Dealers of General Motors India and representatives of Federation Of Automobile Dealers Associations stage protest against low compensation by the auto maker in Jantar Mantar in New Delhi. (Photographer: Surat Singh/BloombergQuint)

General Motors’ Dealers Say 15,000 Will Lose Jobs, Protest Against Poor Compensation

Dealers of General Motors India Pvt. Ltd.’s Chevrolet brand of cars on Tuesday said around 15,000 people would lose their jobs if the company goes ahead with its plan to wind up sales operations in India by the year-end. They will also be left with unsold inventory and “crores” of investment already made, dealers said.

At a protest staged in New Delhi, dealers alleged they were offered inadequate compensation for their investments, and added that their legal teams were working on readying a class action suit against the automaker for “cheating” and “fraud”.

The U.S.-based company had last month announced that it will stop selling its Chevrolet brand of cars in India by the end of 2017. It is currently in the process of working out a compensation for dealers who said they were not apprised in advance about the move.

The decision of the company seemed to have been planned since General Motors Chief Executive Officer Mary Barra’s first visit to India in 2014, alleged dealers, adding that the strategy was devised to keep business partners in the dark.

We were told about the launch of the new Beat (hatchback) just 10-15 days before that (the decision to stop sales in India), and were also asked to train our staff about the vehicle.
New Delhi-based General Motors India Dealer

General Motors has a total of 96 dealers in the country, each of whom put in Rs 7-8 crores to set up showrooms, workshops, and stockyards, said those present at the protest, adding that the company was offering to pay only around 5-8 percent of that amount.

The company arrived at the amount taking into account factors such as the size of the dealership’s facilities by area, and the age of the construction for the purpose of depreciation, one dealer who chose to remain anonymous had told BloombergQuint earlier.

The official spokesperson of the automaker, when contacted, chose to not comment on the protest, but said the company’s statement would remain the same as an earlier version.

“GM India is working directly with our dealers to transition to authorised service outlets and to recognise some of the investments made in dealerships. As we consider these discussions to be confidential, it would not be appropriate to discuss them publicly,” the company had earlier said.

Dealers pegged the number of jobs that may be lost as a result of GM’s move at 15,000, adding that General Motors India had sought a binding commitment from dealers to continue running their dealerships till December 31, if they accepted the latest compensation proposal.

BloombergQuint had earlier reported that the company’s settlement proposal is understood to be valid till July 15, after which dealers would get only half the offered figure for acceptance before September 15. After September 15, dealers would not be entitled to any monetary compensation, as per the contract, they said.

Officials of the Federation of Automobile Dealers Associations, also present at the protest, said they would support the dealers through the legal procedure, but preferred if it was settled before reaching that point.