Dealer Cull Fallout Swirls

Edward Niedermeyer
by Edward Niedermeyer

As congress nears the end of the 2009 legislative session, culled GM and Chrysler dealers are pushing hard for the rapid passage of the Automobile Dealer Economic Rights Restoration Act. Meanwhile, nearly two dozen members of the Senate Commerce Committee from both parties are calling on GM and Chrysler to resolve outstanding disputes with culled dealers in hopes of defusing the situation by non-legislative means.

Given the federal government’s ownership stake in Chrysler and GM, it is our shared obligation to ensure all impacted dealers are treated as fairly as possible. We continue to urge you to take all actions necessary to uphold the assurances you provided earlier, as well as to achieve a mutually agreeable and timely outcome to the negotiations between Chrysler, GM and the dealers. Chrysler and GM’s unprecedented bankruptcy has greatly impacted dealers, consumers, employees, small businesses, and communities across the country. It is crucial that outstanding issues be resolved as expeditiously and efficiently as possible to provide the least amount of hardship to Chrysler, GM and the dealers.

GM’s response to the senatorial call out? “Those discussions are still underway,” according to spokespeople, who refused to characterize the discussions for Reuters. Meanwhile, two examples of possible mitigating action by GM and Chrysler are not off to good starts.

GM’s immediate solution to the situation appears to be to ignore the dealers and reach out to those dealers’ customers. According to Automotive News [sub], GM is offering free tire rotation and 45-day discounts of $1k-$2k per vehicle to 950,000 customers of the company’s closed dealerships. According to a letter to dealers obtained by AN [sub], the incentive amount depends on the “likelihood to purchase a GM vehicle and the relative distance to the next closest dealer.” A second wave of the program targeting Saturn customers is planned for next year, say GM spokesfolks, but the first round isn’t exactly doing much to smooth things over for the culled dealers. This is an inappropriate time to take such an aggressive measure,” Tamara Darvish of the Committee to Restore Dealer Rights tells AN [sub]. “If in fact dealer rights are to be restored, why would GM go in and move all those customers?” Probably because GM has no intention of restoring culled dealers, and is guessing that the ADERRA won’t be passed.

Meanwhile, Chrysler’s dealer wind-down strategy is facing its own speedbumps. Automotive News [sub] also reports that Chrysler’s offer to buy back parts from culled dealers for 68 cents on the dollar is being widely rejected. Chrysler had initially tried to act as a broker, helping culled dealers sell parts inventories to the remaining dealers. However, as Chrysler spokespeople explain “We were asked by congressional leaders to consider doing more if dealers were unable to sell their parts inventories through the matchmaker system.” The result of that legislative intervention was the 68 cents on the dollar offer, which includes conditions requiring that (among other things) parts not meeting Chrysler’s eligibility requirements to be shipped back to the dealer at the dealer’s expense and dropping all parts-related claims against “old” and “new” Chrysler. Dealers have until November 27 to take up the offer.

Edward Niedermeyer
Edward Niedermeyer

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  • Detroit Todd Detroit Todd on Nov 23, 2009
    ...nearly two dozen members of the Senate Commerce Committee from both parties are calling on GM and Chrysler to resolve outstanding disputes with culled dealers in hopes of defusing the situation by non-legislative means. Meaning that absent Congressional action (and it will be absent), the dealers should FOAD. There will be no legislative means. In this political environment, no one cares about thieves (car dealers) wearing shiny suits in flyover country, with their hair that smells of V05 and sulphur. Their day has passed. Yet somehow, the American economy soldiers on....
  • Jacad Jacad on Nov 24, 2009

    One has to admire anyone who can quote so many inane metaphors in so little space as Detroit Todd in an attempt to piss-off the majority of the citizenry and make himself sound erudite to the unwashed masses!

  • Dartdude Having the queen of nothing as the head of Dodge is a recipe for disaster. She hasn't done anything with Chrysler for 4 years, May as well fold up Chrysler and Dodge.
  • Pau65792686 I think there is a need for more sedans. Some people would rather drive a car over SUV’s or CUV’s. If Honda and Toyota can do it why not American brands. We need more affordable sedans.
  • Tassos Obsolete relic is NOT a used car.It might have attracted some buyers in ITS DAY, 1985, 40 years ago, but NOT today, unless you are a damned fool.
  • Stan Reither Jr. Part throttle efficiency was mentioned earlier in a postThis type of reciprocating engine opens the door to achieve(slightly) variable stroke which would provide variable mechanical compression ratio adjustments for high vacuum (light load) or boost(power) conditions IMO
  • Joe65688619 Keep in mind some of these suppliers are not just supplying parts, but assembled components (easy example is transmissions). But there are far more, and the more they are electronically connected and integrated with rest of the platform the more complex to design, engineer, and manufacture. Most contract manufacturers don't make a lot of money in the design and engineering space because their customers to that. Commodity components can be sourced anywhere, but there are only a handful of contract manufacturers (usually diversified companies that build all kinds of stuff for other brands) can engineer and build the more complex components, especially with electronics. Every single new car I've purchased in the last few years has had some sort of electronic component issue: Infinti (battery drain caused by software bug and poorly grounded wires), Acura (radio hiss, pops, burps, dash and infotainment screens occasionally throw errors and the ignition must be killed to reboot them, voice nav, whether using the car's system or CarPlay can't seem to make up its mind as to which speakers to use and how loud, even using the same app on the same trip - I almost jumped in my seat once), GMC drivetrain EMF causing a whine in the speakers that even when "off" that phased with engine RPM), Nissan (didn't have issues until 120K miles, but occassionally blew fuses for interior components - likely not a manufacturing defect other than a short developed somewhere, but on a high-mileage car that was mechanically sound was too expensive to fix (a lot of trial and error and tracing connections = labor costs). What I suspect will happen is that only the largest commodity suppliers that can really leverage their supply chain will remain, and for the more complex components (think bumper assemblies or the electronics for them supporting all kinds of sensors) will likley consolidate to a handful of manufacturers who may eventually specialize in what they produce. This is part of the reason why seemingly minor crashes cost so much - an auto brand does nst have the parts on hand to replace an integrated sensor , nor the expertice as they never built them, but bought them). And their suppliers, in attempt to cut costs, build them in way that is cheap to manufacture (not necessarily poorly bulit) but difficult to replace without swapping entire assemblies or units).I've love to see an article on repair costs and how those are impacting insurance rates. You almost need gap insurance now because of how quickly cars depreciate yet remain expensive to fix (orders more to originally build, in some cases). No way I would buy a CyberTruck - don't want one, but if I did, this would stop me. And it's not just EVs.