GM Gives on Go Forward Agreement

GM Gives on Go Forward Agreement

GM dealers going forward with the company gained some significant concessions last week as GM responded to outrage from dealers and NADA over the initial Participation Agreement it offered them.

In a letter sent this week, the company makes clear that while sales and inventory requirements may be greater for ongoing dealers; these will be mutually agreed upon in the course of a reinvention business plan meeting with each continuing dealer in the first quarter of 2010. GM says the increased sales expectations will be implemented in the second half of 2010 or in the 2011 calendar year, and will be based upon overall market factors. It also notes that inventory requirements will be based on these agreed upon sales expectations.

The letter also makes clear that:

All dealers will be expected to have an exclusive GM showroom by December 31, 2009.

In some markets, GM will expect totally exclusive GM facilities, while in others there may be dual use facilities other than the showroom allowed.

GM will meet with dealers to develop a plan for exclusive facilities or facilities where there may be shared elements.

GM is willing to work with dealers reasonably with respect to exclusivity decisions and dates for completion.

GM intends only to realign dealers, not add dealers to a market.

GM will only seek a remedy for breach of contract under the terms of the Dealer Agreement construed according to state law.

The language of the Dealer Agreement will largely be governed by the dealers state law.

The clarification letter is to be signed by the dealer to supplement the Participation Agreement.

Dealers have until June 15, 2009 to return the Participation Agreement.