• Dec 4, 2009
Back in May, General Motors announced plans to close down a large portion of its dealership network. Since then, a number of those franchisees have lodged complaints to both the automaker itself and appropriate policymakers, leading to possible legislation on how GM is allowed to handle the closing of dealerships. This being the case, The General is proactively drafting a new set of rules as to how it will deal with these to-be-shuttered dealerships, and it promises that some are likely to be reinstated after the process.

Specific details can be seen in the press release pasted after the break, but it seems that the new plan basically will allow these affected dealerships to get some real-life face time with the automaker to hear exactly whey they were targeted for closure. If the dealer still isn't happy with the outcome, it can elect to enter binding arbitration. If that arbiter finds that GM chose to shutter the dealership for anything other than sound business reasons, the franchise stands to be reinstated.

There's plenty more detailed in the plan, including a provision for GM to help service technicians and dealership employees find new placement, after the break. This plan will go into effect by mid-January "provided that legislation related to GM's dealer restructuring does not move forward."

[Source: General Motors | Image: Justin Sullivan/Getty Images]

PRESS RELEASE

GM Announces Comprehensive Plan to Address Dealer Concerns


Today, GM is announcing that it is prepared to implement a comprehensive plan that both resolves concerns raised by dealers regarding GM's dealer network restructuring activities and allows it to continue to move forward with a critical component of its long-term viability plan.

GM will begin to implement this plan in mid-January provided that legislation related to GM's dealer restructuring does not move forward. GM's plan offers a more certain and timely process and the appropriate alternative to address dealer concerns especially compared to proposed legislation that would raise a variety of legal and constitutional concerns. The GM plan, the result of several months of discussion and constructive engagement among dealer groups and Members of Congress, provides complete transparency, face-to-face reviews and binding arbitration, which together, will likely result in some dealers being reinstated.

"GM especially appreciates the leadership of Senator Durbin and House Majority Leader Hoyer and the contribution of other Congressional members. Their tireless efforts to facilitate the discussion among all parties to achieve a non-legislative resolution to address dealer concerns were critical to the development of GM's comprehensive plan," said Susan Docherty, GM Vice President, U.S. Sales.

"GM values its dealer body and recognizes the contributions they are making to the future viability of the company, the critical role they play in satisfying customers and their importance to communities across the country. We are prepared to implement this plan so GM and its dealers can channel our full focus on building and selling exceptional cars and trucks with the consumer experience to match," Docherty said.

"I would also like to thank the National Association of Minority Automobile Dealers (NAMAD) for their commitment to work through some very difficult and complicated issues involving GM's dealer network," Docherty said.

GM's plan includes:

* A commitment to advise all Chevrolet, Buick, GMC and Cadillac dealerships that received a complete wind-down agreement of the criteria used by GM in the selection of that dealership for wind-down.
* A face-to-face review process for all complete wind-down dealers who have not already terminated their dealer sales and service agreements with GM.
* If the complete wind-down dealer is not satisfied with the outcome of the face-to-face review process, he or she may elect to proceed to binding arbitration. The arbitration will expressly be limited to whether GM selected the dealer to receive the wind-down agreement on the basis of its business criteria.

Additional components include:

* Accelerated wind-down payments to dealers consistent with the terms of their wind-down agreements.
* A process to resolve open issues identified by dealers related to the operation of wind-down dealers.
* Agreement to support public policy issues of mutual interest identified by dealers.
* Agreement to work with appropriate policy makers regarding floor-plan and other financing issues that are important to dealers.
* Additional evaluation in limited circumstances for complete wind-down dealers who purchased stock, land or dealerships from GM in the last four years.
* Reaffirmation of GM's long-standing commitment to try to increase the diversity of its dealer body.
* In the limited circumstances where there are dealer re-establishments, area wind-down dealers will be given the opportunity to submit a proposal.
* Market reevaluation to ensure GM has sufficient dealer representation across the country.
* Placement assistance for service technicians and other dealership employees
.


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    • 1 Second Ago
  • 22 Comments
      • 5 Years Ago
      The shame is the fact that the average guy has no understanding of the business and basically a deep dislike of car dealers in general. Had the Government aided and abetted the closure of more than 3,000 small businesses in some other field without any remuneration, the public would be more than outraged.

      I was 150% effective(sold 50% more cars than the factory felt I should) and have all the trophies as the best Customer Satisfaction dealer in my area. I lost $100,000 selling the remaining inventory, sold $200,000 worth of special tools for 10 grand, wrote off $75,000 in parts, and I am stuck with a five year old $750,000 remodel to the showroom. All because some MBA in Detroit who has never sold a car thinks there should not be downtown dealers in our area.

      Yeah, thats all fair....as long as it is SOMEONE else! Remember, GM management was the folks who required me to do all this to maintain my 20 year franchise and the same people who bankrupted the largest car company in the world. Obviously they have all the answers!
      • 5 Years Ago
      I don't get it. If you failed to do your job and you didn't sell the number of cars you are suppose to sell then you should lose your franchise it should be that simple. If you are a small franchise in a suburb then prove that you can sell more and then, and here's where it gets tricky... actually do it!
        matthew
        • 5 Years Ago
        Tool:

        That's the price we pay for letting looter bureaucrats run things.
        • 5 Years Ago
        The issue isn't of fairness or business, but "dealer rights".

        When it gets down to the brass tacks of straight dollars-and-cents business criteria, which is where GM's arbitrator is going to be advised, these guys are going to have to prove that they were competing with GM's best dealers, and that just won't be a likely case that the wind-down dealers will be able to persuasively make.

        There will be a process, but I expect GM to prevail 95% of the time.
        • 5 Years Ago
        Technically there are no dealer rights when GM canceled dealership agreements in the C11 proceedings. That was the point (or a point) of C11.

        GM needed to get rid of dealers and that was the process to do it.

        This whole re-addressing is complete BS. Purely political. Everyone is bitching because of the huge bailout of GM and wonder if taxpayers will ever get repaid. If Congress keeps meddling, there is no way GM can move forward.


      • 5 Years Ago
      With new brands like Mahindra coming in, maybe some of these dealerships could switch brands.
      • 5 Years Ago
      Waste of time and resources.

      Either tell those closed dealerships to keep walking, or institute a policy that they have to be X miles away from any other GM dealer, have to have X amount of money in the bank and are willing to spend X amount on advertising. That will keep only the very serious still in the running to re-open.

      One of GM's biggest problems was too many dealers that would under-cut each other and cheapen the brand. Maybe let some of them re-open, but keep their dealer-count low (and the typically higher transaction prices that go with that) is one of the ways back to profitability.

      matthew
      • 5 Years Ago
      It's amazing how much of the bailout money is being wasted, sending papers back and forth across the desks of idiots and arguing about irrelevant BS.
        • 5 Years Ago
        @matthew
        This is America, and we have more lawyers than we know what to do with.
      • 5 Years Ago
      The problem is GM has told some dealers to close. Now they are offering them (and their competitors) the opportunity to bid on the franchise they were told to close. Why? I thought the problem was too many dealers. If they were not doing a good job in the first place. Why would you offer them the opportunity to be a GM dealer again?

      Ford made over one billion dollars last quarter. How many dealers did they force out?

      • 5 Years Ago
      Maybe the dealers should consider other options or car lines.
      There is a dealer here in Michigan that just started selling KIA and in my town we don't have a Honda dealership and barely a half a$$ed Toyota dealership and no KIA either.
        • 5 Years Ago
        That's the right approach: find a niche or a need and fill it. Some brands are on an aggressive streak to sign up new dealers. Ally with them and do them proud. Everybody wins.

        Other brands are poorly served by the existing dealer. Compete with them, outdo them, and dominate. Everybody wins.

        This is basic business 101 stuff.
      • 5 Years Ago
      Jacad.......It's nice to be in the only business where people on the outside know more than the people on the inside. Can you imagine telling someone else about their business without spending one hour working in it? They don't know how stupid they are.

      I'm in a wind down store and this basically amounts to strong arm robbery. My dealer has been in business for over 30 years. More units sold, higher CSI, (than the guy across town) and he's being forced out.

      Jobs summitt.......what a joke!
      • 5 Years Ago
      Maybe the dealers should consider other options or car lines.
      There is a dealer here in Michigan that just started selling KIA and in my town we don't have a Honda dealership and barely a half assed Toyota dealership and no KIA either.
      • 5 Years Ago
      If GM says it may keep some of the dealers, even after the process...

      What sense does it make to run small business owners, the franchise holders, through the ringer of shutting them out, to then have to ramp them back up.

      This process reeked before. It still does.

      The decisions to close which dealers were made hastily, and back then, were even possibly politically motivated as more R-supporting owners lost franchises than D-supporting franchise holders were.

      The decision to close dealers was necessary. I don't really doubt that. But that vetting process of which dealers to close, and which ones to hold onto should have been much more competently handled, and much more closely scrutinized from a marketing, and economic perspective.

      Once that vetting process was done correctly, they would have been able to intelligently trim the network, and make the transition clean, and the closed franchises would know about it along the way, and have been able to plan for it, and possibly change over to another brand, or look out for the best interest of that particular small business, there on the ground.

      This was handled BADLY, on an EPIC scale. But then what about GM hasn't been about EPIC FAIL, or trying to skirt past an epic fail.
        • 5 Years Ago
        So, in other words, rumor and innuendo from people who lost their businesses is sufficient evidence that the process was political. Sorry, but using the word "possibly" is a pretty weak way of weaseling out of your statement. Car dealers are a heavily Republican demographic, so of course more of them were closed. So the right wing's persecution complex on this issue, as on so many others, is more delusional than real. It would be a bit like saying the lay-offs of social workers was "political" because more of them are Democrats than Republicans. No S**t, genius.
        • 5 Years Ago
        http://www.autoblog.com/2009/05/26/gm-and-chrysler-ceos-called-to-d-c-to-explain-dealer-closings/

        http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Furor-grows-over-partisan-car-dealer-closings-46261447.html

        http://www.usatoday.com/money/autos/2009-07-31-GM-dealers_N.htm "Some rural car dealerships say PR push saved them"


        AND...

        I said "possibly", I didn't portray it as established fact, because I don't know. But there was a lot of talk, and not just from the people you mentioned.

        Not only which dealers were closed, but also which dealers were protected, while their competition was closed in the near vicinity.

        Again, not established fact, but there was some talk about it not being above board.

        And there is more out there from the mainstream media, with just a simple web search. I could only post 3 urls here.
        • 5 Years Ago
        I haven't seen any proof, and by proof I don't mind some Rush/Beck/Savage/Drudge rant with no facts backing it up, that any closings were politically motivated. Most dealers are going to be republican leaning they are small business owners of course they are going to lean republican.
      • 5 Years Ago
      If some of you looked past Autoblog, you would see some of these dealerships stories.

      One is posting on GMI. They have been very successful for 30+ years, and just spent $3 million in 2003, renovating their facility. They were one of THE most successful Buick/GMC/Pontiac dealerships in the COUNTRY. Their customer satisfaction scores were great. Even with losing Pontiac, their business would be affected little, because they sold few Pontiacs (do fantastic with the others).

      Their crime............ being family owned. It would seem that they were given a notice, and a Mega dealer not far from them, with a run down store, and awful customer service scores, got to live.

      This is one of many stories. Many of them are from RURAL areas. You know, relatively small markets, far from any other GM dealerships. You know, markets that are loyal domestic buyers. GM, in their ultimate wisdom, looked at sales only........... and rural shops don't sell as much............ and gave many of them notices. As a matter of fact, over half of the notices given, were to rural dealerships. You know, the ones that may be 100's of mile from another GM store. I guess GM forgot that alot of dealerships, selling 50-100 cars a year, equals alot of cars.

      They are dumb enough to think that people will drive 100's of miles to buy and service a GM vehicle. They are wrong.

      The good news is, most of these rural areas have Ford dealerships in place.

      Talk about cutting off your nose, to spite your face.
      • 5 Years Ago
      Waste of time. Many of the affected dealers have already gotten rid of inventory and employees and made plans to move on or shut down.

      Going back now and saying "Hey we were just KIDDING! You can stay a dealer!" is cruel and stupid and just too late.

      Going back also ignores the underlying problem for GM which was (and still is) too many competing GM brands and too many dealers compared to consumer demand, either now or in the next 5-10 years.

      It might save a few jobs in the short term, but it solves nothing mid to long term to go back on those plans and try to keep extra dealers on hand.
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