GM is demanding paybacks from dealers on incentive program

Article by Christian Andrei, on August 26, 2010

General Motors Co. wants dealerships to pay up starting this month certain sums racked up due to alleged infractions of its Standards for Excellence incentive program. And these dealers won't be able to protest these chargebacks, under the agreement they signed last year in order to continue as GM dealers.

Dealers are being asked to pay back sums of up to five- and six-figures. Jeff Watts, GM's dealer mediation chief, explained that the "participation" agreement releases GM from "any and all claims."

It was in 1994 that the lucrative program was introduced to Cadillac dealers. Later extended to all brands, the program rewards dealers for meeting operating standards (high customer satisfaction scores and sales volume).

Depending on the dealership's size and on how standards were met, dealers can earn bonuses of more than $1 million in a year. Typically, dealers can appeal GM's attempt to charge them back for incentives they received. But GM audited the dealers before its bankruptcy and this put the chargebacks and potential appeals on hold indefinitely.

Now, GM is denying these dealers the chance to dispute the results of its audits. Watts said dealers have the option to repay GM monthly over three years at 5% interest.

The money gets debited from the dealership's open account. Watt warned that those who refuse to sign off on the installment plan will be charged the entire amount in a lump sum. [via autonews]

Topics: gm, incentives

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