General Motors to face a messy divorce as dealers threaten class action law suit

Key highlights:

• GM dealers threaten to file class action law suit against the company
• Over 100 GM India dealerships went on a protest in Delhi on Tuesday
• Dealers say the compensation package by GM too low

Although General Motors (GM) promised its car dealers appropriate compensation for the company's impending exit from India's car market by the end of this calendar, it is unlikely to be so. 

Dealers of GM's Chevrolet brand are now threatening a class action law suit for the poor compensation package given to them for the losses they are incurring due to GM's exit.

Source: FADA

Over 100 GM India dealerships held a procession today in New Delhi to protest against the losses caused to GM's decision to exit the Indian market. The dealers said that they are looking at all possible legal action including filing a class action law suit against GM India.

John Paul, President of Federation of Automobile Dealers Association (FADA) said, “The General Motors dealers are looking at all options including speaking to ministers from the government. They are also planning to file a class action law suit against the company and exploring whatever legal options they have.”

Source: FADA

“These GM dealers have put a lot of investment into this business with a promise from the company that will bring out new models and increase their market share by investing heavily in India. But they have not done so. These dealerships believed in them and continued, only to be lied to later,” he said.

Paul further said that FADA is backing these GM dealers.

“We can't stop GM from taking a business decision like this as they were making heavy losses. But there is a way of exiting the market and price that needs to be paid for the stakeholders incurring losses due to their decision,” he said.

Source: FADA

When contacted a GM India official spokesperson said, “GM India is providing our dealer partners with a fair and transparent Transition Assistance Package based on a methodology that is consistent across all dealers. This has not changed. The methodology is then applied to the individual circumstances of each dealership. These discussions with individual dealers are confidential.”