The deadline for culled dealers to apply for congressionally-mandated arbitration is midnight tonight, so if you lost your Chrysler or GM dealership in last year’s bankruptcy cull, you’d best get cracking. The Detroit News reports that at least 1,200 of the roughly 3,000 culled dealers had applied for arbitration, according to the American Arbitration Association. That number is expected to creep rise even higher by the time the deadline expires. Many observers had expected arbitration applications to be much lower, as GM and Chrysler had dragged out the proceedings, forcing many dealers to shutter their shops. GM has already reversed the closure of 80 dealers and Chariman/CEO Ed Whitacre has said he expects “hundreds” more to be reinstated in arbitration. Chrysler continues to take a hard line on the issue, a stance that is sure to make its arbitration proceedings considerably more tense.

The Globe and Mail reports that Toronto-based Trillium Motor World has filed a $750m class action suit on behalf of 215 culled Canadian GM dealers. The suit names General Motors and, in an interesting twist, its law firm Cassels Brock & Blackwell LLP. According to a suit’s statement of claim, Cassels Brock was representing Canada’s federal government in bailout talks with GM at the same time as it was representing the Canadian Automobile Dealers Association, a relationship it never disclosed to the dealers. Conflict of interest much?
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The prospect of US launches by Chinese and Indian auto brands like Tata and BYD have at least one of the established US-market players in a paranoid froth. Honda VP John Mendel revealed a few of the nightmare scenarios that keep him up at night to USA Today [UPDATE: more on Mendel’s fears at Automotive News [sub]]. One, inspired by BYD’s plans for a 2010 US launch without a distribution channel in place, is that newcomers could skip the dealer model altogether. Mendel worries that “warehouse stores or electronics stores” (sound familiar?) could be used to cut dealers out of the loop, “blowing up” business-as-usual for US distribution strategy.

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GM has a tough row to hoe in 2010, with the launches of key products like the Cruze and Volt going on sale, an IPO to worry about, and a sales slide (down 30 percent for 2009) to reverse. Still, according to GM’s new North American boss Mark Reuss, navigating the congressionally-mandated dealer arbitration is the top challenge of the coming year. At a speech last night, Reuss told reporters from Automotive News [sub] that:

I welcome this as an opportunity for GM and the dealership network to go through a change in our network with integrity,

As opposed to the arbitrary bankruptcy-era dealer cull?
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GM’s CEO and Chairman Whitacre gave Automotive News [sub] some choice nuggets of quote today. Addressing almost everything except his firm’s stagnant sales, Whitacre took on some of GM’s most staggering challenges in the most… folksy tone imaginable. Mr Whitacre, your explanation of GM’s bankruptcy dealer cull if you please:

The way it came out, if you fell above or below a line, you were removed. But you had to do it that way. You can’t just go around flipping coins, so you had to have a process.

Ok, take a minute to wrestle with that one. Then hit the jump.
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You’d have to be a fairly trusting GM dealer to participate in what The General calls its Essential Brand Elements program. After all, it’s just the kind of dealership re-branding exercise that HUMMER dealers were forced into shortly before the brand was consigned to the ash heap of history. And once again, GM is asking dealers to create ideal showcases for its brands while keeping compensation for the renovations on a highly trust-dependent basis. GM wants brand-specific dealership rebrandings complete within three years, but will only pay for them over the next five to ten years reports Automotive News [sub]. And the payments won’t be fixed either, but will rather be tied to the dealer’s annual vehicle shipments using “a seasonally adjusted formula that takes into account the price of the vehicles sold.” According to Chevy’s Sales Manager Kurt McNeil, those payments could “conceivably” cover the recommended changes over the ten-year period. Are you feeling the trust yet?
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Here’s a question: You want to do something, but it’s against the law, what do you do? Abandon the idea? No, if you’re Chrysler you sue the government. Detroit News reports that Chrysler LLC are suing officials from Oregon, Maine, North Carolina and Illnois for laws which “unduly burden New Chrysler with the obligation to provide the rejected dealers with rights that this court determined that the rejected dealers do not have,” as lawyers for Chrysler wrote.

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