Is GM Trying to Run Over Former Car Dealers?

February 20 2010, 11:40 AM
Starting today, American automotive giant General Motors is spending $60,000 on ads to oppose a bill before the state legislature that would ease some of the pain from last year's announced shutdown of 2,000 franchises around the country. The legislation, sponsored by Representatives Joe Rice, a Littleton Democrat, and Marsha Looper, a Republican from Calhan, (both pictured) would force General Motors to reimburse former car dealers in Colorado for upgrades they were required to make in the last five years. The potential law would also ensure that the dealers get a right of first refusal if the company creates a new nearby franchise, notes The Associated Press. General Motors says the bill ignores an arbitration process approved by Congress and claims it could prevent the company from repaying government bailout loans and returning to profitability. In addition to Colorado, GM is also spending money to fight a similar bill in Massachusetts and watching the action at other state capitols. The company's strategy isn't endearing itself to car dealers, like fourth-generation dealership owner Elizabeth Daniels, who sells Chevrolets in Colorado Springs and is among 25 GM dealers in the state slated to lose their franchises. "If GM took money from taxpayers, they better be spending it wisely to do their housekeeping and get their ducks in a row and not worry about the likes of Colorado dealers wanting a fair deal," Daniels says. The backlash against the media push canceled out some of the buzz surrounding GM's announcement that it would invest $500 million to develop its next-gen "Ecotec" engine (via the Detroit Free Press). And the print and radio ads could have a negative impact on the company's cause, writes the Denver Business Journal, since it seems to be energizing the bill's sponsors and supporters, who held a bipartisan rally this morning to chew out GM for its spending choices. The state House overwhelmingly approved the legislation, and a Senate committee is scheduled to consider it on Monday.