GM's Rough Terms for Dealers

As part of its reorganization process, American manufacturer GM will have to cut deep into its dealership network. To ease up the mounting pressure from both dealers and the American public, GM is said to offer anywhere in between $100,000 and $1,000,000 to dealer who will be closed, according to inside sources quoted by Autonews.

The offers are said to be included in the wind-down agreements, sent to dealers who will not get their franchises renewed after their expiration in late 2010. Each of the dealerships will get an amount according to its inventory, overall structure and their rank in their respective region, Mark LaNeve, GM sales chief told the source.

The money which will be given to dealers are to be used by them to support the selling of the remaining inventory. The catch is that if the dealers go for the money, they will no longer be able to sell their inventory to GM. In addition, they will have to agree not to sue GM prior to the expiration of the franchises.

Another downside for taking the money is that the respective dealers will no longer be able to purchase any more vehicles from the manufacturer, despite the fact that they will have to stay in business until January.

Dealer opinions on the matter are mixed. "The level of coercion is dramatic. When it's life or death, what are you going to do?" Eric Chase, a New jersey attorney told Autonews.

"I suspect I'll sign them," Paul Walser, Walser Automotive Group CEO told the source. "I don't see any point in arguing at this point."

As for the discontinued brand Pontiac, its dealers will be offered less money. Sources say they will receive anywhere in between $10,000 and $200,000.