Rejected GM/Chrysler Dealer Last Chance for Survival
Coming up on The Christian Car Guy Show
Authored by: Bob Dilmore and Tony Noland with Management Performance Groups
The Automotive dealer franchise system came under attack with the advent of “wind down” letters sent to over 2,000 GM and Chrysler dealers this past Spring. Any contract is only as good as the trust between the parties. For nearly one hundred years, manufacturers have entrusted dealers as the retail outlet for their products. Dealers have made huge investments to fulfill their duties in the sale and servicing of the manufacturer’s product. They have trusted the validity of their Sales and Service Agreement. If that were not the case, there would have been no incentive to invest millions in facilities, equipment, inventories and people. That trust factor was seriously eroded by the actions of Chrysler and General Motors as they stripped the dealers they didn’t want out of their retail network with the help of the President’s men and a unilateral bankruptcy court.
The livelihood of well over 100,000 people employed in these dealerships was destroyed in a single action. Dealers lost their investment and in many cases their family business. Federal, state, county and city coffers were all affected by the loss of tax revenues. Communities lost the support and contribution of generous dealers throughout the USA and the poor customer now has to drive to a new service location, often several miles away.
Many dealers who have shut down, gone broke, sold equipment, laid off employees will never recover their losses. It’s like trying to put Humpty Dumpty back on the wall.
As we sit here today, the US Congress has passed a Bill, which is awaiting the President’s signature, that will give each of the dealers who were issued wind down letters the knowledge as to why they were chosen to be terminated (knowledge that none of them have now) and an opportunity for the restoration of their Sales & Service Agreement through an arbitration process.
Of course, not all dealers will be restored, but those who feel they are qualified to be restored will have to begin preparations NOW since the time table is narrowly focused. If the President signs this Bill, it is enacted into law on that date. (We are estimating that will occur on or before December 18th) The manufacturers have 30 days to send each of these dealers the specific reasons for termination. Within 40 days of the enactment of the law, each dealer must decide if they want to go to arbitration. They then must be prepared for arbitration, and such arbitrations in most instances must occur within 180 days from the time the Bill is enacted.
MPG, Inc. has put all the processes in place to help dealers make an intelligent decision as to whether to proceed with arbitration. For those dealers who utilize MPG’s services, a panel of 3 experts with assistance from automotive dealer-oriented attorneys, will render an opinion as to whether or not arbitration may be favorable. A template has been developed to gather pertinent information prior to a rejected dealer’s 30-day letter. We are indeed hopeful that we can serve dealers who deserve to retain their franchises.
