dealership closings last year.
The report concluded that a decision by the U.S. Treasury’s auto task force to favor accelerated closures instead of a gradual plan added to job losses in an already tough economy.
Under a federal law enacted in December, GM and Chrysler were required to offer an independent review of those closed franchises, with an arbitrator deciding on a case-by-case basis whether to overturn the carmaker’s decisions.
Of the 789 Chrysler dealers closed last year, 418 applied for arbitration, the company said.
The process, completed late last month, led to the reinstatement of 32 dealers, while Chrysler prevailed in another 76 cases. The remaining cases were settled, dismissed, withdrawn or abandoned.
When he learned about the costly improvements Chrysler was requiring of reinstated dealers, Tarbox persuaded state Sen. James C. Sheehan, D-North Kingstown, to sponsor legislation that would have required Chrysler and GM to offer sales and service agreements to reinstated dealerships under their previous terms.
The new terms were “so far beyond attainment that it was apparent they were doing everything to prevent you from getting back into the business,” Tarbox said.
The measure, approved by the Senate, died in the House Finance Committee.
Mike Palese, a Chrysler spokesman, said the new amenity and capital requirements were not aimed solely at reinstated franchises.
About 20 dealerships that have been added to the Chrysler network since last year have also opened under the new terms because the carmaker is a new company after exiting government-assisted bankruptcy.
Tarbox is convinced he would have won in arbitration, but he said he would have spent much more time and money fighting in court the new, more rigorous requirements.
Instead, Tarbox chose to take the settlement.
“It’s been a struggle,” Tarbox said. “But I’m still here.” •