LANSING – State Representatives Roy Schmidt (D-Grand Rapids) and Mike "Huck" Huckleberry (D-Greenville) today voted for a plan to better protect Michigan auto dealers and workers when an automaker terminates their contract. The plan, which is set to be signed into law after receiving broad bipartisan support from the Legislature, is in response to the numerous auto dealerships that were forced out of business and the countless jobs of Michigan workers that were lost during the bankruptcy restructurings of General Motors and Chrysler.
"It was disheartening to see how quickly vacant dealerships lined neighborhood streets across Michigan last summer," said Schmidt, who introduced the plan in the House and brought members of the Auto Dealers of Michigan, the Auto Alliance and other interested parties to the table to work out a compromise. "Unfortunately, Michigan's laws weren't strong enough to protect our dealerships, and many of our working families paid the price. We can't let that happen again – we can't afford to lose any more jobs. I'm glad we were able to work out a bipartisan solution that works for both our car dealers and our manufacturers."
The comprehensive plan passed by the House and Senate today ensures that if an automaker breaks a franchise contract with a dealer, the dealer will be properly compensated. Under the plan, if a contract is terminated, the automaker will be required to:
- Reasonably compensate the dealer for certain new vehicles that remain in their inventory;
- Make a monthly payment to the dealer equal to the closed property's rental value for a year; and
- Pay the dealer a "goodwill compensation" if the contract was terminated because the manufacturer went out of business, a line of vehicles was discontinued, or the manufacturer's ownership changed.
"Nowhere have the struggles of our economy and our workers been more apparent than in Michigan's auto industry," Huckleberry said. "Now more than ever, we need to stand up for our workers to protect their jobs and support our small businesses. Our auto companies and car dealers have had a great relationship for years, and I was proud to see them work together on this issue – just as I was encouraged to see my colleagues work across party lines to make sure the rights of our workers and small businesses were protected."