I wondered how the Treasury, the bankruptcy courts and the "New" GM were going to dance around bankruptcy law. You see, in bankruptcy, you can accept a contract, or reject a contract, but not modify a contract.
The announcement GM's made at their noon press conference certainly sounded more favorable for the 1124 dealers that were notified two weeks ago that their franchise agreements would not be renewed in October 2010. Fritz Henderson called the 17 month wind-down period an "orderly transition" rather than the opposite of orderly "which is chaotic" - referring what is taking place with 789 terminated Chrysler dealers.
As I said in an earlier blog, I still find it abhorrent that the manufacturers can hide behind bankruptcy laws to take away going and profitable independent businesses whose owners have invested millions of dollars, pay millions more in taxes, and employ collectively thousands of workers. At least, I said, GM is giving its dealers time to create a plan and manage from it.
I knew another shoe had to drop. It did. "Participation Agreements."
Participation Agreements are the new agreements being shipped out to the "winners" - those dealers that are having their franchises renewed in 2010, IF, and I say IF, they agree to do whatever GM claims the dealers must do to be worthy of a GM franchise. Facility upgrades? Eliminate a non-GM franchise from the showroom? Raise CSI? Raise sales penetration? Who knows what demands can and will be made?
The New GM, 72.5% of it to be owned by you and I, is feeling pretty gutsy the way I see it. Their dealers have collectively been kicked around for the better part of nine months while the media bantered around the bankruptcy word and customers reacted accordingly - choosing not to buy, or buy elsewhere. So, now that GM is no longer on the ropes and has some financial "muscle" behind it, they use an ultimatum letter to have their way with their dealer "partners."
"You are a winner!" - isn't that the way the con-mail letters and e-mails go? All you have to do is claim your prize (franchise). To do so, you simply have to pay a processing and handling expense (make all these promises to spend money that you may no longer have since we have helped sales to sour over the last nine months with all this BK talk). Wait until tomorrow. The letters will be arriving. I can't wait to hear what they demand. Oh yeah, this has been skillfully planned (with the best brains in the government) to insure they can't be caught up with the states' franchise protection laws.
You know I work with dealers of all shapes and sizes across this country (and Canada). Most have franchises, some do not. I can't really root for or against any franchise because doing so would inevitably cause me to root against my clients and friends, which isn't going to happen. Yeah, I certainly have favorites. Having owned Buick, Pontiac, GMC and Hyundai franchises, and knowing the people in the organizations, my heart strings have always been pulled there. I have had more GM vehicles in my collective garages than anything else (but had at least one of everything else) and still have a couple.
But you know what - I am now pissed off. Chrysler - to quote Jim Press - I have a long memory. You have wrongfully terminated 789 independent entrepreneurs while causing the demise of countless others over the last nine months with the abysmal management of your company. That includes over a dozen of my friends/clients. I wish you well (I have to, my tax dollars are invested), but your actions preclude me from ever desiring to own a vehicle with a Chrysler logo on it, or ever recommending one to a friend.
GM, join the crowd. You announced today that you were becoming a leaner and faster company that was going to be focused on two things - the customer and the product. Last time I looked your customer was the dealer. Why should your customer - the dealer - ever trust you again (not that it really took the actions of the past 48 hours to reinforce that)? I have been awaiting the release of the 2010 SRX since I saw it at NADA - time to replace the trusty Escalade. Not now.
My friends/clients also own Ford stores, and Hyundai stores, and BMW stores - you get the picture. I want nothing but the best for the dealers I consult with, train and coach - regardless of whether or not they have a franchise nor which one(s) it is. But, I will be darned if I have to condone the heavy handed pistol whipping that GM and Chrysler is exerting at a time when if it hadn't been for their dealers willingness to step up an take unneeded inventory months ago Chapter 11 might not even have been an option - they would have gone straight to liquidation.
Fritz Henderson stood at the podium during today's press conference and asked for those customers that have had a bad experience to give the New GM another chance to earn their business. Really? Are you serious? Fritz, please, tell me how the dealers that are receiving ultimatum letters tomorrow will get their second chance?
GM. you have not had a product problem. You have had a brand problem - the perception of wanting to own a GM product. With you actions of today - it just got worse - at least for me.