By on June 9, 2009

An anonymous reader sent us the before and after agreements sent to GM dealers by the post-bankruptcy corporate mothership. Here’s the controversial post-bankruptcy GM dealer agreement before the National Automobile Dealers Association intervention (and media condemnation). And here’s the controversial post-bankruptcy GM dealer agreement after they faced the dealer revolt. The differences between these two documents are not as profound as their similarities. As Casey Raskob (a.k.a. Speedlaw) points out in a comment below, “In short, Dealer agrees to let GM dictate cars purchased, the buildings they are sold in, and this deal is subject to change at the whim of GM. Now GM dealers know how we normal folks feel signing a car lease.” Make the jump to read the analysis provided by our sharp end tipster.

I’ve called Senator Rockefeller’s office for the list of closed GM dealers, promised by the totally transparent (in all senses) GM CEO Fritz Henderson during his sworn testimony to the Senate. Nothing. Our tipster agrees that the list—with pledged financial calculations—is damning evidence of GM’s zombie walk.

I would love to see it too. I hear there are some major surprises on the list. I’d also like to see the REAL forecast of GM sales in the 2010 model year. Nearly a third of the GM dealers can’t sell 2010s (save some Camaros and a Cadillac).

And what of the mysterious “throughput”? A customer of a closing dealer will not necessarily drive to a new GM dealer when his old dealer was the basis of his relationship with GM. Chrysler/Fiat faces the same issue.  Five years from now and another trade cycle and we might see some GM sales growth. Meanwhile, what’s going to happen to GM’s viability and the local dealer network.

This reluctance to reveal the list reveals that GM’s image is taking a beating. The public will be hearing bankruptcy news for the next two months, at least: the leaked dead dealer list, local layoffs, etc. And then comes January 1st, when GM dealers start closing like dominoes, laying off more local people. And then GM will report a major loss for ’09. Of course they’ll blame the economy or something, as will Chrysler, while Ford finally blames its problems on on the federal government for its problems.

As the Chinese say, we live in interesting times.

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12 Comments on “Download New GM New Dealer Agreement(s) Here...”

  • avatar

    Permit me to translate into English from Legalese.

    Sign this or we reject the prior dealer agreement. This agreement will now control.

    Dealer must sell more cars, and must buy cars as directed by GM as per guidelines. They direct and you must buy as directed (!).

    You must sell only multi brand stores-you have till the end of 2009.

    You can’t protest any GM dealer outside a six mile radius. (GM can plop a company shop next door if they wish)

    You release any and all claims for everything against GM. Period.

    You expressly consent to an injunction in the favor of GM if you breach.

    You again release GM for all claims, including that Hummer building and anything else GM made you build in the past. You still get your incentives, warranty and holdbacks.

    Your holding companies also release GM, in that you, dealer, agree to indemnify GM if your holding company sues GM. (closes the door to collateral suits by the dealer’s side businesses, which GM could not bind by this contract…nice !)

    The dealer also agrees to reaffirm the land contracts and leases from GM to Dealer.

    Dealer again agrees to increase floor plan as directed and comply with “any subsequently published guidelines”. This means they say Jump, dealer asks “how high”, and that is it. This is the sort of open clause that no sane businessman signs, in a normal world.

    Dealer agrees that he has had an attorney review the document (as if that had any effect)and that any controversy is in Michigan Courts. (This is forum shopping-GM wants the home field advantage).

    In short, Dealer agrees to let GM dictate cars purchased, the buildings they are sold in, and this deal is subject to change at the whim of GM.

    Now GM dealers know how we normal folks feel signing a car lease.

  • avatar

    I detest bullies. Just my opinion but companies and people that bully people simply because they can usually get whats coming to them in the end.
    Just got a hunch that this dealer reduction is all going to go badly for them.

  • avatar

    Why would anyone sign this?

  • avatar

    Why would anyone sign this?

    Anyone still wishing to make their living selling cars for GM. Sometimes you have to do what you need to do no matter how shitty it is to do so.

  • avatar

    Dimwit :
    Why would anyone sign this?

    Because they think they can make alot of money.
    If they don’t think they can, don’t sign. Everybody else has taken a haircut, now it is the dealers turn in the chair.

  • avatar

    Dimwit asks : Why would anyone sign this ?

    The only contracts I’ve ever seen that are worse, besides your visa/amex contracts, are the franchise contracts for McDonalds, which I saw when my firm was getting zoning done for a franchisee in the NYC area.

    You sign it because you have no real choice. In the legal world it is called a ‘contract of adhesion’ where one side basically has a take it or leave it option, but there is no practical negotiation or ‘meeting of the minds’.

    I’m just amazed that they can make you buy cars under the terms of the contract. The olden days of “sales banks” are just a warmup to the central office planning how many cars will be sold this month. We all know how well central planning worked out in Eastern Europe.

    In the past, dealers were encouraged to take cars, but now, they are forced.

    I’ve not seen any other contracts, so this might be “the business”, but the concept that the transporter will show up with another 50 cars you have to take and pay for should scare anyone who has run a lemonade stand.

  • avatar
    Edward Niedermeyer

    Dimwit: Why would anyone sign this?

    The phrase “anticipated sales increase” keeps popping up in both letters. I have to wonder how many dealers actually believe this will happen considering a Dimwit doesn’t.

  • avatar

    A Morton’s Fork perhaps….

  • avatar
    Robert Schwartz

    Three weeks ago, if something were posted here on TTAC about dealers. Everyone would jump on dealers, tell stories about the most outrageous scam a dealer ever ran on them, and few commenters said anything nice about dealers.

    Now the dealers are folk heroes. Just goes to show you, I guess.

  • avatar

    Folk Heroes ?!?! Hell no.
    In another forum I’d discuss my lady with the $24k Mitsu econobox, or the SAAB with the transmisssion that the dealer could not fix, or the Volvo which blew a timing belt and how the dealer and warranty company tried to evade liability.

    I somehow doubt that customer satisfaction scores played any part of this…..

    The only product that does not have a set price…

  • avatar

    Did GM go too far? Perhaps, but this “Agreement” is, in part, a reaction to the extreme pro-dealer bias of the state franchise laws. Remember it cost billions in dealer payments to close down Oldsmobile and GM was still in court with dealers right up to the C11 filing even though the last Olds was built over five years ago.

    Bankruptcy affords GM a once in a lifetime opportunity to reverse the trend toward “anything goes” dealerships and reestablish their brand. I’ve got to give GM credit for capitalizing on the opportunity, but the jury is still out as to whether there is any real vision or substantive direction behind this opening move.

    The old GM is bankrupt and dealers have the option of rejecting the new deal; it’s business, nothing personal.

  • avatar

    I would love to read a full-version of the dealership agreement contract!

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