Reprieve for GM Dealers (for now...)
Kudos to GM. At least for now. While they have indeed filed for Chapter 11 Bankruptcy protection, GM stated they intend to allow dealers that have been informed their franchises will not be renewed, as well as between 200 and 400 additional dealers yet to be notified of the same fate, to work through an orderly phase out of their franchises over the next 18 months.
That is the good news. The bad news is that Chrysler had intended the same thing and had asked the bankruptcy court to honor that request only to have it red-lined before Debtor-in-Possession financing was approved.
While I still believe it is an abomination that the government can force independent business owners out of business in the manner that Chrysler has been forced to do, and GM will, I can say with respect to the dealers that I consult and train that received letters two weeks ago from GM, this is a path that can at least be planned for and managed.
This also eliminates mass immediate dealership closings, keeps people employed and allows them to keep their personal debts current. It allows the vendors of the industry, as well as the vendors that serve the employees of dealerships to not feel an overnight impact of dealership closures, which additionally saves countless jobs.
We are a long way from being out of the woods, but for today, at least 1124 GM dealers living with a non-renewal letter, this is good news. May the days and months ahead provide even more such good news.
That is the good news. The bad news is that Chrysler had intended the same thing and had asked the bankruptcy court to honor that request only to have it red-lined before Debtor-in-Possession financing was approved.
While I still believe it is an abomination that the government can force independent business owners out of business in the manner that Chrysler has been forced to do, and GM will, I can say with respect to the dealers that I consult and train that received letters two weeks ago from GM, this is a path that can at least be planned for and managed.
This also eliminates mass immediate dealership closings, keeps people employed and allows them to keep their personal debts current. It allows the vendors of the industry, as well as the vendors that serve the employees of dealerships to not feel an overnight impact of dealership closures, which additionally saves countless jobs.
We are a long way from being out of the woods, but for today, at least 1124 GM dealers living with a non-renewal letter, this is good news. May the days and months ahead provide even more such good news.
Comment
-
Comment by Tom Gorham on June 1, 2009 at 8:28pm
-
I just found this in Automotive News. "General Motors is requiring all surviving dealers to sign a "participation agreement" asking them to comply with any dealership upgrades that the company imposes in bankruptcy.
GM also will require dealers who got franchise termination letters to sign a "wind-down" agreement. That will provide money for them to phase out their business over the next 17 months as their franchises expire.
Surviving and terminated dealers have until mid-June to sign the agreements. If they refuse to sign, GM will yank their franchises, Mark LaNeve, vice president of vehicle sales, service and marketing, said today in an interview with Automotive News.
"They get put into the old company and get a fairly quick termination, like the Chrysler dealers did," LaNeve said. "Their sales and service agreement will be rejected and put into the old company."
"
-
- I tend to be skeptical that the 18 months will be honored once GM is deep into the BK process. Just as they said BK was not an option, things and attitudes change at crunch-time. All we can do is wait and see. I'm lucky to work for a great Chevy dealer who was not targeted for closing, but I still see difficulties ahead that everyone should be prepared for, such as bottom-barrel pricing by dealers desparate to sell their inventories. Everyone should be strengthening their other profit centers if they haven't already begun to do so.
-
Comment by Greg Goebel on June 1, 2009 at 5:55pm - I totally agree - whether death by fire or death by plague, neither option is desired. Given no other options, at least 18 months does allow a modicum of planning. I still feel it is an atrocity, but 18 months sure beats 26 days.
-
Comment by A Jay Gould on June 1, 2009 at 5:49pm -
I guess having 18 months to "wind down" a business you may have had for 50 plus years is a good thing but I have a hard time living with that viewpoint. You can certainly expect many dealerships in this circumstance to begin losing their best personnel almost immediately and even if the list hasn't been published it will become public knowledge. Hell Custer would have lived to a ripe old age if he would have had a couple of car people scouts.
This whole damn thing is just sad from any angle you care to view it from.
-
Comment by David Ruggles on June 1, 2009 at 3:06pm -
Greg,
It still isn't clear to me who forced the dealer closings. No one seems to want to take the blame. There is all sorts of evidence that some of the terminated Chrysler dealers might have been targeted as "pay back." I'm personally aware of Chrysler dealers who had tickets yanked and those franchises awarded to a competitor. But the factory claims they were forced into it by the task force. Either way, it sucks. My question is; are you sure the government is forcing independent business owners out of business?
© 2010 Created by Greg Goebel.
You need to be a member of Auto Dealer People to add comments!
Join Auto Dealer People