GM faces French dealer challenge over Chevy exit from Europe

PARIS (Reuters) -- General Motors Co. is facing a legal battle with a group of French Chevrolet dealers who are preparing to go to court over the terms of the brand's withdrawal from Europe.

GM plans to halt Chevrolet sales in the region at the end of next year and has opened negotiations to end dealer contracts.

But France's CNPA, which represents retailers, repair shops and service providers, has called a news conference on Tuesday to announce legal action on behalf of a group of Chevrolet dealers who have rejected GM's terms.

The court challenge, to be filed on Monday, accuses GM of failing to honor compensation payments owed to dealers as it unwinds franchise contracts, a CNPA spokeswoman said.

GM France said it is not yet aware of any legal action. "All contracts have been respected," a spokesman said, declining to comment on their terms. Cancellations are being negotiated on a case-by-case basis, he said.

Dealers are seeking redress for restructuring costs, previous investments to meet GM showroom requirements and the impact of Chevrolet's withdrawal on the value of their businesses and vehicle stocks, according to the CNPA.

The association declined to say how many of the Chevrolet brand's 133 French dealers are backing the challenge.

Chevrolet's European sales have remained low since GM relaunched the brand in the region in 2005. In Europe, Chevrolet mainly sells small cars such as the Aveo subcompact and Spark minicar, both built by GM Daewoo in Korea.

Chevrolet's vehicle sales in the European Union fell 18 percent to 138,545 last year, according to industry association ACEA, giving the brand a 1.2 percent market share.

The brand's 2013 sales in France dropped by 13 percent to 21,518 for a 1.2 percent share, according to data from the CCFA auto association.

Chevrolet has about 1,900 dealers across Europe.

Automotive News Europe contributed to this report