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GM Offers Closing Dealers up to $1 Million

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Jun 4th, 2009 by Ross Edwards

GM dealerships that won’t have their contracts renewed in October 2010 are being offered between $100,000 and $1 million to go gracefully. According to Left Lane News, GM sent out a “wind-down” agreement to the 1,124 dealers this week that is designed to help ease the franchisees out of GM.

The money comes with a few stipulations. Dealers who sign the “wind-down” agreement will be required to remain in business until January 2010, won’t be able to sell their excess inventory back to GM, and won’t be allowed to buy any new inventory. The terms of the agreement also state that dealerships accepting GM’s offer won’t be able to sue the company until after their franchise agreement expires in October 2010.

Dealers who don’t accept the “wind-down” offer will be lumped in with GM’s “bad assets” during the bankruptcy and will have their franchise agreements terminated immediately, like Chrysler’s recently closed dealerships.

When I was young, and someone from my group of friends got a new video game that didn’t have a two-player mode, we would each play through the game until our character died, then trade off the controller. We’d eventually get through the game because once you’ve seen your friend fall into the spike pit, you know how to avoid it. Chrysler’s already fallen into the spike pit by treating its dealers and customers badly during the bankruptcy and upsetting a lot of potential customers. It looks like GM is avoiding this trap, at least with its dealers.

Closed Car dealership picture

GM’s agreement to “wind-down” the dealerships it plans to cut rather than abruptly closing them should help some dealers avoid bankruptcy.

Picture via autos.msn.com.


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