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GM will require separate showrooms, not buildings, for duals

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GM will require separate showrooms, not buildings, for duals



DECEMBER 4, 2009 - 11:21 AM ET

General Motors Co. set off alarm bells last month with an erroneous letter to dealers warning they would need to remove non-GM brands from their premises by Dec. 31.

The company now is preparing a retraction. The automaker will only require separate showrooms for GM products, not exclusive properties.

“Dealers who received this letter will get a clarification that will correct it by early next week,” GM spokeswoman Ryndee Carney says.

She declined to say how many dealers received the erroneous letter.

The letter prompted frantic calls to lawyers and dealer associations. It cited the June 1 sales and service agreements GM issued to dealers when the automaker was in bankruptcy. The “participation” agreements spelled out the requirements for dealers GM wanted to keep in its retail network.

The radical requirement on GM-only dealerships was dropped in an amended agreement June 9, which called for separate showrooms for GM products. Dealers could still sell non-GM brands on the same premises.

GM’s letter reads “as if the June 9 agreement does not exist,” says Michael Charapp, a McLean, Va., dealer lawyer.

Three of Charapp’s Virginia and Maryland clients received the letter. The dealers sell non-GM brands at their dealerships, but they have exclusive showrooms for GM products.

“The letters should have cited the June 9 requirement,” Carney says. “It was a mistake.”

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