At a special meeting arranged by NADA, Oldsmobile dealers were advised to consider carefully their settlement offers from General Motors and to raise questions with GM executives at Monday's Oldsmobile make meeting.
GM's sweetened offer to Oldsmobile dealers:
Clarifies special circumstances clause
Adds $200 to vehicle for facilities assistance
Includes dealer transfers in inventory
Raises potential price of deal to $3,100 per vehicle sold from $2,400
In December GM announced plans to phase out Oldsmobile within three years.
John Oyler, an attorney with McNees, Wallace & Nurick, which represents car dealerships, told dealers to consult their legal and financial experts, as well as to work with their local and state dealer associations to ensure they are protected legally. They should document in writing any special circumstances of their situation for their counterproposal to GM.
Butch Williams, a certified public accountant from Birmingham, Ala., discussed the terms of GM's sweetened deal with Oldsmobile dealers. The proposal adds extra payment for dealers who have special circumstances, provides increased dollars based on the Oldsmobile units sold within the dealership vs. overall sales, and clarifies what the original proposal defines as special circumstances. Williams said the potential for what a dealership could receive increases to $3,100 per vehicle from $2,400.
Williams noted that the tax implications of the settlement remain a thorny issue. According to the wording of GM's current proposal, money that dealers receive from their GM settlements would be taxed as ordinary income, which could cost them 20 percent more, instead of as capital gains. Dealers hope some or all of the money could be categorized as capital gains.