General Motors and Chrysler are using U.S. Bankruptcy Court to purge competing brands from their dealerships.
"We don't want non-GM brands dualed in the same showroom," says Mark LaNeve, GM's sales chief.
Bankruptcy Court is a rare opportunity for the two automakers. Since the 1950s, import automakers have established U.S. sales networks by granting franchises to top Detroit 3 dealerships.
And for decades, dealers have thwarted Detroit 3 automakers by lobbying state legislators to pass state franchise laws that protect dualed dealerships. But bankruptcy judges can cancel these protections.
In new proposed dealer agreements, GM would require all dealerships to remove non-GM brands from their showrooms. It's OK to keep a non-GM brand in a separate building on a dealership campus, LaNeve says.
If the non-GM brands aren't removed from showrooms, GM could terminate the franchise, LaNeve says.
GM, which filed last week for Chapter 11 protection in U.S. Bankruptcy Court, is asking the court to approve the new dealership agreements.
The proposed GM agreement vexes one East Coast dealer, who declined to be identified for fear of retribution. Despite LaNeve's assurances, he fears that the new agreement might be broad enough to allow GM to tighten further its prohibition on rival brands.