#Dealer

Ed Dowdall, a 70-year-old San Jose area resident with a rare form of dementia that causes wildly unstable cognitive functioning and hallucinations, walked into a dealer and traded in his 2008 Nissan Altima Hybrid for a Nissan Murano CrossCabriolet, which retailed for $62,000. A series of protests and complaints from Dowdall’s wife led to the dealer taking back the car and voiding the sale.

With the Toyota 86 set to go on sale in a couple of weeks (the first production models are set to leave the line on Friday), Toyota’s Japanese sales outlets will have separate spaces to sell the new sports car – and in some cases, stand alone sales facilities, similar to the Chrysler/Fiat arrangement in America.

For years now the Chinese automakers have been the bête noir of the global car industry, inspiring equal parts fear and contempt in boardrooms and editorial meetings from Detroit to Stuttgart. In an industry built on scale, China’s huge population and rapid growth can not be ignored as one scans the horizon for dark horse competitors. And yet no Chinese automaker has yet been able to get even a firm toehold in the market China recently passed as the world’s largest: the United States.

Certainly many have tried, as the last decade is littered with companies who have tried to import Chinese vehicles, only to go out of business or radically rethink their strategy (think Zap for the former and Miles/CODA for the latter). Others, like BYD (or India’s Mahindra), have teased America endlessly with big promises of low costs and high efficiency, only to delay launch dates endlessly. In short, a huge gulf has emerged between overblown fears of developing world (particularly Chinese) auto imports and the ability of Chinese automakers to actually deliver anything. No wonder then, that we found what appears to be the first legitimate attempt at importing Chinese cars to the US quite by accident…

A lot of people have little or no respect for car dealerships. In fact, on the TTAC forums, I frequently hear the word “stealership” so much, that I’m herewith petitioning the Oxford English Dictionary to officially put it in our lexicon. I recall the story of a friend on mine who had trouble with a Honda dealership in the UK. His mother bought a brand new Honda Civic and in the final month before the 3 year warranty ran out, the alternator gave up. The mother wasn’t angry that such a failing had happened, she just wanted it fixed. But the dealership had other ideas. They weren’t convinced that it was the alternator and they couldn’t look at it until next month. The mother told her son (my friend) this story and the son though it was a bit of a coincidence that the dealership couldn’t look at the car until next month, which happened to be the month that the car came out of warranty. The son bypassed the dealership and wrote a very strongly worded letter to Honda UK (It could have been “extremely worded”. In the first draft, he threatened to run over their testes with a steam roller). Strangely, a week later, the mother received a phone from the dealership saying that they could look at her car, fix whatever needed to be fixed and throw in a free service. Now that’s a story with a happy ending. Now let’s try one a bit more turbulent, and this one comes from the land of the “stealership”, the United States.

Even with a government-mandated arbitration process in place, the battle between Chrysler and its 789 culled dealers is a low-down, dirty dogfight. Last week, Chrysler sent out letters to all of its rejected dealers, in its attempt to comply with the arbitration law’s disclosure requirements. But, dealers tell Automotive News [sub], those letters are justifications, but not explanations. Absent concrete evidence for why their franchises were closed (something GM has provided to its culled dealers), lawyers for some 65 rejected dealers are fighting back.

You’d have to be a fairly trusting GM dealer to participate in what The General calls its Essential Brand Elements program. After all, it’s just the kind of dealership re-branding exercise that HUMMER dealers were forced into shortly before the brand was consigned to the ash heap of history. And once again, GM is asking dealers to create ideal showcases for its brands while keeping compensation for the renovations on a highly trust-dependent basis. GM wants brand-specific dealership rebrandings complete within three years, but will only pay for them over the next five to ten years reports Automotive News [sub]. And the payments won’t be fixed either, but will rather be tied to the dealer’s annual vehicle shipments using “a seasonally adjusted formula that takes into account the price of the vehicles sold.” According to Chevy’s Sales Manager Kurt McNeil, those payments could “conceivably” cover the recommended changes over the ten-year period. Are you feeling the trust yet?

If you haven’t been following the drama surrounding the effort to restore dealers culled during GM and Chrysler’s bankruptcy, you might need to be brought up to speed. In essence both the cut dealers and the automakers have agreed to send create an arbitration process by which dealers could have the decision to cut their franchise reviewed by a neutral third party. The remaining conflict is over the criteria arbitrators should use to judge dealer viability, as the GM and Chrysler proposition would have forced arbitrators to use the same criteria GM and Chrysler did in the initial cuts. That would obviously have yielded the same results as the initial cull, so the dealers pushed for a set of criteria that is more favorable to their interests. Automotive News [sub] reports that a compromise has been reached in conference committee that would allow dealers to present “any relevant information” to make their case. That bill is now been approved by the House [sub] and is headed to the Senate, where its passage is “virtually assured.” But despite having all but guaranteed an independent review, culled dealers still aren’t happy.

Bowing 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.

North of your border (not mine), GM dealers are slightly annoyed. In fact, they’re fuming. Topnews.us reports that Bob Slessor, owner of a dealership for GM has sued the firm after he was informed that his dealership would be closed before the end of 2009. And don’t think he’s the only one, 12 dealers are submitting multi million dollar lawsuits against the automotive arm of the U.S government. The lawsuits hinge on the way GM approached these dealer closures. Bob Slessor claim that GM used “high handed and oppressive” tactics. The plaintiffs are looking for a permanent injunction against their terminations and $1.5 million in punitive damages. The report didn’t state whether that figure was in U.S or Canadian dollars.

While other brands are busy closing down dealers, Volkswagen is buying them. They buy the big ones, to be exact. The smaller ones have been eliminated ever since yours truly has been working for VW.

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?