NADA Approves GM’s Modified Dealer Participation Pact
By Cliff Banks WardsAuto.com, Jun 9, 2009 1:36 PM

The National Automobile Dealers Assn. says it has reviewed and agrees to support General Motors Corp.’s amended participatory agreement that will be mailed to U.S. dealers this week.

The participation pact replaces current franchise agreements with U.S. dealers the auto maker wishes to retain after it emerges from bankruptcy as the “new GM.”

While NADA says in a statement today it is not in a position to formally endorse the participation agreement, “we believe the revised document addresses the majority of dealer concerns.

“We’re especially pleased that GM moved so quickly to meet with NADA and the GM National Dealer Council on such short notice to review and to discuss the serious concerns that dealers had with the original agreement.”

NADA officials and members of GM’s national dealer council met for more than five hours in Washington on Friday with GM North American President Troy Clarke and Sales and Marketing Vice President Mark LaNeve to highlight concerns with the new agreements.

NADA is sending a letter tomorrow to GM dealers informing them of the changes and clarifications GM is making to the new contracts.

GM’s move comes after NADA representatives, along with GM President and CEO Fritz Henderson, last week testified before the U.S. Senate about the auto maker’s plan to eliminate 2,600 dealers over the next 17 months as part of its bankruptcy restructuring.

Dealers to be retained were given until June 12 to sign the participatory agreement or be lumped in with the “old GM” to be liquidated once the auto maker emerges from Chapter 11.

However, dealers expressed outrage at the stringent operating requirements called for in the original agreement sent to them last week, which included facility upgrades, increased sales, inventory, capitalization and financing, particularly during the nation’s poor economic conditions.

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“No manufacturer has ever imposed such outrageous terms in dealer-operator agreements,” NADA Chairman John McEleney, a long-time GM dealer, said at the time.

But McEleney now says he commends GM for its flexibility and willingness to make “substantive clarifications and modifications to address dealer concerns.”

LaNeve, in a statement today, says, "The consolidation of GM's dealer network nationwide is a very difficult, but necessary part of GM's overall reinvention efforts.

“During testimony last week before the Senate Commerce Committee on this topic…NADA expressed concern over some specifics in GM's Participation Agreements for our dealers.

“We are happy to report that after meetings last Friday and Saturday with both NADA and GM’s National Dealer Council leadership, we now have a better collective understanding of the issues.

“As a result, GM will be sending our dealers a letter clarifying various subjects in the Participation Agreement, most notably dualing with competitive makes and performance standards.”

However LaNeve also warns the auto maker will “continue to evaluate all GM dealers against a common set of performance standards to ensure that our selection process is fair and robust.

“It is important to remember that despite the difficulty of these circumstances, the majority of GM dealers support and recognize the necessity of these changes to our dealer network,” he says.