The National Association of Minority Automobile Dealers said it will “soon” sign a memorandum of understanding with General Motors Co. accepting the automaker’s offer last week to institute binding arbitration for rejected dealerships, provided legislation to reverse dealer terminations is dropped.
The dealer group said the GM offer will allow its members to seek additional wind-down money from the automaker in appropriate cases or fight for reinstatement.
The National Automobile Dealers Association and the Committee to Restore Dealer Rights, a rejected-dealer advocate, have criticized GM’s plan as inadequate.
NAMAD President Damon Lester declined to say when the agreement with GM would be signed.
Marjorie Staten, executive director of the GM Minority Dealer Association, said she has “personal concerns” about the plan but “pursuant to NAMAD’s leadership this was the best plan possible.”
Todd Bullard, NAMAD’s attorney, said the minority dealer group objects to legislative action because the proposal in Congress to restore dealer rights favors large dealers and excludes small, rural, and minority dealers who don’t have the financial ability to go back into business or ride out a lengthy court battle.
“How many dealers have the cash, the money to be reinstated, to reopen their stores?” Bullard said. “Look at the passage of time since the bankruptcy.” The current proposal, he said, “favors the select few that have the lobbying resources and the financial resources to push this through.”
Congress is still revising that proposal, and its final form remains unclear.
Also making the GM plan attractive, Lester said, is that the automaker has indicated a willingness to provide some relief to wind-down dealers in GM’s dealer development program who bought out GM’s interest in their stores with funds borrowed from a GM-controlled entity in the past four years.
That includes GMAC Financial Services, which was GM’s captive finance company until it became a bank in late 2008.
Some minority GM wind-down dealers have been left with huge personal debts from having bought out GM’s interest in their stores with money borrowed from GMAC.
“You have to have a nonlegislative solution that provides a great deal of flexibility to allow GM to work with the dealer body in good faith to address those very unique issues,” Bullard said.
“They are looking at the inequitable situation caused by their bankruptcy, and our dealers holding the financial obligation,” he said. “Their press release tracks a number of the things we’ve negotiated in good faith in our memorandum of understanding.”
GM’s plan, outlined last week in a press release, includes a commitment to reveal to wind-down dealers the criteria it used in the rejection of their dealerships and a face-to-face review process for those affected dealers who are still in business.
The process includes binding arbitration for dealers who are not satisfied with the review process. “The arbitration will expressly be limited to whether GM selected the dealer to receive the wind-down agreement on the basis of its business criteria,” the press release stated.
Lester said the next step is to join with auto manufacturers to approach financial institutions, including former captive finance companies, to find ways to help surviving dealers.
He said that is included in the memorandum the group plans to sign with GM.
“All of the focus has been on reinstatement,” Lester said. “But the voice of the smaller guy who doesn’t have the ability to be reinstated -- that’s the voice we represent.”
NAMAD said it has no agreement with Chrysler Group, which also released a plan for working with rejected dealers.