Florida has asked General Motors to explain why the automaker's deal to buy the core assets of bankrupt Daewoo Motor Co. does not violate state law and the rights of Daewoo dealers in the state.
In a letter delivered Friday, May 10, to William Stacy, GM's dealer network development manager, the state's Department of Highway Safety and Motor Vehicles asks for answers to four questions:
1. Does GM plan to sell Daewoo vehicles in Florida?
2. What arrangements are being made to ensure warranties and parts availability for Florida Daewoo owners?
3. What arrangements are being made to honor the franchise agreements of Florida Daewoo dealers?
4. Why is GM not in violation of Florida law, which provides that a dealer franchise agreement "shall continue in full force and operation," notwithstanding a change in ownership of the distributor?
The letter, a copy of which was obtained by Automotive News, asks for a reply by June 1.
GM spokesperson Toni Simonetti reiterated the automaker's position that it has no relationship with Daewoo Motor America and no responsibility for its dealers. But she said GM would provide Florida with the requested information.
GM last week signed an agreement with Korea Development Bank, Daewoo's main creditor, to acquire a 42 percent stake in a new company that will take over two Daewoo assembly plants in Korea and sales networks in Korea and Europe. But, as expected, the deal excludes Daewoo Motor America and its 525 U.S. dealers.
The deal, which is subject to U.S., European and Korean regulatory approval, is expected to be completed in late July or early August.
The Department of Motor Vehicles letter to GM followed by one day a filing by 23 Florida Daewoo dealers for a declaratory judgment action, essentially a request that the department clarify the dealers' rights under state law.
According to the filing, the GM deal summarily leaves the U.S. sales arm and its dealers with no money and no product, thereby raising questions about whether the rights of the dealers have been violated. The action requests that an administrative law judge be assigned to conduct hearings into the legality of GM's refusal to keep Daewoo's U.S. dealers.
Loula Fuller, a partner in the Tallahassee law firm that represents more than 300 U.S. Daewoo dealers, says the Florida action will be followed by similar actions in Texas and Pennsylvania, other states with strong dealer-protection laws.
The filing in Florida is important to Daewoo dealers because it could be a guide to other state governments on how far they will go to protect Daewoo franchise agreements.