Under Congressional Pressure, GM Hints At Dealer Restoration

The recent revelation that congresspeople have been successful in coercing GM to rescind dealer closures in their districts, has the rest of our elected representatives (not to mention GM itself) sitting up and taking notice. In a conference call with Michigan’s congressional delegation, Fritz Henderson said GM was close to a deal which would restore a number of “mistakenly” closed dealerships. But GM hasn’t met with rejected dealers in weeks, and the Committee To Restore Dealer Rights is unaware of any such agreement. “[Henderson] was very vague, and the plan sounded inadequate to me,” Michigan Republican Hoekstra tells Automotive News [sub]. “He explained, for instance, that they might reopen some franchises if they found errors, but he didn’t say what those errors might be.” Henderson also rejected the dealer demand for compensation of $3,000 per vehicle sold in 2006, 2007 and 2008, further supporting suspicions that GM doesn’t have a deal at all. So what is happening?

I think GM is telling Congress: ‘We’re close to a deal, you don’t have to do anything.’ But GM isn’t doing anything. They’re just playing out the string because rejected dealers can’t hold out that long

Hoekstra may well be right. Without a compensation offer on the table, government-ordered arbitration between GM and the rejected dealers won’t go anywhere. More importantly, Henderson’s use of the term “mistakenly closed” illustrates how much pressure GM has been under from representatives to reopen dealers in their districts. If a number have already succeeded in getting GM to re-open their dealers, it’s only a matter of time before the floodgates open. Remember, GM only accepted arbitration because a bill was working through congress that would have restored all the culled dealer franchises. If arbitration is failing, GM’s only option is to hold off congressional interference for as long as possible, in hopes of as many dealers croaking as possible. And now that everyone knows some representatives have succeeded in rescuing their campaign donating home-district dealers, the rush will be on. All of which further pits the legislative against the executive branch, raising the specter of more, not less, government interference in GM and Chrysler.