GM India dealers protest against insufficient compensation

Dealers of General Motors (GM) India which has decided to stop selling vehicles in the domestic market by the year-end sat on a 'dharna' or agitation at Jantar Mantar in New Delhi today to protest against the American automaker. They have called the automaker's exit from India "a planned conspiracy".

A majority of GM India’s 96 dealers, which operate around 140 showrooms across India, are unhappy with the company’s offer to compensate just around five percent of total investments they have made.

"Never before have automobile dealers resorted to a dharna as a method of protest. But anguished by the decision of GM India to quit the domestic market without keeping their long standing dealers in the loop, we have been forced to do this," John Paul Kuttukaran, the Federation of Automobile Dealers Associations (FADA) president, told PTI. FADA, the apex body of automobile dealers in the country, has received permission from the authorities concerned to stage a peaceful dharna at Jantar Mantar, he added.

The methodology is then applied to the individual circumstances of each dealership. These discussions with individual dealers are confidential and it would not be appropriate to discuss them publicly, the spokesperson said.

 Likelihood of class action suits against GM in the US

The company’s dealers have already decided to explore the possibilities of filing class action suits against the American automaker in the US over inadequate compensation being offered to them.

As per the conditions set by GM, a dealer who does not accept its offer by July 15, would only get 50 percent of the compensation being offered. In case a dealer does not accept the offer by September 15, he would not get any compensation at all.

Some GM India dealers, who were part of the agitation in New Delhi today told our sister publication Autocar Professional that based on GM's commitments and future growth projection of having a market share of up to 10 percent in India, they had invested between Rs 7 crore and Rs 10 crore in each of their sales, service and spares facilities. It is understood that the cumulative investment of nearly 100 dealers is to the tune of Rs 1,000 crore.  

They point out that until very recently, the company was aggressively pushing its dealers to prepare for the launch of the upcoming Beat Essentia compact sedan, inviting their sales personnel to be trained for the launch of the car in July 2017. However, following the culmination of this sales training in May 2017, GM India announced its pullout from the domestic market.

GM India dealers are now stuck with existing inventories at their stockyards. The company is only offering to compensate for losses made on the discounts given on each car on the condition that the dealers place fresh orders to liquidate the stocks lying at the Talegaon plant. There are an estimated 2,000 cars lying in Talegaon. Many dealers have to deal with repayment of huge bank loans taken to revamp infrastructure as well as to relocate workforce in the future.