First Up: June 2009

CHAIRMAN'S PAGE  
In support of dealers

by John McEleney, NADA Chairman

Despite all the turmoil currently surrounding the auto industry, NADA’s core mission remains the protection of the legal rights and economic interests of the dealer. And to that end, we have never been more engaged than we are right now.

I recently testified on Capitol Hill before the Senate Commerce, Science, and Transportation Committee on the gross inequities in the way dealers have been treated in both the Chrysler and General Motors bankruptcy proceedings. I told the committee what I had told President Obama’s Auto Task Force in our three face-to-face meetings, and both GM and Chrysler leadership in our numerous meetings—explain to me why dealer reductions will make these companies more viable? The retail network—the land, the buildings, the employees—the dealers pay for it all. Dealer cuts won’t save any money, because dealers don’t cost the manufacturers any money, it will just cost the factories lost revenue. I also spoke about how the Chrysler dealer terminations were particularly harsh, giving those dealers just 26 days to wind-down operations with virtually no assistance from Chrysler. Also, the onerous requirements GM was asking its go-forward dealers to sign on to that threatened the very dealer rights that NADA has fought so hard to maintain.

The issues raised with respect to GM resulted very quickly in a meeting, here at NADA headquarters in Washington, with GM North American president Troy Clarke and sales and marketing head Mark LaNeve. The meeting focused on important clarifications in the GM “Wind-down Agreement” and the necessity for changes in the “Participation Agreement.”

NADA opened the discussion by reiterating its stance that eliminating dealers does not improve a manufacturer’s viability, and in addition argued that GM should assume the current Sales and Service Agreements for the dealers going forward without modifications. GM, however, declined to do that.

I’m pleased to report that as a result of the meeting GM has determined it will clarify several important points concerning the Wind-down Agreement that should be beneficial to those dealers impacted, and will be sending out a letter addressing these points in the coming days. With respect to the dealer concerns about the Participation Agreement, GM determined to make clearer its intent with regard to the elements of the legal document, and most importantly make significant changes protecting certain dealer rights.

I commend GM for its flexibility and its willingness to make substantive clarifications and modifications. While NADA is not in the position to formally endorse GM’s Participation Agreement, we believe the revised document addresses the most serious of the dealer concerns.

NADA will continue to pursue every possible means of protecting dealer rights, now and in the future. However, we can’t do it alone. Your strength and support will be essential for the continued preservation of the franchise system and the success of our industry going forward.