Companies

GM India dealers plan class action suit over ‘measly’ compensation

Press Trust of India New Delhi | Updated on January 12, 2018 Published on June 08, 2017

Dealers of General Motors, which has decided to stop selling vehicles in India by year-end, are gearing up to drag the auto major to court while also exploring possibility of a class action suit in the US, over “measly” compensation.

A majority of 96 dealers, which operate around 140 showrooms across India, are unhappy with the company’s offer of just around 12 per cent of total investments they have made as compensation.

Moreover, they also said there would be job losses of around 9,500 due to closure of showrooms and service outlets.

The dealers also warned that existing car owners of the company will face service issues as many of them are unwilling to continue providing only after-sales service after GM exits from the Indian market.

Confirming plans by dealers of GM India to drag the company to court, Federation of Automobile Dealers Association (FADA) President John Paul Kuttukaran told PTI that around 50 of them have approached the apex body of automobile dealers seeking support.

“We are also examining the possibility of filing a suit in the US. GM is a very big company and so we have to first examine if is feasible to take up such a step, if it is possible we will do it,” Kuttukaran said.

He said the FADA is already discussing the matter with lawyers.

Kuttukaran also accused General Motors of indulging “in loose talk” and misleading dealers by stating that it would make new investment and bring in models and “then suddenly announcing to shut operations” in India.

According to one of the dealers of the company, who runs showrooms in Central India, GM offered just ₹70 lakh as compensation for a total investment of ₹6 crore for setting up a showroom.

“The compensation offered is measly. It is just around 12 per cent of the investments we made. Imagine the hit to those of us who made investments to the tune of ₹11-12 crore in setting sales and service outlets,” an owner of a dealership said on condition of anonymity.

When contacted, General Motors India spokesperson said the company is meeting with dealers individually and working through a plan that addresses their concerns.

“GM India is working directly with our dealers to transition to authorised service outlets and to recognise some of the investments made in dealerships,” the spokesperson added.

Published on June 08, 2017
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