As the free enterprise system is turned upside down with the financial meltdown, mortgage crisis, bankruptcies by major corporations, including General Motors, companies across America are being forced into making major cut backs in employees, expenditures and deal with a less than stellar economic forecast in the foreseeable future.
Particularly as General Motors has gone to Washington D.C. with hat in hand and lawmakers and the current administration willfully opening up the taxpayers piggy banks, GM has taken the opportunity through the bankruptcy process to force the hand in it's favor away from many of it's stakeholders.
One of the principle stakeholders that the company has no investment in and cost the company virtually nothing as GM cost shifts at unprecedented rates, is it's dealer body. The remaining dealer body that has weathered tremendous economic conditions over the 100 years of GM existence and persevered through great adversity is now being forced to sign "Participation Agreements" or face franchise termination.
These "Participation Agreements" are requiring the remaining dealers to comply with company upgrade and program requirements that the company requires during the bankruptcy process. The remaining dealers who have received the letters have until mid-June to sign and return the agreements and if the dealers do not comply with the request, General Motors will terminate the existing franchise agreement.
To the outside world this may seem simply as a company requesting an authorized franchisee to do what is in the best interest of the company and compliance should not be questioned. However in the world of auto dealer and auto manufacturing relationships, this becomes a another tool in which a major corporation with the power and might of GM (now backed by the U.S. Government), has a new tool to impose it's will on an independent businessman or woman without regard to market conditions or an assessment of need in a particular dealerships sales area.
The heavy hand of GM dictates need, no questions asked, do this or else seems to be the new corporate by line towards factory and dealer relations. It truly is a sad day for dealers, the individuals, cities and towns that depend on these dealers now have to spend excess monies to fund projects for GM in another cost shifting move to comply with whatever the factory wants, now the independent dealer must do, or else.
The corporate position is firm, Mark LaNeve said in a company statement, "GM expects them (the dealers) to perform well on customer satisfaction scores and sales, have their facilities up to speed and not have any non-GM brands in their showrooms". Dealers should and will expect tough requirements moving forward through this process, I ask, individual markets have significantly different market expectations and no one is giving dealers any bailout or any monies at all. The remaining dealers, many of them are in perilous financial conditions currently and will get even worse if the sales climate does not improve soon.
The big twist in all of this, the biggest glaring clause in the agreement states that the dealer agrees that they will not sue the manufacturer before the dealers franchise agreement expires in 2010.
Our free market system, isn't it wonderful.
Enjoy Today!
That Car Guy
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