Houston partner Billy Donley was quoted in December 6 Associated Press article which was published in over 30 media outlets including, BusinessWeek, Chicago Tribune, CNNMoney.com, Forbes, Houston Chronicle and MSNMoney.com.
According to the article, General Motors and Ford have been working for years to reduce their dealer ranks, but with vehicle sales at record lows and the industry seeking a financial bailout, both automakers now have new reasons to renew their pushes to create smaller, more profitable, dealer bases. As part of its restructuring plan submitted to Congress this week, GM said it plans to reduce its dealer ranks by 27 percent, to 4,700, by 2012. Meanwhile, Ford said it expects to end this year with about 3,790 dealers, down 14 percent from the end of 2005.
However, according to Donley, who represents automakers in dealer franchise cases, state franchise laws make it hard for an automaker to take a franchise away, and attempts usually result in a long legal case. Automakers also have the option of effectively buying out a dealer, usually by repurchasing inventory, tools and parts, Donley said.