GM Amends New Contracts

Following a five-hour meeting on Friday and numerous email exchanges over the weekend with NADA officials and members of its national dealer council, General Motors is amending the new -- and stringent -- franchise agreements it mailed to surviving dealers last week. (NADA Approves GM’s Modified Dealer Participation Pact).

The meeting went so long, members of GM's contingency, including executives Troy Clarke and Mark LaNeve, had to reschedule their flights back to Detroit.

You can read my column on the danger these contracts pose to the automotive retail system here.

GM is overnighting its clarifications and amendments to its dealers today. Dealers now have until Monday June 15 to sign and return the agreements (extended from Friday June 12).

The amendments, or clarifications, for the most part, soften language found in the agreements mailed last week.

NADA also is sending a letter to its GM dealer members outlining the auto maker's clarifications.

Regarding the more demanding sales requirements, NADA's letter says GM will hold a Reinvention Business Plan with its continuing dealers in the first quarter of next year "where 'appropriate' sales targets will be agreed upon." The new requirements will take effect in the second half of 2010 or in 2011, "based upon overall market factors."

Similar language is provided for the new inventory requirements.

Meanwhile, NADA says GM has agreed to work with its dealers "reasonably" regarding exclusive showrooms and may extend the December 31, 2009 deadline in certain cases.

GM also clarifies that the dealer's waiver of protest "is not designed to allow GM to add new dealers into an existing dealer’s area of responsibility. GM intends only to realign current points, not add dealers to a market."

According to NADA, GM will eliminate paragraph 8 from the agreements sent last week, which provided special rights to GM in cases where a dealer allegedly fails to meet the requirements of its franchise agreement. Instead of reserving special rights, any remedy sought by GM will be in accordance with state franchise laws.

GM also is providing clarifications to the wind down agreements it sent to dealers it is terminating later next year.