The Colorado House’s passage of HB-1049 [PDF here], a bill requiring restitution for dealers culled during the Chrysler and GM bankruptcies, has drawn a $60,000 “no” campaign from General Motors. The Denver Post reports that GM’s ad campaign, which features lines like “we must keep driving forward to repay our government loans,” and “don’t let special interests stick taxpayers in reverse,” has riled up local lawmakers more than ever, drawing such timeless put-downs as: “they must be spending tax dollars on Botox to say that with a straight face.” The bill would require OEMs compensate culled dealers for signs, parts, dealer upgrades and more, as well as offer them the right of first refusal for any new area dealerships.
Arbitration between culled dealers and GM and Chrysler is ongoing, having been mandated by congress, and it’s already creating friction, particularly for Chrysler. But federally-mandated arbitration will only accomplish so much, if states like Colorado continue to push back for local culled dealers. Dealers are protected on the state level by franchise laws that vary significantly from state to state, and if local legislators (who are much more easily persuaded by the pleas and donations of local dealers) dig in and fight, GM and Chrysler’s dealer culls could become hopelessly mired in the kind of compensation negotiations that collectively earned Oldsmobile dealers about $1b when that brand and its dealers were wound down.