On Friday, GM said it would reinstate some 661 dealers—over half of those slated for closure—because otherwise it would be facing an interminable and expensive process of arbitration. You may remember that the company last spring (before bankruptcy began) planned to cut its 6,150 dealers down to 3,600 by year’s end.
Well, the uproar from those affected stirred our ever-vigilant Congress and ever-responsive President to pass legislation calling for arbitration. You had staunch defenders of the American way protesting that the lifeblood of their communities was at stake:
Representative Steven C. LaTourette, a Republican of Ohio who helped establish the arbitration process, said the loss of dealerships affected individual communities. “You’re talking almost 40,000 people going back to work, potentially. The car dealer, in many cases, supports the Little League and supports the Chamber.” By forcing the dealerships to close, he said, “you’ve destroyed the fabric of some communities.”
Mr. LaTourette made no such move to enforce GM reopening its shuttered factories, and so the political games continue. GM has now about 5,500 dealers, and its representatives are making noises about how important dealers really are, so the company is in the process of sending out letters of intent to those awaiting arbitration, giving those dealers ten days to respond. Most are expected to accept, gratefully. As the L.A. Times reported:
“We are eager to restore relationships with our dealers and get back to doing what we do best — selling cars and taking care of customers,” said Mark Reuss, president of GM North America. “The arbitration process creates uncertainty in the market. We believe issuing these letters of intent is good for our customers, our dealers and GM.”
Chrysler has been tougher and still awaits arbitration with about 400 of the 789 dealers that have been closed. Mr. LaTourette reportedly wrote a letter to Chrysler CEO Sergio Marchionne, “asking him to stop the practice of awarding new franchises in territories where a rejected dealer has applied for arbitration.”
Keep at it, Congressman. There can be no more important issue facing our country today.
Car dealers are typically reviled, cursed, hated, and loved. Where do you stand on the reinstatement issue?