General Motors has lost a court battle to a California-based Chevrolet dealership after the automaker attempted to revoke its franchise.
Folsom Chevrolet filed the lawsuit after GM said the dealership underperformed and moved to strip the dealer of its franchise. Folsom Chevy brought the California New Motor Vehicle Board into the equation, and ultimately, GM was found on the wrong side of the case. The sales measurement qualm comes from the Retail Sales Index (RSI). Many automaker employ RSI, which measures sales data and compares the dealer to a statewide average.
Automakers then set a dealer target based on the brand’s market share (Chevrolet in this case) for each vehicle segment. Automotive News reported that Folsom Chevy 129th out of 133, 124th out of 128, and 115th out of 131 in 2013, 2014 and 2015. The dealer argued that construction hurt sales, but the New Motor Vehicle Board dug deeper.
The board found GM failed to incorporate brand preference, geography, and demographics in calculating the RSI for Folsom Chevrolet and the automaker failed to establish good cause for the dealer’s termination with a lack of evidence.
GM has already said it strongly disagrees with the decision and it will likely appeal the case. Folsom’s legal team added the attempt to revoke the franchise is also in violation of California law.
Comments
In Trump’s America, shouldn’t a company get to choose who they do business with? Shouldn’t GM be able to say “You’re Fired”? Or is this USA a commie welfare-state for dealers, where they get to force GM to give them handouts because the dealer trigger-whined and used the government to get its way? The dealer used the judge to tell the GM shareholder-owners to give their money to the dealer who does no work. Redistribution of wealth? Yup!
WELFARE FOR DEALERS – WELFARE FOR DEALERS !!!
If you can’t make a profit like a decent business, why should the government come in and force the good profit-making listed company to ‘redistribute their wealth’ to the no-work-dealer? This ain’t capitalism at all! It’s socializm-for-dealers. Adam Smith would be appalled at the rent-seeking on display here.
Anybody who lives in Sacramento knows that there are two big auto-malls, Roseville and Elk Grove, and Folsom has been gradually dying as a mid-range-price car-suburb because Kaiser and Blue Cross are making huge medical campuses there and the house prices are exploding, leading to a population of very old and very rich folk in Folsom who buy Merc’s and Porsche’s, not Chevy’s. The Chevy dealer making up for that by forcing GM to give it welfare … is SICK.
I think you’re ill-informed, sir. First, this isn’t Trump’s America. This is the people’s America. But if you’d like to use Trump as an example, then this dealer is following his lead.
Second, GM does not provide welfare to dealers. If so, I’ve failed to see the bulletin.
Third, the article indicates neither that the dealer wasn’t profitable, nor that he was out of trust. The fact that he’s fighting to keep his franchise indicates he feels it’s a good financial decision. Based on the article, all we know is that his sales effectiveness isn’t where GM thinks it should be. I will say, however, that’s I’m certain there’s more to the story. GM doesn’t simply go around pulling franchises.
As for your last point, I’ll offer this information: rich people buy GM products, too. As a matter of fact, they buy more GM products than the luxury makes.
Knowing your facts before going on a Fox News style tirade would certainly benefit you.
I apologize Buick dealer, Sir/Ma’am. 100% I didn’t know any facts and yes I went right on a Fox tirade. I accept I’m wrong, you’re correct, and I’m truly very glad you came on here and put us all right.
Of course I deserve no excuses and this following attempt at one is wrong, but Fox-style here I goes anyway: I’m sick of Fox Fact Free culture, and (although I find none of it above the line by Professional Journalists on GMA – Thanks J.Luft. J.Szymkowski, and all the folk who work at GMA) I find plenty down here below the line in comment land. One commenter Bob freakn blamed the GM CEO’s gender for the collapse of his bottom cushion in the driver’s seat of his 91 Blazer. So I go ahead and give Fact-Free-Fox tirades from the opposite perspective to give ‘em hell! Their normal reaction is to get totally PC and try to shut me down and claim they have a safe space here, which is exactly what they accuse the left of doing before 2016, so I Gotcha’d them good many many times on PC hypocrisy.
Except from direct replies by the Professional Journalists who so excellently make this site, I never, ever get replies like yours – full of facts drawn from actual experience. Thanks for that. Honestly.
I still want to develop one point from your reply – “GM doesn’t simply go around pulling franchises”, they certainly don’t. Isn’t that a true fact? Doesn’t that mean GM wants to do something with the products they designed and manufactured themselves, and they are being forced to do something they think is bad for their own business, forced by a government authority, to go with a decision they think is bad, to support a type-of-business that Apple, Google, and even PWC and Morgan Stanley say shouldn’t exist and aren’t likely to survive autonomous cars and app-based subscribers? Isn’t the dealer model antiquated and being propped up by … forced welfare? GM says they don’t want to deal with these people. Why should they HAVE TO?
Ketan Deshpande, former VP of Business Development and Engineering at Quadion LLC, wrote this:
“There are two mega trends that will challenge and change the current/established model for car sales. Additive manufacturing (Industry 4.0) and rise of autonomous and shared ecosystem.
In the future additive manufacturing will allow for localized (close to the customer) manufacturing of transportation solutions. Industry 4.0/IoT will also allow customers to highly customize their solution and have it built for them.
Autonomous technology will allow the completed solution to “drive itself” to you, check out 2018 Mercedes Benz S class production where the finish car drives itself around the facility and parks itself in the storage area.
When you add shared ecosystem on top then one must agree that “ownership” of the vehicle will not be with one individual and hence the current car distribution model will become irrelevant.
Long way to go however the basic frame work or technology road map is very clear and is being executed by the automakers.”
Dealers are struggling, like hungry lions in a drought. They don’t see an easy future, and they’re looking for any way to survive they can. Does society really need middlemen in the internet age?
If you want to see a positive future for the garage-businesses that dealers once were and will again be, have a look at the cover of the latest “Vette” magazine Nov 2018 – there you will see Abel Chevrolet Buick of Rio Vista CA’s Service and Parts Director Rich Wilhoff in his personally-built ‘06 Z06 blasting everything on his way to winning the LS Fest West. That Business will always get Business from customers well into the future. If a kid in 2050 downloads and prints a Corvette, the kid can put it all together in the company of friends on build days at Abel, with advice from Wilhoff, and drive it at events that Abel organizes and/or trailer-caters. Caterham is doing exactly this at lifestyle-dealers in the U.K., where you can pay to build your car among friends in a workshop with all the right tools and advice from folks who actually designed some of the parts. Dang, even Bowling Green will charge you $5k to build-yer-own engine!
On a more stable note I agree there may be more to this. Often GM only goes this route when a dealer is out of control.
Often that can or will be cases like poor service, many complaints etc. Even a reluctance to do updates to the dealer as required. Even relocating as GM wants most dealer by highways today.
The MFGs have so little power on dealers. I have seen the same thing happen st Ford too.
Well, it looks like someone sure got triggered.
From James Bragg at Clark dot com:
“I was convinced that the 1995 arrival of the Internet had compelled the auto industry to take action to offset the negative impact of the sudden easy access to invoice prices. The invoice price probably was a decent vehicle-cost estimate before the Internet’s arrival. Consumers could buy invoice prices then from Consumer Reports and publications like ConsumerGuide’s New Car Price Guides, but most folks didn’t. … Then 1995 happened, and any doofus with five thumbs and a keyboard could get invoice prices for free all over the Internet. … In response to this threat, the auto industry launched a secret program to transfer beaucoup bucks from the sticker price to the invoice price, a process that has continued for almost two decades. They’ve done this by steadily raising the invoice price by more than they raised the MSRP, thereby disguising a big cache of available dealer-incentive dollars as dealer-cost dollars. They chose this approach because car shoppers have been conditioned for decades to believe the invoice price is a real cost number. And they did it slowly and deliberately, year after year, so that we wouldn’t notice a sudden substantial change.’
I really think he is more of a CNN guy. Not a Fox News Guy LOL
Fox is owned by an Australian – Rupert Murdoch – and supplies anti-American political movies in Saudi Arabia as well as the UK and pro-American movies in the USA (see Outfoxed). The mayor of NY (an American city) recently said Fox’s Australian owner had caused irreparable damage to American culture, and had worked with Putin to do so. Murdoch’s UK arm “Sky” recently had to declare allegiance to the UK government in order to get 100% control over satellite feeds in the UK, and part of that deal was to provide certain Fox viewer data for UK government inspectors.
CNN is owned in America and is 100% accountable to the American FCC.
Yup – I’m a Fox guy!!!! Listen to my accent, maaaaaate!
I get my news from YouTube. 🙂
He is more Looney Tunes news be it CNN or MSNBC.
Looks like someone is off their meds.
If you haven’t seen Outfoxed and yet watch Fox, then Fox IS your meds…
vendor of chemical