LANSING – State Representative Roy Schmidt (D-Grand Rapids) has introduced a plan to strengthen Michigan's auto franchise law in order to better protect auto dealers when an automaker goes into bankruptcy.
"Our automakers and dealers have enjoyed great partnerships for decades – one would build a world-class automobile, the other would help get their products to the people," Schmidt said. "Unfortunately, they also suffered together when our automakers were restructured. So many dealerships closed their doors, even more workers lost their jobs and it became clear that we needed better protections for our auto dealers. This plan will make sure they have someone in their corner."
Under Schmidt's plan, an auto dealership that was forced to close because of an auto manufacturer bankruptcy will have the right to veto the automaker's effort to open a new nearby dealership for five years. The plan will also speed up payments of any money owed to the closed dealership by the automaker.
GM and Chrysler sent more than 2,000 closing notices to dealerships during their bankruptcy restructuring last summer, according to the Detroit News. Roughly one-fourth of the shuttered dealerships later received letters from the manufacturers offering to let them reopen.
"This plan is about protecting the rights of our dealerships and our workers' jobs," Schmidt said. "However, we must make sure that this bill meets the needs of both our auto dealers and automakers. I look forward to bringing all interested parties to the table so we can pass a plan that works in everyone's best interests."