GM DEALERS UNITE TO DRAG CARMAKER TO COURT

Dealers of US multinational car giant (the world’s third largest) General Motors have decided to drag the carmaker to court over compensation-related issues, after a day-long meeting at a city hotel in Delhi.

They have decided to stage a dharna at Jantar Mantar on Tuesday, provided they get permission. Dealers want the government to wake up to this issue as it involves investments made by them and livelihood of around 10,000 people.

In May, GM announced that it would stop selling cars in India’s domestic market by December 2017 and would use its local manufacturing base at Talegaon, near Pune, to focus on the export markets.

As many as 40 dealers, out of 96, attended the meeting. The representatives of the Federation of Automobile Dealers Association (FADA) were present, and the industry body claimed about 75 per cent dealers are expected to come on board for the legal battle against the automobile manufacturer.

FADA president John Paul said, dealers have been misguided by GM as far as its business plans in India went. “As late as April this year, the company had indicated to dealers that they have an India business plan, they would continue to invest in India and that dealers would need to enhance their investments,” he said.

Dealers are feeling cheated at the company’s behaviour. Also, for the past seventeen years, GM had been renewing contracts with dealers for a three-year term. This year, they have reduced that to a one-year term. The compensation offered by GM India is based on the average of last two years sales of a particular dealership multiplied by a factor, plus 40 per cent of the sales establishment cost at a rate of ~1,800 per square feet. For most dealers, this is working out to be 10-12 per cent of the investments they have made.

Sources said GM India is not compensating for the sales personnel, inventory and spares.

Nikunj Sanghi, director, international affairs, FADA, said dealers have written to the managing director of GM India and informed the company that they do not wish to deal with them individually, but FADA would be representing the dealers. Initially, when FADA had written to GM India on behalf of the dealers, the company, however, had responded by saying that they would be dealing with dealers individually.