General Motors recently announced it will be eliminating 1,124 dealers by 2010, but the company’s remaining dealers will not necessarily be safe from termination. General Motors announced on Monday it will be requiring its remaining dealers to sign a “participation agreement” or face being lumped together with the ‘old’ GM in bankruptcy court.
Dealers willing to sign the agreement will be forced to follow all of GM’s requests, such as removing non-GM brands from showrooms. GM won’t be demanding new facilities initially – due to the state of the economy – but could ask dealers to improve their current stores. Those not willing to ink the agreement will be lumped into the ‘bad’ GM and terminated almost immediately.
“They get put into the old company and get a fairly quick termination, like the Chrysler dealers did,” Mark LaNeve, GM’s head of sales and marketing, told Automotive News. “Their sales and service agreement will be rejected and put into the old company.”
Additionally, those dealers already earmarked for closure will be asked to sign a “wind-down” agreement. The wind-down agreement will guarantee dealers funding over the next 17 months until their store is closed, but also prohibits dealers from taking legal action against GM until 2010.
Dealers will have until mid-June to sign the papers.
