View Full Version : Is GM sending out Termination Letters?
A news report from Reuters indicates that GM has identified poor-performing dealerships and has started sending Termination Letters to the target dealers. GM has concluded that they cannot reduce their dealer count fast enough based on attrition alone.
Given the genuine fear dealers have about a GM bankruptcy filing, receiving a Termination Letter may not be such a bad thing. :(
Here's a link to the news report: http://uk.reuters.com/article/motoringAutoNews/idUKIndia-39070920090416?pageNumber=1&virtualBrandChannel=0&sp=true
dgale
04-16-2009, 03:31 AM
It's going to get very interesting from here on in. According to another Reuters report GM is considering dropping Pontiac and GMC. http://www.reuters.com/article/GCA-autos/idUSTRE53F0AD20090416. if this happens it would seem that Buick would fold into Cadillac,Buick can't certainly stand on its own. All I know and can surmize from this is that a lot of dealers are going to get screwed and be heading for the bankruptcy court. The question is whether a GMC customer will settle for a Chevy. I know in our area most won't and that is probably why we outsell the Chevy store. A lot of sleepless nights ahead for us GM dealers.
SHACOS
04-16-2009, 07:27 AM
But the real difference between Chevy and GMC is just marketing? So isn't it a question of front loading the potential customers with reasons why GMC and Chevy are exactly the same?
I would think this would solve the issue.
Txflyer
04-16-2009, 07:35 AM
I think most GMC customers might say they'd never buy a Chevy, but given a choice of a Chevy or a Ford I think they'll soon be driving Chevys.
The differences in the two are purely marketing.
danderson
04-16-2009, 08:22 AM
The question is whether a GMC customer will settle for a Chevy. I know in our area most won't and that is probably why we outsell the Chevy store. A lot of sleepless nights ahead for us GM dealers.[/QUOTE]
If the consumers only choice is Chevrolet then that would be the route they would go. It gets back to Chevrolet vs Ford instead of building a product that competes with another product they already build..........
It's going to get very interesting from here on in. According to another Reuters report GM is considering dropping Pontiac and GMC. http://www.reuters.com/article/GCA-autos/idUSTRE53F0AD20090416. if this happens it would seem that Buick would fold into Cadillac,Buick can't certainly stand on its own. All I know and can surmize from this is that a lot of dealers are going to get screwed and be heading for the bankruptcy court. The question is whether a GMC customer will settle for a Chevy. I know in our area most won't and that is probably why we outsell the Chevy store. A lot of sleepless nights ahead for us GM dealers.
That Reuters' article fits perfectly with the other news reports suggesting GM needs to make big cuts in their dealer network.
Concerning Buick, based on what I've read the only reason GM would keep that brand is because it's huge in China. For the U.S., I agree with your assessment that there's no way a Buick dealer could survive as a stand-alone and they would likely be added to the Cadillac dealer network.
Sadly, I think there are many sleepless nights for all GM and Chrysler dealers. :( Everyday it appears that bankruptcy is a more likely outcome.
okcarl
04-16-2009, 08:59 AM
The worst part of all of this is that we dont really know what is going on. We hear it in the press just like everybody else, and are left to speculate on the future of GM as well. This could very well be true or complete speculation by the press in an attempt to keep bashing GM
The worst part of all of this is that we dont really know what is going on. We hear it in the press just like everybody else, and are left to speculate on the future of GM as well. This could very well be true or complete speculation by the press in an attempt to keep bashing GM
Has GM done a better job communicating with their dealers than Chrysler?
We've all been critical of Chrysler's last two Conference Calls - has GM done anything different or better?
okcarl
04-16-2009, 09:51 AM
No they both suck. I mentioned that meeting I was at with Kate Hardy from GM. Well it was just before the last deadline with the Gov. Her statement was that GM was confident that they were going to get the green light from GM and that all was rosy. Well she got that one wrong. GM has no clue just like Chrysler has no clue what is really going to happen. They are just living day by day and hoping for the best while trying to placate the entire dealer body.
dgale
04-16-2009, 10:00 AM
Not to be cynical,but perhaps these reports are deliberately being sent in order to encourage some dealers to terminate their franchise agreements. Who knows, look what other actions GM has done, curtailments,delays in rebates, all of which have certainly driven some dealers out of business. Makes you want to really examine and question everything.
danderson
04-16-2009, 10:38 AM
The sad thing is having to read everything in the news and not from GM. The communication so far has been less than stellar. Our field reps claim they know nothing and I tend to believe that they are telling the truth. Seems like everything coming out of Detroit is coming through news outlets instead of from the Manufacturer to the dealer. I actually have to feel sorry for the reps that go into the dealerships. My rep was in yesterday and I was asking him a few questions and he really quick replys. He told me it because he has almost 20 dealers that he calls on and has had to repeat the answers (non-answers) to each one of them as we are all asking the same questions. Now the media is reporting about closing stores as early as June 1st and nobody knows which ones so the default thinking will be that each employee (not dealer) will think it could be the store they are working at. I may be way off base but like the line from the movie Roadhouse: "Its going to get worse before it gets better"
okcarl
04-16-2009, 02:31 PM
Well as I speculated GM has come out and said that this report is not true. I sure hope so.
Well as I speculated GM has come out and said that this report is not true. I sure hope so.
Here's a news report where GM refutes the story about eliminating the Pontiac and GMC brands. They also refute that there's a plan in place to terminate target dealers on June 1st. Here's the link: http://www.autoweek.com/article/20090416/CARNEWS/904169983
The report also indicates that GM will have a Conference Call with journalists tomorrow to provide an update on their restructuring plans.
Makes you want to really examine and question everything.
I totally agree. It's reached the point where you have to examine everyone's motives and try to read between the lines.
The Chrysler dealers have learned this the hard way with Cerberus and Nardelli. A year ago at this time the Chrysler dealers were invited to a theater-event where they were told the future was bright and the product pipeline was full of exciting new vehicles. They were told that Chrysler was meeting all of their internal targets and if the dealers could survive for 18 months they would be well-rewarded. So much for that forecast.
It's just like Wall Street - look at how many CEOs were lying about their company's prospects right down to the final day.
fullspeed
04-24-2009, 09:26 AM
Around here they are calling for 1400-1600 GM stores to close nationwide. Some say it will happen fast, others like me, think it will take a few years and a whole lot of lawsuits. I don't buy the GMC thing, but I do believe that Pontiac is doomed. They need to split Pontiac up and spread the models around to Buick and Chevy. We have been trying to acquire Pontiac but lately are not so sure it would be a good move. Look at the line up and future plans and that's all you need to see. At least Buick has a plan and thank god for that Chinese market keeping it alive.
I don't buy the GMC thing, but I do believe that Pontiac is doomed.
Did you make that prediction before or after this news report? click here (http://www.bloomberg.com/apps/news?pid=20601087&sid=aSzU5bt90cWM&refer=home&loc=interstitialskip)
I didn't see anything in the press until about two hours after your post. That's pretty cool if you have the ability to predict future events..... :cool:
Txflyer
04-27-2009, 03:23 PM
From what I heard on the news conference it sounds like letters are being sent out. Anyone rec'd one yet, or heard EXACTLY when the dealers are supposed to know if they have been tapped?
dduke
04-28-2009, 09:23 AM
Sounds like letters will go out the month of May and based on their numbers there will be 2,641 of them. 450 of which will be Saturn, Saab & Hummer. That leaves 2,191 additional GM dealers about to get the axe. Ouch.
scooter
04-28-2009, 09:56 AM
These numbers are a bit confusing...If a GM dealer has Buick, Pontiac, & GMC and with Pontiac going away, the dealer will not close down, just lose the franchise, from what I read yesterday there are only 35-39 stand alone Pontiac dealers...so with them closing down it will not reduce the dealer count by much...same thing for Hummer and Saab dealers...when they are gone the franchise count is down but the acutal dealer count is the same...the only one that was mostly exclusive was Saturn and that is only 400 dealers....So I guess in my long winded question is dose closing a franchise mean the same as closing a dealer????
Txflyer
04-28-2009, 10:09 AM
Broadcast today said they would start notifying dealers the week of May 11th.
lsx only
04-28-2009, 11:46 AM
watched the broadcast they should have sent us a bottle of vasaline so we could sit down afterwards,its gonna be a crazy year
possum
04-28-2009, 11:58 AM
What is "underproduction" ? Who, and how do they decide, what are the rules?
watched the broadcast they should have sent us a bottle of vasaline so we could sit down afterwards,its gonna be a crazy year
lsx only - Welcome to DealershipForum.com :)
I totally agree, this is going to be a crazy year. Who knows what will happen from one day to the next?
What is "underproduction" ? Who, and how do they decide, what are the rules?
Great questions.
Based on what I've read so far, this appears to be the best answer:
"Company spokeswoman Susan Garontakos confirmed the numbers and said GM is in the process of deciding which dealers to keep based on their sales performance, capitalization, potential profitability, size, image and customer satisfaction scores."
For the rest of the news story - click here (http://news.yahoo.com/s/ap/20090428/ap_on_bi_ge/us_gm_dealers)
CL Pgh
04-28-2009, 02:39 PM
Seems to me State franchise laws are going to come into play. I know PA is very difficult to terminate a dealer based on performance.
Welcome aboard lsx!!!
Txflyer
04-28-2009, 02:58 PM
Seems to me State franchise laws are going to come into play. I know PA is very difficult to terminate a dealer based on performance.
My guess is that if GM starts running into too much interference from state franchise laws, NADA lawyers, etc. that you'll see the "surgical bankruptcy & you don't get anything" threat come into play. :(
lsx only
04-28-2009, 06:59 PM
gm is gonna have a hard time buying all the dealers out
gm is gonna have a hard time buying all the dealers out
I think that's the main reason bankruptcy is so often spoken as a solution for GM's problems. The simple fact is GM doesn't have the money to buy-out their dealers and bankruptcy will likely allow them to sever their dealer agreements.
For bankruptcy to work, promises need to be broken and someone has to lose. Sadly, it appears the dealers are taking a bigger hit than most of the other stakeholders because no one is looking out for their interests. :(
Txflyer
04-29-2009, 10:11 AM
. . . and it just keeps getting better and better. :(
Here's the latest headline from Automotive News:
"GM will pay terminated dealers only for inventory, parts"
. . . and it just keeps getting better and better. :(
Here's the latest headline from Automotive News:
"GM will pay terminated dealers only for inventory, parts"
I just read the article - it's hard not to get overwhelmed with all the bad news. :(
Sadly, I'm convinced that many dealers are going to get screwed over simply because they're such easy targets. The UAW has the President looking out for their interests, who's looking out for the dealers?
danderson
04-29-2009, 02:02 PM
I just read the article - it's hard not to get overwhelmed with all the bad news. :(
Sadly, I'm convinced that many dealers are going to get screwed over simply because they're such easy targets. The UAW has the President looking out for their interests, who's looking out for the dealers?
I may be mistaken, but I think I read somewhere yesterday that the UAW will get a seat on the board......Wouldn't that be like letting Osama Bin Laden sit on the Joint Chiefs of Staff????? I know a little extreme but just think about.....The UAW is a big part of the problem and now they are getting a stake in the company???? I'm so distraught over this whole thing that I don't really have a lot of words that would make sense right now.
The UAW is a big part of the problem and now they are getting a stake in the company???? I'm so distraught over this whole thing that I don't really have a lot of words that would make sense right now.
The news-flow has been so fast that it's been mind-numbing. :(
Concerning the UAW, it's still not clear how much power they'll have, but I share your concern.
There was a great article that reviewed what happened at United Airlines when they became "employee owned" after their first bankruptcy. It didn't turn out well......
I'll see if I can find the article and post a link.
lsx only
05-07-2009, 12:59 PM
i believe gm will file bankruptcy next month so the little dealers will not be able to sue them,i know the big dealers hate us since we work hard to keep them in line, we dont have all the 2 percent advertising expenses 300 dollar doc fees etc.
i believe gm will file bankruptcy next month so the little dealers will not be able to sue them,i know the big dealers hate us since we work hard to keep them in line, we dont have all the 2 percent advertising expenses 300 dollar doc fees etc.
When you look at the losses GM reported today, I agree that a bankruptcy filing is almost certain. And to your point, I'm afraid that Chrysler will serve as an example of how easy it is for an OEM to reshape their dealer body when they have the power of bankruptcy.
In light of all the news, I'm surprised that the Intrade Website has the odds of a GM Bankruptcy at only 80% - click here (http://www.intrade.com/jsp/intrade/common/c_cd.jsp?conDetailID=670735&z=1241746911321)
Txflyer
05-07-2009, 06:57 PM
When you look at the losses GM reported today, I agree that a bankruptcy filing is almost certain. And to your point, I'm afraid that Chrysler will serve as an example of how easy it is for an OEM to reshape their dealer body when they have the power of bankruptcy.
GM had said in a previous IDL broadcast that any terminated dealer would have their tools, parts and inventory repurchased. No money for the franchise whatsoever, but in light of what Chrysler is doing the GM plan sounded like the better alternative. Now that they've seen what Chrysler is going to get away with, the GM method will probably mirror it. Say what you will about Rick Waggoner, but he at least had empathy for the dealers as well. Chrysler seems to have very little compssion for the dealers - just use them then throw them in the dumpster. :mad:
lsx only
05-08-2009, 11:59 AM
the new idl said we would not get paid for tools only parts and get rid of inventory,hate to say it but its not gonna be that easy for them,
Txflyer
05-08-2009, 12:05 PM
the new idl said we would not get paid for tools only parts and get rid of inventory,hate to say it but its not gonna be that easy for them,
Which new IDL?
possum
05-08-2009, 12:15 PM
Anything is easy for them if they file BK. IF they agree to the Inventory, don't even sweat the parts, tools, etc., that stuff is chump change compared to the newinventory.
Anything is easy for them if they file BK. IF they agree to the Inventory, don't even sweat the parts, tools, etc., that stuff is chump change compared to the newinventory.
When I hear Chrysler's Jim Press refer to bankruptcy as a "once in a lifetime opportunity" I'm convinced that GM is going to take the same path.
If a GM dealer can walk away and have his vehicles repurchased, it's an offer he'd have to study closely because the alternative could be a lot worse.
lsx only
05-08-2009, 02:44 PM
you also have franchise laws that come into play
you also have franchise laws that come into play
You make a valid point, State Franchise Laws are a wild card at this point. No one seems to be certain that National Bankruptcy Law trumps State Franchise Laws.
My fear is that Chrysler is working on a plan that will circumvent State Franchise Laws. This thread addresses that possibility - click here (http://www.dealershipforum.com/forums/showthread.php?t=1044) (Start reading at post #8 for the theory.)
DealerEx
05-11-2009, 08:07 AM
Every single "legal expert" that I have heard or read in the last 6 months has clearly stated that Federal BK Laws DO supercede state franchise laws, and that certainly seems correct to me, because all other Federal Laws supercede state laws. Consider federal legislation on civil rights, alcohol, tobacco, drugs, interstate commerce, import/export, etc...in every case federal laws overule any applicable state statutes.
fullspeed
05-11-2009, 03:46 PM
Letters are going out. All stand alone Pontiac dealers have been notified as to what is going to happen. What that is specifically I don't know. I was told that by the end of the week everyone that is on the list will know.
Personally I find that hard to believe. It's gonna take weeks for everyone to know what's happening. Plus how do you deal with the folks that want to try and figure out a way to make it work such as the stand alone GMC or Buick guys. What if they were to work out a deal to join together? There is a situation here where a dealer is losing Pontiac so he will be left a stand alone GMC store. Right up the street there is a store that houses Buick, Hummer, Saab and Saturn, all in three buildings. So the other guy is gonna be left with Buick only. How are they going to get the GMC and Buick to get under one roof?
dgale
05-11-2009, 04:43 PM
It's not going to be as simple as GM may thing. When you look at all the combinations out there GM is going to have to put some money on table to get more dealers in the right mix. We may even see undually which was common in the early 70's. Chevy Buick duals could come apart or probably more super stores with all the franchises together. Even with fewer dealers and no lease deals to be had it is going to be hard for dealers to survive on one less franchise.
possum
05-12-2009, 04:31 AM
CNBC reports this morning that GM Execs are dumping their stock...........rats leaving the ship. This whole process actually makes we wonder if I'm scared to get cut, or am I scared that I have to stay?????
dgale
05-12-2009, 04:54 AM
Spoke to my rep yesterday and he is as clueless as we are as to the whole process as to who is getting a letter, when, content,method of contact, etc. It would have been nice if the factory would have been a little more candid about the whole process and let every dealer know whether they are going to be part of the new GM or not. Right now it appears that it won't be until sometime in August that every dealer will know where they stand. Waiting sure sucks. Meanwhile everyone is on pins and needles. No one is sure if they are safe unless your one of the big boys. Probably 80% of the dealers fall into the maybe category, with the other 20% divided evenly between the safe and the not safe. I'm figuring memorial day weekend for the bk announcement. Gives the market the weekend plus and extra day to digest the situation. And as far as all these offers all of a sudden for saab, hummer, and saturn. Makes you wonder if it isn't some sort of smoke screen so that dealers don't terminate now. But if they go bk it really won't matter since termination rights prior to a bk probably will be thrown out the window. Just a wait and see game right now with all chrysler and gm dealers essentially helpless.
lsx only
05-12-2009, 06:36 PM
i cant believe it could be until august before we find out
dgale
05-12-2009, 07:04 PM
What I meant is that by August everyone should know their status. Letters are beginning to go out this week with the process concluding sometime in August.
Spoke to my rep yesterday and he is as clueless as we are as to the whole process as to who is getting a letter, when, content,method of contact, etc. It would have been nice if the factory would have been a little more candid about the whole process and let every dealer know whether they are going to be part of the new GM or not.
Thanks for the update. I was under the impression GM was doing a better job with communication than Chrysler, but maybe that's not the case?
The waiting does suck - it's tearing people up. How can you make intelligent decisions about your future if you don't know what direction you're going?
possum
05-13-2009, 04:30 AM
Even if that won't give names, they could at least outline the process involved. It will be years, if ever, before Dealers will look at the Factory guys in the same light.
lsx only
05-13-2009, 07:02 AM
our rep clearly told us it would not be a letters just a phone call
Even if that won't give names, they could at least outline the process involved.
Excellent point - if GM and Chrysler really cared about their "partners" they would at least outline the process so dealers could calculate their own "worse case scenario."
dgale
05-13-2009, 01:01 PM
According to Bloomberg News GM is notifying 1000-1200 dealers on Friday that they will not renew their franchise agreements. Another 48 hours of wondering. Let's see how many reps are around Friday when everything hits the fan.
According to Bloomberg News GM is notifying 1000-1200 dealers on Friday that they will not renew their franchise agreements. Another 48 hours of wondering. Let's see how many reps are around Friday when everything hits the fan.
If they're anything like their Chrysler counterparts they'll be told to stay away from dealerships until the letters have been received.
Thanks for keeping this thread updated. :) I've been spending so much time trying to keep up on Chrysler that I've been falling behind over here.
lsx only
05-14-2009, 08:16 AM
guess we are gonna recieve a letter tommorow
dgale
05-14-2009, 08:22 AM
Just spoke to my rep (who by the way is a great rep-understands what is really going on and goes the extra mile) who was told to stay away from all dealerships and not to answer his phone this weekend. Just saw the list of Chrysler dealers, a few of whom I know personally from college. It really sucks to see their lifes destroyed in an instant. Some of these guys just in the past few years put up new stores and now they have nothing.
lsx only
05-15-2009, 07:35 AM
we recieved our letter this morning not gonna comment on it at this time
F&I Pro
05-15-2009, 08:12 AM
I'm with a CJD dealership who was fortunate enough to make the cut...at least I think we're fortunate!....It's my guess that GM will file BK at month end and these dealers receiveing the Bad news will be listed as non secured creditors just as chrysler did leaving those high, dry and screwed just like the CJD dealers who were cut, some of which are in the upper 3-5% of sales volume locations....no rhyme or reason to some of the cuts..good luck to you all
dgale
05-15-2009, 09:02 AM
Just learned I'm safe. Thank God. Apparentley mostly Chevy dealers are getting the letter. Now we have to see what GM's plans are under phase two-consolidation plan.
Txflyer
05-15-2009, 09:06 AM
We're a Chevy dealer and got the letter. :(
We're a Chevy dealer and got the letter. :(
Sorry to hear that you received the letter. :(
There's been so much hardship expressed on this forum over the past couple of days that I haven't had a chance to keep up. On so many levels it's unfair, but who are you going to sue? There's no question that GM's going to follow Chrysler into Chapter 11 making them "Judgment Proof" too. :mad:
crowe
05-15-2009, 09:47 AM
It’s my understanding if you get a GM letter FedEx today you are toast & if you don’t get a letter your OK for now. Any truth to this?
danderson
05-15-2009, 09:57 AM
We did not receive a letter. From what I understand, if you don't get a letter you are safe. Just listened to the media conference call and they said that there will NOT be a list like Chrysler. Since Chrysler is in BK it is a matter of public record. On the GM side Mark Laneve said that the only people that know all the names are him and his team and that is it. So.....I guess now the media speculation begins!!!!
gopwillie
05-15-2009, 10:01 AM
Pretty sad that they aren't notifying 'good' dealers so we don't have to keep looking out the window for the FedEx truck
Thanks for the update. It's good to hear that GM intends to keep the list confidential - what the Chrysler dealers went through yesterday was brutal. :(
That said, you're right about media speculation. I'm sure they're writing their stories right now...
F&I Pro
05-15-2009, 10:28 AM
Just posted in the Automotive news, GM states that it will likely follow chrysler's lead if and when it files BK at the end of the month....my guess is that GM dealers receiving the bad news will find themselves in the same boat as listed Chrysler dealers...a lot sooner than renewal of franchise agreements
lsx only
05-15-2009, 12:50 PM
42 years thanks gm for the good screwing
SWELLS40241
05-15-2009, 02:40 PM
Just heard on the news that one of the local dealers here that was cut by Chrysler yesterday, got the same from GM today. What a way to end the week.
dgale
05-16-2009, 07:38 PM
Interesting who got booted off the island and who remained. I know of two nearby dealers that probably should have gotten the letter but didn't. One sells maybe 50 new per year and the other is on floor plan hold,while a dealer selling in excess of 450 units got the dreaded letter. The only reasoning I can see behind this decision is for these two dealers to be taken care of under round two with another dealer assuming their franchises. If GM was to terminate them and give another dealer their franchise they may be open to lawsuits and perhaps GM is hoping to do this under round two thereby expediting the time table for changes rather than 10.2010. Round two is to begin sometime around the end of June, with dealers being told that 1) they may have to relocate 2) may have to build new facilities or do image programs 3)buy out their nearest competitor or another point or add additional capital. Any one of these items may force a dealer into terminating. Time will tell. But what I have heard is that Chevy is the division that has taken the biggest hits. This may be to strenghten all remaining Chevy dealers when there is only Chevy Caddy. Who knows? Just plain crazy out there and remaining GM dealers still have plenty to worry about. Good luck to all surviviors.
XGATOR
05-17-2009, 05:49 AM
yea a dealer next to me (Chevy) received a letter asking how he planned to upgrade his facility, did not can him or anything, I am Chrysler and next door to him and I am ok with Chrysler, but I know for a fact he is a less than 100 a year new unit dealer...........15 minutes down the street is two 100 plus a month new unit dealers, yet one of them got the axe being GM..........wierd :rolleyes:
Txflyer
05-17-2009, 07:09 AM
I think most of the dealers are keeping mum on the subject. Including us, I'm only aware of 3 dealers in TX that received letter. Out of the number they sent I'd expect between 40-70 Texas dealers would have gotten them.
Several within 100 miles of us have said they got nothing, but I think they are lying.
Funny - we are in a town of about 9000. We are a Chevy dealer dualed with Chrysler (which I'm sure hurt us). 12 year old very nice facility (built at GM's insistence when we took over the dealership). Our techs are in the top ranks of certification and we have a very good relationship with our sales rep. We got the "bye bye" letter.
Our closest GM store is 2 miles away. Cadillac/Pontiac/Buick/GMC store. 50 year old building, less sales volume than us, less certified techs, lot clear across the highway from the showroom, bad service audit 2 years ago. The list of negatives goes on and on. They claim not to have gotten a letter.
Two days later and I'm still scratching my head. :mad::confused:
dgale
05-17-2009, 07:22 AM
Just rewatched LaNeves weekly telecast. By is mathmatics another 400-800 dealers will be going in round two. I'm sure a good number of dealers are lying about their status, but I know in our area no one got the boot. Can't figure it out considering their trying to make everyone stronger. Not that I want to be the guy out, but in this market with the sale rate off 40% who's going to survive.
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