The Recipe: How GM Will Deal With Shuttered Dealers’ Complaints And Prevent Legislation

Back in May, General Motors announced plans to shut down a sizable portion of its dealer network (from here-on termed wind-down dealers). This, of course, coincided with GM’s announcement of either shrinking, selling, or closing its Saab, Hummer, Pontiac, and Saturn brands. As you would expect, some dealerships filed complaints to both, The General itself and relevant policy makers.

In recent months, these complaints have prompted Washington to consider passing legislation on how GM is allowed to handle the closing of these dealerships. In trying to avoid all possible legislation (we know how messy that can get), GM has been actively preparing a plan that will deal with the dealerships in question, and today it has released a plan, which calls for the following:

• GM will provide all dealerships that received a complete wind-down agreement the criteria it used in selecting said dealerships.
• For complete wind-down dealers that have not already terminated their sales and service agreements with GM, a face-to-face review process will be called for.
• If the dealer is not satisfied with the outcome of the face-to-face review process, they may choose to proceed to binding arbitration, which will be strictly limited to “whether GM selected the dealer to receive the wind-down agreement on the basis of its business criteria.”

Barring any complications (read: opposition and related legislation), GM will begin to implement this plan in mid-January. To further emphasize its lack of desire for any legislation, GM is of the opinion that its 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.”

GM’s plan also includes provisions for actively trying to increase the diversity of its dealer body as well as placement assistance for service technicians and other dealership employees.

Click past the break for complete details of GM’s plan to address dealer concerns.

PRESS RELEASE

GM Announces Comprehensive Plan to Address Dealer Concerns

2009-12-03

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.