661 GM Dealers to Get a Reprieve

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?


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  1. Here we go again, with GM going right back to the behavior that put it in bankruptcy in the first place– Failing to do the things necessary for the long-term health of the business. With Pontiac, Saab, Hummer and Saturn gone, the last thing GM needs is a base loaded up with marginal dealers. With each step they make, they are are telling us that the “New GM” is not really different than the “old GM.” Besides, aren’t those dealers terminated under the “old GM” which is in bankruptcy court? I’m not sure what there is to be arbitrated if the terminated dealers are not “new GM” dealers. At this point, GM actually needs to close even more dealers. Look at just about any area that has a Toyota dealer, and you’ll probably find at least eight to ten (or even more) GM dealers. Even worse, all the GM dealers must resort to questionable marketing tactics like advertising employee-only prices. That’s got to generate a lot of good will when non-employees show up and find the price inflated. When they go down the street to the Toyota dealer, they’ll be able to get the same price that Toyota advertised. GM just never learns.

  2. I think the ones that still want to in that group should be reinstated. However, after that treatment, I’m not sure If I personally would want to reassociate myself with GM.

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