Your Tax Money Hard at Work: GM Offers Discontinued Dealers a $1M Kiss Off
For the last ten years or so, the United Auto Workers (UAW) has pretended to make “concessions” to General Motors while doing nothing more than accepting pay-offs consisting of lump sums and promises to pay lump sums from fictional future earnings. Exhibit R: the fed’s recently promised $2.5 billion cash “top-up” of the UAW’s health care VEBA, ahead of other payment of other lump sums AND a slice of fictional future earnings. Automotive News [sub] reports that GM’s deep-sixed dealers are now playing grease my palm at wounded knee. “General Motors is offering some dealerships $100,000 to $1 million to wind down their businesses over the next 17 months, according to three sources familiar with the proposals.”
Let’s assume the average dead dealer gets a $500,000 kiss off. GM announced it was terminating 1124 dealers. I make that a $562 million pay off (as opposed to a zero dollar FO&D possible under bankruptcy law). I reckon we got a bargain mate! GM’s Oldsmobile termination reported cost GM a billion bucks, back when a billion was more than a rest stop on the way to $100 billion. Or a trillion. So, what do we get for our money?
The money is intended to help dealers sell their remaining inventories. But if the dealer accepts the payment, GM will not buy the unsold inventory. In addition, the dealer must agree not to sue GM until their franchise agreement expires. The terminated dealers also will not be allowed to order new cars from GM, yet they must stay in business until January.
GM’s army of the undead! And what’s with the “until their franchise agreement expires?” Does that mean we’re looking at hundreds of millions in federally-funded lawyers fees defending Government Motors against dealer lawsuits? Sure!
This, no doubt, at the same time that those discontinued dealers will land themselves the Small Business Administration loan guarantees to buy product GM won’t sell them. While we’re at it, I wonder where the funding for the freshly mandated GM dealership upgrade is gonna come from? Hey Tony?
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I'm on record saying these dealer closures are a bad idea. Paying them cash money to go away just makes it dumber. Paying employees to go away at least reduces a real, measurable ongoing cost. Paying a customer to go away, doesn't.
I don't get it...wasn't one of the advantages of C11 the ability to pare the dealer network without such payouts? They could have done this years ago ala Oldsmobile! At least Chrysler had the balls to cut the cord clean. GM is dithering already in only it's 2nd day of C11. That can't be good.