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DATE News (chronologically)
03/15/09
automotive
Dealer sues GM  A rural Alabama dealership is showing how difficult it could be for General Motors Corp. to follow through on its restructuring plan to reduce its sprawling network of more than 6,200 U.S. dealerships by about 25% by 2012.

Abercrombie Chevrolet of Hartselle, Ala., has filed a lawsuit against GM and its minority-held finance arm, GMAC, claiming a conspiracy by the two to unlawfully break its franchise agreement "in an effort to shut down dealers and avoid paying franchise buyout fees."

Reducing Detroit's dealer network, which is necessary as U.S. sales shrink, has bedeviled the industry for years because automakers face state laws and individual franchise contracts that make the process costly and slow. It's also an emotional process for many dealers who have had the business within the family for generations.

The lawsuit filed in Morgan County Circuit Court claims GM wrongly withheld rebates, warranty claims and other money due to the dealership while GMAC demanded a bigger cash deposit "in an effort to drive them out of business."

While GM said Abercrombie's complaints are not part of the automaker's reduction plans, the lawsuit illustrates the complicated nature of what GM could face over the next few years as it seeks to reduce its dealership numbers.

"GM has been under intense political fire for not having a plan. But the public needs to know that GM has a plan: to get taxpayer money to prop up their own finances while sticking it to loyal and family owned auto dealerships," Abercrombie Chevrolet's lawyer Douglas Jones, a former U.S. attorney for the Northern District of Alabama, said in a statement last week.

GM denied wrongdoing, saying this was an issue between GMAC and the dealer, and called the accusations "nonsense."

"GMAC makes its own independent business decisions on whether and in what amount to extend wholesale flooring to dealers like Abercrombie. It is a requirement of the dealer agreement that a dealer have an acceptable line of wholesale floor-plan credit to purchase vehicles from GM," said Susan Garontakos, a GM spokeswoman. "In this instance, even though Abercrombie Chevrolet's flooring line was suspended by GMAC, GM has not terminated the dealer agreement with the dealership." Detroit Free Press

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