GM tweaks dealer rules

General Motors Corp. has told its roughly 4,000 surviving dealers that they must stop selling non-GM brands in their showrooms by the end of this year. They must also be prepared to sell more vehicles and improve the look of their showrooms, if necessary.

The Detroit News obtained a letter from Mark LaNeve, GM's vice president for sales, service and marketing, that modifies the company's planned new agreement with dealers. GM is seeking to close at least 2,400 of its nearly 6,200 dealers during its stay in bankruptcy court.

GM said it expects that its continuing dealers "will remove non-GM brands from the GM showroom by December 31, 2009 ... and will operate a showroom exclusive to GM products going forward. GM reserves the right to require in certain markets that dealer provide completely exclusive GM facilities on the dealership premises going forward," LaNeve wrote.

It was not known immediately how many dealerships were in that category.

The new pact says that date can be extended under extenuating circumstances or GM can allow some joint branding to continue.

"This means specifically the showroom floor. Depending on certain variables, size of market, type of structure, etc., we agreed to work with dealers individually regarding shared service centers," GM spokesman Peter Ternes said.

GM also warned that older dealerships that aren't updated could be terminated.

"While most continuing GM dealers operate out of excellent, imaged facilities, there are those that continue to operate out of dated, noncompetitive facilities that do not properly represent GM's brands. This is not good for the dealer, GM or the other dealers in the same market," LaNeve wrote. "If a dealer's facility is not compliant with GM's image, facilities, exclusivity requirements, GM's channel representative and the dealer will meet and agree on the appropriate action to be taken."

GM has agreed to give its surviving dealers until June 15 -- rather than until Friday -- to approve the new agreements. GM said Tuesday that nearly 90 percent of GM's continuing dealers have signed or verbally agreed to the participation agreements, while 75 percent of the closing dealerships have agreed.

The company has reversed at least 15 closing decisions

The changes to the agreements won the support of the National Automobile Dealers Association, which had called the initial GM dealer agreements "onerous and one-sided."

GM expects that its surviving dealers will sell more vehicles since they expect the market to improve and many dealers are closing.

"These sales increases are necessary to GM and the dealer networks' viability over the long term," LaNeve wrote.

GM hasn't yet told existing dealerships how much their sales quota will increase.

Early next year, GM said, "we will hold a GM reinvention business plan meeting with each dealer executing a participation agreement." LaNeve praised the surviving dealers.

"I would like to personally congratulate you on being selected to move forward with the new GM," LaNeve said. "With our innovative and award-winning product line for Chevrolet, Buick, Cadillac and GMC, and the strongest dealers in the GM network, we have an extraordinary opportunity to win in the market and create both great brand and franchise value, as well as a business that will make America proud."

The changes came after GM met Friday and Saturday with members of the National Automobile Dealers Association.

"We believe GM has made a very good-faith effort, given the unprecedented circumstances facing GM and the industry," said NADA chairman John McEleney.