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Posts Tagged ‘dealer cuts’

Canadian Dealers Sue GM

Seeking $750 million under franchise laws.

by on Jan.26, 2010

Ousted Canadian GM dealers are suing the company for $750 million.

A class action lawsuit seeking $750 million in damages has been filed on behalf of 215 Canadian auto dealers terminated by GM as it reorganized last year under the threat of bankruptcy.

The suit was filed in the Ontario Superior Court of Justice and claims that GM of Canada Limited breached franchise laws as it selected dealers for elimination.

The suit also takes aim at a Canadian law firm, CBB, which had been retained in advance to represent Canadian dealers in a GM restructuring or bankruptcy.  The suit claims the law firm failed to disclose to the dealers that it was simultaneously acting on behalf of the Canadian Government in the GM auto bailout. CBB is denying the allegations.

(Over 1,200 ousted U.S. GM and Chrysler dealers file for arbitration. Click Here for that  story.)

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The lawsuit noted that the Canadian Government insisted that GM scale back its dealership network as a condition of its multi-billion dollar bailout funding. The bailout was the largest government subsidy given to a corporation in Canadian history.

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Dealer Closure Battle Heating Up on Capitol Hill

Congress threatening to order GM, Chrysler to reinstate thousands of retailers.

by on Jul.09, 2009

House Majority Leader Steny Hoyer is one of those calling for the reinstatement of thousands of dealers "fired" by GM and Chrysler.

House Majority Leader Steny Hoyer is one of those calling for the reinstatement of thousands of dealers "fired" by GM and Chrysler.

The Obama White House may soon be faced with a potentially no-win decision: whether to maintain its support of Chrysler and General Motors or give backing to those who contend the two automakers have unfairly issued death sentences to thousands of U.S. auto dealers.

Momentum is building on Capitol Hill, especially within the U.S. House of Representatives, to take action that would reinstate 789 Chrysler dealers who were summarily terminated as part of that maker’s recent bankruptcy.  A proposed bill gaining ground on the Hill would also force GM to cancel plans to trim thousands from its own retail body.

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The larger maker, which could re-emerge from bankruptcy by week’s end, hopes to trim its dealer network to as little as 3,600 from 6,100 last year, but GM is giving retailers up to 16 months to wind down their operations.  So far, the maker says 98% of the dealers it is eliminating have signed contracts that will also provide financial assistance to ease the shut downs.

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GM, Chrysler Execs Defend Dealer Cuts

Hold their own during hostile Senate reception.

by on Jun.04, 2009

GM CEO Fritz Henderson (shown here) and Chrysler V.Chairman Jim Press faced a hostile Senate committee but held their ground on planned dealer cuts.

GM CEO Fritz Henderson (shown here) and Chrysler V.Chairman Jim Press faced a hostile Senate committee but held their ground on planned dealer cuts.

This time of year, it’s pretty hot and humid in Washington, D.C., but things were downright chilly, on Capitol Hill, if nonetheless sticky, when senior General Motors and Chrysler officials were put in the spotlight during a hearing on the planned cut, by the two makers, of nearly 3,000 U.S. car dealers.

“There’s been double-dealing going on,” proclaimed New Jersey Democrat Frank Lautenberg, as he suggested to GM CEO Fritz Henderson and Chrysler Vice Chairman Jim Press that they “must have a terrible conscience right now” for cutting so many dealers.

The wording was ironic, and more appropriate than Lautenberg might have intended, for the executives held their ground, during the tense session, insisting that they indeed do have double-dealing going on, with too many retailers chasing the same GM and Chrysler customers, and not spending enough of their time and energy trying to draw business away from the competition.

“This is our last chance to get it right,” said Henderson, “to fix permanently those parts of the business that have diverted us from consistently building winning cars and trucks and the consumer experience to math.”

According to Henderson, it costs about $1,000 per dealer in advertising and various other forms of support.  Reducing the number of showrooms would cut that figure sharply, the industry claims, though dealer backers insist that retailers actually cost little, if anything, for the manufacturers. (more…)

Dealers Battle for Survival in Court, Congress

Lawmakers to debate, judge to rule on planned retailer cuts.

by on Jun.03, 2009

The Senate will lend a friendly ear to dealers, concerned about cuts at General Motors and Chrysler, but it's unlikely they can do anything to save close to 3,000 retailers slated to lose their franchises.

The Senate will lend a friendly ear to dealers, concerned about cuts at GM and Chrysler, but it's unlikely they can do anything to save close to 3,000 retailers slated to lose their franchises.

Federal bankruptcy Judge Arthur Gonzales is expected to issue a ruling from his New York courtroom, today, on Chrysler’s plan to terminate 789 of its dealers, the same day that Washington lawmakers will take up the debate over those cuts and General Motors’ plan to terminate 2,000 of its own retailers.

Both makers insist they need to make the reductions in order to maintain a viable, competitive distribution network that can effectively compete against their import rivals.  But opponents insist that such claims are overblown, that the makers will wipe out thousands of independent businesspeople, eliminate tens of thousands of jobs and devastate communities around the country.

Both makers have already been hit with lawsuits aimed at blocking the proposed cuts, though with GM and Chrysler both under court-ordered bankruptcy protection, it appears highly unlikely such measures would do much, especially if Judge Gonzales and the judge in the GM case, rule in favor of the automakers’ plans.

In the Chrysler case, a group representing about 300 dealers are hoping to block the dismissals.  Observers say the motion is unlikely to succeed, as Judge Gonzales has ruled in favor of Chrysler and the White House – which helped draft the automaker’s turnaround plan – in almost every instance.

Subscribe to TheDetroitBureau.comLawmakers, however, have threatened to intervene separately.  A proposal floated by Texas Senator Kay Bailey Hutchison – and later withdrawn – might have blocked federal aid for the two makers if they didn’t take steps to assist their dealers.

That doesn’t mean Congress is giving up on the matter.  GM CEO Fritz Henderson and Chrysler Vice Chairman Jim Press will be among those testifying before the Senate Commerce Committee, today.  The meeting was called by the committee’s chairman, West Virginia Senator Jay Rockefeller, who wrote that, “The egregious time frame and terms of these franchise terminations seem unprecedented to me.” (more…)