GM to get tough with dealers during bankruptcy
General Motors is going to right-size its dealer body as part of its bankruptcy, and the Detroit automaker is going to ask plenty of dealers that make the cut to remain with the "new" GM. The General has already announced that 1,124 dealerships wouldn't be renewed in October 2010, and another 200 franchises will receive similar notices this week.
GM VP Mark LaNeve told Automotive News that the remaining GM retail outlets would need to sign a participation agreement to stay off the endangered species list. The agreement will guarantee that the dealers will make required facility upgrades and reach customer satisfaction objectives. Surviving dealers will also need to remove all non-GM vehicles from the showroom. If the dealers refuse to sign the participation agreement by a mid-June deadline, they will be cast into the "old GM" bin, and the dealerships will be terminated in a manner similar to the 789 Chrysler dealers that will cease to exist on June 9.
The 1,324 dealers that are scheduled to go away in 17 months will also need to sign an agreement to avert an early closure. The "wind down" agreement will enable the dealerships to receive money from GM for inventory for unused inventory and leftover parts and signage. In return, the dealers will not be able to sue the General. Some dealers will even be paid up front for their loss, while others will receive money closer to October 2010. Dealers that refuse to sign the wind down agreement will lose their franchise soon after the mid-June deadline.
[Source: Automotive News - Sub. Req. | Image Source: Mark Ralston/Getty]
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Reader Comments (Page 1 of 2)
Avinash machado 9:40AM (6/03/2009)
Guess GM wants to avoid Oldsmobile part two.
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Tool 1:37PM (6/03/2009)
Probably a good thing to avoid Oldsmobile, Part Deux.
GM (and all OEMs) are hamstrung by state franchise laws that make it very difficult to fire a dealer. These are ridiculous laws and have been part of the problem for a very long time. Yes you can blame GM Management for a lot of piss poor decision making, but it is also the operating environment that prevents them from taking the necessary actions to fix the company.
SimbaDogg 5:01PM (6/03/2009)
i've never been to anything but a honda dealer in my life (the browsing the lots @ ford n' toyota dont count), but are you kidding me that some GM dealers have NON GM cars in the SHOWROOMS. i always thought the showrooms of any dealer were sacred space, reserved for the "good stuff"
John P. 9:44AM (6/03/2009)
I know it's a cost saving measure and an image/branding thing, but I think many small rural towns are going to be left without their local GM dealer. Some of which have been around for generations. People will be left to travel tons of miles for warranty work, etc,...
Kinda sad really.
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FousString85 9:48AM (6/03/2009)
I wouldn't jump to that conclusion right away. From the many stories I've read location seems to be a large deciding factor. Meaning they will eliminate or combine 2 of the 3 GM dealers within 2 miles of each other for example.
But we'll have to wait and see I guess.
John P. 9:53AM (6/03/2009)
I sure hope you're right about that, but I don't know if the volume some of these mom and pop dealerships have can afford the showroom upgrades,... etc,.. I mean, I've seen dealers with 5 or 6 cars total on the lot, and I don't find anything wrong with that if it serves their customer base well.
Personally I'd rather them spend the money of service than a fancy showroom in these particular cases. City dealerships, of course they should look great, at least as good as the Toyota/Honda/Nissan dealers across the street.
Like you said, I guess we'll see soon enough. :)
Chadman1990 1:18PM (7/21/2009)
What are you talking about warrenty work. It a GM product!
zamafir 10:56AM (6/03/2009)
Why? Why is it sad to have to drive 10 or 20 miles? GM can't support a dealer every 3 miles, that sort of antiquated retail model is part of the reason they are where they are now. It's not the 50's any longer, GM doesn't need a half dozen dealers on every corner to squeeze other automakers out of te market.
Pat 11:11AM (6/03/2009)
Sad indeed ... but every other business has done the same to small towns. The only thing left in these places are local stores and second-class chains, and Subways.
Most of these stores don't cut it compared to National stores and most people are already used to heading out of town.
AngeloD 12:09PM (6/03/2009)
""Sad indeed ... but every other business has done the same to small towns. The only thing left in these places are local stores and second-class chains, and Subways.
""
Not so. Sam Walton built Wal-Mart by locating stores initially in towns as small as 20,000.
egs 9:45AM (6/03/2009)
more layoffs coming. this sort of "delayed gratification" will linger the US into a depression
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WilliamTell 9:48AM (6/03/2009)
wasn't their a story just yesterday stating GM would offer dealers $1M to close? I'd take the money and run.
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Sgt. Hulka 9:59AM (6/03/2009)
But don't forget about the government perks and benefits!
Cushy pensions, complete health coverage. dWho's want to work the private sector after working for the Feds?
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tomguptill 11:03AM (6/03/2009)
To be honest, I'd say pretty much everyone whose ever worked for the feds.
BigWill 10:01AM (6/03/2009)
For some reason I already know what decision my local Hyundai-Buick dealer is going to make. Particularly after just having Pontiac and GMC crammed down their throat, then having Pontiac killed.
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Steve Lopez 10:03AM (6/03/2009)
GM must do this correctly. A lot of these dealership were selling their vehicles.
GM has to remember this when downsizing. There are a lot of Americans who still like their products and if the lose them, it's good bye GM!!!
Stop being the tough guy. There won't be anyone left to bully.
It better start making good cars or Ford and the rest of the competition will take over.
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Smegley 10:17AM (6/03/2009)
It's already goodbye to GM for me. They sold their soul to the federal devil and the devil himself is calling the shots. All GM vehicles are off my list of consideration for my purchase next year. 6 months ago 3 GM vehicles were in the top 5. Since DC and the UAW own it, there is no way I will ever support it ... voluntarily (I'm sure lawmakers are working to make it compulsory).
skicat 11:19AM (6/03/2009)
Smeg, yr logic is about is brilliant as a box of hammers. If you've ever bought Japanese, you bought a government subsidized vehicle. You also probably bought it because you thought it was better (quality, looks, utility, etc.) than anything the domestics offered. So now that GM is making the best vehicles, by any measure, that they have ever made, you're going to stand on id*ot ideology and buy something else. Serving to both undermine a U.S. company, a U.S. industry and your fellow Americans. As an added bonus, you'll help make sure the taxes that the government has loaned G.M. never get paid back – which, if you are a taxpayer, is like shooting yrself in the foot!. All because u have them ee-vile unions and the gummint. You kill me.
dave1w41 10:12AM (6/03/2009)
Good news. GM's biggest liability is their underperforming dealers that have serially disappointed customers. I hope the new GM has a sales and service agreement with some teeth in it so that they can make these people toe the line.
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hyundaifans.com 10:20AM (6/03/2009)
I wonder if you trade in another make to buy a GM car, must the dealer hide your trade in somewhere out back until it is sold to someone else? Looks like it can't be in the "Showroom" but is the parking lot of the dealership okay or must it not be visible at all?
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