Chrysler, Dealerships Resolve Spat

Chrysler Group LLC said North Carolina has dropped a statute giving closed-down car dealers the right to hold their inventory rather than sell their vehicles to dealerships that remain open.

The change comes as three Florida dealers are preparing to plead their cases in separate arbitration hearings Tuesday. The dealers want the chance to rejoin the auto maker's network.

Chrysler closed 789 dealerships last year as part of its bankruptcy and agreement to merge its assets with Fiat SpA. The move—backed by the Obama administration—set off a state and federal backlash after dealers expressed outrage to their representatives and legislators.

North Carolina, along with Illinois, Maine and Oregon, enacted statutes in an attempt to override the bankruptcy laws giving the remaining dealers the opportunity to buy vehicles and brands from the closed dealers. Federal legislators also mandated Chrysler allow its closed dealers a chance to rejoin the network through arbitration.

Chrysler sued North Carolina, Maine, Illinois and Oregon arguing that the statutes interfered with the bankruptcy court sale process and federal law.

The state law said the closed dealers could release their inventory only if Chrysler paid the dealer the value of their former dealerships or filed an action showing the dealers were unfit.

"Chrysler Group is pleased to reach an amicable resolution to our issues," the company said Monday. "Such state dealer laws grant rejected dealers specific statutory rights previously afforded only to existing dealers, and are preempted in accordance with the bankruptcy court's prior rulings."