By on December 3, 2009

( to legislative pressure, GM and Chrysler have announced today that they will initiate reviews of the dealer cull undertaken during bankruptcy. GM is announcing a “Comprehensive Plan To Address Dealer Concerns,” while Chrysler characterizes its agreement as a “Binding Independent Review Process for Discontinued Dealers.” Both firms take pains to thank Senator Dick Durban and Rep Steny Hoyer for their leadership in preparing the non-legislative conclusion of months of bitter acrimony. Culled GM and Chrysler dealers, you know who to make your campaign donations to… unless you’re a member of the dissident group the Committee To Restore Dealer Rights. According to Automotive News [sub], the group says the new plans will only allow “between 39 and 51” culled GM dealers to be reinstated. “The GM proposal guarantees that they would win every arbitration,” says one member of the committee, who alleges that the new process is based on the same allegedly flawed data the initial cull was based on. Hit the jump for the plan outlines.

GM’s plan includes:

  • A commitment to advise all Chevrolet, Buick, GMC and Cadillac dealerships that received a complete wind-down agreement of the criteria used by GM in the selection of that dealership for wind-down.
  • A face-to-face review process for all complete wind-down dealers who have not already terminated their dealer sales and service agreements with GM.
  • If the complete wind-down dealer is not satisfied with the outcome of the face-to-face review process, he or she may elect to proceed to binding arbitration. The arbitration will expressly be limited to whether GM selected the dealer to receive the wind-down agreement on the basis of its business criteria.

Additional components include:

  • Accelerated wind-down payments to dealers consistent with the terms of their wind-down agreements.
  • A process to resolve open issues identified by dealers related to the operation of wind-down dealers.
  • Agreement to support public policy issues of mutual interest identified by dealers.
  • Agreement to work with appropriate policy makers regarding floor-plan and other financing issues that are important to dealers.
  • Additional evaluation in limited circumstances for complete wind-down dealers who purchased stock, land or dealerships from GM in the last four years.
  • Reaffirmation of GM’s long-standing commitment to try to increase the diversity of its dealer body.
  • In the limited circumstances where there are dealer re-establishments, area wind-down dealers will be given the opportunity to submit a proposal.
  • Market reevaluation to ensure GM has sufficient dealer representation across the country.
  • Placement assistance for service technicians and other dealership employees.

Chrysler’s plan includes:

  • Transparency on Chrysler’s initial dealer determinations through face-to-face meetings with Chrysler executives
  • A binding review of those determinations by an independent 3-person panel
  • An opportunity to join the new dealer network if that independent review panel rules in the discontinued dealer’s favor

The fundamental elements of the appeal process include the following:

  • Provide each discontinued dealer the general criteria and standards used by the former Chrysler LLC in making its rejection decisions and the specific criteria considered and applied to the individual discontinued dealer’s circumstances
  • Offer of a meeting with the discontinued dealer’s former Business Center to discuss the criteria, and ability for the dealer to present information to refute the rejection decision
  • Right to call for a binding independent review if dealer believes its rejection was not warranted. Chrysler will abide by the decision of the independent review panel
  • Two opportunities to join the new dealer network if the panel rules in the discontinued dealer’s favor: first, to join the new network as a Genesis (Chrysler, Jeep® and Dodge) dealer in the previous market area or, if that is not possible, to be offered an opportunity to open a Genesis dealership in another market area from a list of available market areas
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20 Comments on “GM, Chrysler Agree To Reconsider Dealer Cull...”

  • avatar

    Great Picture – I know that dealership.  Dimension Ford in Fort Wayne, Indiana (Formerly Allen County Motors) where my mother boutht two Crown Victorias!  It has been closed for a few years now.

    • 0 avatar

      My grandmother bought a Thunderbird and a used Mark VII from Allen County Motors. They did a lot of repeat business, enough to keep them open for decades in a horrible location, but when they changed to Dimension they became just another numbers shop.

  • avatar

    What a shame. Even after a judge said they could jettison the dead weight, they still have to consider “reinstatement”.

    • 0 avatar

      First, it was always known that shutting down a lot of dealers was going to be complicated and involved, and probably take some time.
      Second, involving the federal government in any process is bound to make it take longer, cost more, and not work as well.

  • avatar

    Welcome to the world of government ownership, where business needs will play little role in the attempt to regain viability.
    Besides, aren’t the affected dealerships already dust in the wind?  Who’s paying the legal fees for all of this investigation?
    The only satisfaction these toasted dealers will receive is a check.

  • avatar

    I have noticed that the Chrysler-Plymouth dealer in Tacoma, which was on the shut-down list that was published here, is still up and running, but the Dodge dealership, also on the list, is down.

    • 0 avatar

      The GM dealership windown was supposed to take place in 2010, I’m pretty sure. The Chrysler stores that got the axe were only given a couple of months.

      Here it is, June 9th was Chrysler’s date of termination.

      Dead GM dealers are supposed to stay open until January 2010 if they want their money from GM.

      They went about their dealer culls differently. Chrysler’s made sense, GM’s doesn’t.

  • avatar

    Here’s a radical idea. Give them what they want.

    Since the dealers are claiming that they cost the franchisor nothing, deliver on that promise.

    When your sales drop by, say, 50%, you might want to cut the number of outlets to give the rest of the dealers a small chance to do the volume necessary for survival of both the parasite and the host.

    But apparently GM dealers stocked up on kool-aid years ago. Drink up boys, rearrange those deck chairs, grab a seat. The band is still playing.

  • avatar

    Claude Rains (Capt. Louis Renault ) 
    There’s gambling in this establishment!….I’m Shocked!

    You mean this government take-over isn’t going to creat a more efficient company!?

  • avatar
    Roberto Esponja

    Ummm..OK, but the photo you show is that of a closed Ford dealership.

  • avatar
    Gardiner Westbound

    Several former Detroit-3 dealers around here have switched to Hyundai and Kia.

    • 0 avatar

      Smartest move those dealers ever made. Unless Obama decides to tarriff imported cars to satisfy his UAW masters.

    • 0 avatar

      A chrysler dealer near me (at various times the largest in the country) has converted the main lot to hyundai/kia (and he advertises the heck out of them with “no money due until tax time” deals) and the small lot to chryco. (and barely advertises)

  • avatar

    While I understand the problems with over saturation of dealers in the market, I feel very bad for a “local” dealer (not really local to me) in a small farming community 80 miles northeast of here.  This dealership was the only new car dealer within 80 miles of this community, and it had the best reputation for service.  I had never heard a bad statement regarding the dealer and plenty of positive ones.  GM could only hope that its remaining dealers had half as good of a reputation (the one where I live certainly doesn’t).  I’ve heard stories of the owner stopping on the way to and from work to help a motrist change a tire or giving people a free tow because they couldn’t afford one, and if the repair wasn’t to difficult he might do that for free as well for somebody in need.  He was a strong believer that if you treat people right they’ll treat you right.  The current owner was the second generation operating the dealership.  His dad bought it in the 1950’s ,and he was an employee until he took it over in the early 70’s.  While he was pushing 80 and ready for retirement anyway, it was obviously a punch in the gut when GM yanked the rug out from under him.

    I’m sure the dealership was closed due to low sales, but it was in no way taking sales from other GM dealerships in the area, as there weren’t any.  Based on interviews that appeared in an article surrounding this closing, GM is not going to pick-up one sale at any of the “nearby” GM dealers.  The locals loved thier local dealer and service shop, and they will be taking their future business to Ford.

  • avatar

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    Although almost no one is a fan of car dealers the fact of the matter is both GM and Chrysler used the cloak of bankruptcy to evade state franchise laws, Chrysler more so than GM. Both have or are going to leave dealers with multi million dollar investments high and dry with zero compensation. Their own factory franchise agreements prohibit them from doing what they did but bankruptcy superseded that. I don’t find it the least bit unreasonable that the terminated dealers would have some kind of review/recourse. Consider all the newly built factory mandated facilities that were built nationwide by these terminated dealers for which at the present they have received zero compensation. In my local area I can’t make much sense out of the locations which either were closed or are to be closed and I spent 30 years in my local retail automotive industry. While it is fact the gross number of domestic dealers needs to be reduced on an individual dealership basis the dealer should at least have the opportunity to know why they were chosen and the chance to refute the criteria used.

  • avatar

    Although almost no one is a fan of car dealers the fact of the matter is both GM and Chrysler used the cloak of bankruptcy to evade state franchise laws, Chrysler more so than GM.
    That’s why is called a FEDERAL bankruptcy code. It supersedes protection-racket state laws (that allowed many dealership to degrade to Pauly-Walnuts-style customer service).
    Yes, some dealers were good and got shafted. But they chose to do business with GM and Chrysler – they should have hedged.
    And many others got the shaft, like non-union pensioners:

  • avatar

    I find it ironic that local GM dealers are being shuttered, even as taxpayer money is keeping GM alive.

  • avatar

    Maybe we can call them jobs “saved or created”?

    Of course with the rest of us footing the bill, would that be government sector or private sector gains?

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