General Motors Corp. has told its roughly 4,000 surviving dealers to stop selling non-GM brands in their showrooms by the end of this year, said an official of the company.
Mark LaVeve, GM’s vice president for sales, services and marketing, told the Detroit News in a letter that the dealers must also be prepared to sell more vehicles and improve the look of their showrooms, if necessary.
GM is seeking to close at least 2,400 of its nearly 6,200 dealers during its stay in bankruptcy court.
The company said it expects that its continuing dealers will remove non-GM brands from the GM showroom by Dec. 31, 2009, and will operate a showroom exclusive to GM products going forward…
Nearly 90 percent of GM’s continuing dealers have signed or verbally agreed to the participation agreements…
Should franchise agreements have this kind of power?
If Microsoft did this, they’d get sued.
A dealer of cars is a different legal animal than a retail store.
I don’t think this is really out of line. If the company is marketing themselves as a “GM Dealership”, they shouldn’t sell the competitors’ products. For example, in my town, we have a dealership that is “XXXXX Chevrolet / Kia”. If the business really wants to continue to sell Kias, they could always split the business. I think the real kicker here could be in used vehicle sales. Dealerships should still be able to sell any brand of used vehicle, although many of the lots have used vehicle divisions split into a different company already.
Auto companies are required to sell cars through a dealer, so yes, they should have more control over them than a normal company has over retail.
Eideard asked, “Should franchise agreements have this kind of power?”
You mean like a McDonalds can’t sell Burger King products? Um, yes. It is a mutually agreed upon civil contract. Any other questions?
duh. what about charging much higher tariffs on foreign cars and giving
the American auto industry some protection? this, along with pensions and not keeping up with the latest is what drove GM to the brink.
Can’t go into Burger King and get a Big Mac!
This strategy only works if GM is making cars people want. Otherwise those GM-exclusive dealers have nothing else to sell and may not stay in business.
#10 yep. Caveat emptor applies to those buying a franchise.
#10 and that is a good thing. GM has too many dealers at 6200 and they will have too many dealers when they shutter 2400 of them.
Umm.. Saturn already has these restrictions. Along with a lot of others in terms how many dealerships you can own, and how the dealership is ran, etc.
There are a lot of dealership owners that buy up rights to be resellers of different brands only because they want to sell one or two car line by that manufacture, and ignore the rest. This is what tends to hurt GM, Ford, etc.
what about charging much higher tariffs on foreign cars and giving
the American auto industry some protection?
One of the problems with this is what is an “american” car? There’s a Honda factory that opened up here in Indiana a year or so ago. Are Hondas American cars? Lots of the “big 3” automobiles are made outside of the USA so are they American cars? One could argue ownership but doesn’t Canada own part of GM now?
I think GM should be allowed to mandate that their dealerships don’t feature other manufacturer’s new cars but only in new agreements. They shouldn’t be able to go back and change their existing contracts with dealerships.
So if you’re a dealer selling both, do you stick with the foreign brand, or the company that has gone bankrupt?
# 14 jccalhoun said, “They shouldn’t be able to go back and change their existing contracts with dealerships.”
Umm, BK eliminated the old agreements…
17, If you’re in China you would drop Toyota and sell Buicks. The Japanese are having a tough time selling there while Buick is very popular in China.
Welcome to the end of America as we know it after the supreme court passed on the bankruptcy suit against Chrysler ( which was so entirely unconstitutional is was dumbfounding ) it is all over now, the Obama adminsitration got a green light to take over any industry it chooses and control any thing it likes and the rule of law no longer matters
Franchise contracts are powerless if they are illegal. In some places, this GM move amounts to either a suppression of trade or anti-competitiveness. But as GM is now basically a government department and it’s staff are overpaid civil servants, it might be considered to be OK. Hard to tell, really.
#19 – You’re right. Isn’t it interesting how the liberals were terrified of the “scary conservative” Bush appointees? Yet that same “overly conservative” court is upholding the most amazing breaches of the Constitution. I don’t get it.
You WILL only sell the Government Model.
You WILL only sell it in the color we say.
You WILL only make the profit we say you can.
Signed,
Majority Stock Holder
(we do this for your own good)
My favorite Dealer is closed, I can finally go buy a Toyota and don’t feel too bad about not giving business to my favorite GM dealer.
#21, “In some places, this GM move amounts to either a suppression of trade or anti-competitiveness.”
Anti-competitive? You mean like how the state governments involve themselves in the process in order to prevent these companies from selling directly to their customers, and instead are required to go through local middle-men (dealers)? Almost as bad as the death grip that liquor distributors maintain in many states.
If I want to sell Chevrolet and BMW what business is it of the government what I sell as long as they get their tax revenue?
This is madness! As a result may I take this opportunity to say to all of you who voted for Obama – You Suck!
I hope you like living in the soon-to-be 3rd world economy.
Dealers are given special protection by states, which prevent car makers from selling direct to customers (which a lot of customers would prefer and benefit from). Given that, GM has to strong arm dealers in order to put a good image out to the public. Buildings that are dirty and run down make GM look bad. A GM dealer selling Kia makes GM look bad. Get the states out of the picture, let GM sell direct if they want and then I’d back you saying GM shouldn’t have control over the look of the dealerships lots.
Those of you who think that this is a government decision are, once again, uninformed (surprise, surprise). These attempts by GM to stop dealers from selling competitive brands have been going on for years, with varying success. They’re either settled through negotiations or court. The bankruptcy has probably given GM’s VP for sales, services and marketing (Mark LaNeve, misspelled in the above article) an opportunity to tighten GM’s grip on remaining dealers.
http://detnews.com/apps/pbcs.dll/article?AID=/20090124/AUTO01/901240378
This is exactly the type of management decision that the administration wants to leave in the hands of GM managers.
What the eff is it with the right wing nuts? How the eff is Chrysler’s bankruptcy unconstitutional? Please, could one of you asshats just explain that?
This is what happens when Boss Limpdick owns stock in a company that goes belly up.
#8 jerry:
“what about charging much higher tariffs on foreign cars and giving the American auto industry some protection?”
Why do you want to punish me for buying a superior product that’s largely made in America?
#28, ‘temp,
This is madness! As a result may I take this opportunity to say to all of you who voted for Obama – You Suck!
Ya, maybe. But you right wing nuts that supported Bush got us into this mess. You suck BIG ONES.
Now quit crying like a baby, accept you idiots lost the election, stand back, and let a real man fix the economy.
#33 Mr. Fusion
>>you right wing nuts that supported Bush got us into this mess.
No, this entire mess is all on Obama or his teleprompter… it’s difficult to tell the difference.
Obama couldn’t fix a peanut and jelly sandwich much less an economy. You SUCK for always toeing the Obama line knowing full well he is full of crap. Just admit it and let the healing begin.
#31, “How the eff is Chrysler’s bankruptcy unconstitutional?”
Well, at least the Constitution actually grants the federal government the power to enact laws concerning bankruptcies. Which is a significant step up the justification ladder from 3/4 of the crap you regularly make up that the government is empowered to do.
Am I the only one who thinks it’s odd that the source for this information (at least the only link provided above) is a newspaper in China?