GM Wins Suit Over Ad Dollars

Dealers Had Sought to Regain Control of Regional Spending
CHICAGO–General Motors has won a decisive court victory from Chicago-area dealers in a dispute over its revamped regional dealer advertising program.
The ruling is being appealed by dealers but is expected to be settled out of court shortly, said several people familiar with the case. Attorneys for the dealers did not return calls by press time.
The ruling allows GM to retain control of $1 billion in regional ad dollars, which were at the heart of the automaker’s dispute with its dealers.
Cook County Circuit Court Judge Stephen A. Schiller ruled that the 1 percent advertising fee that GM assesses on all vehicles sold to its dealers for regional advertising was not the property of dealers, as they had argued.
The dispute began when GM announced in December 1998 that it was reorganizing its dealer advertising structure around five regions, assuming control of regional advertising, events and promotions. Dealers and dozens of agencies that worked for them lost out in the reorganization. Advertising responsibilities were given to the GM divisions’ national agencies, and many of the regional agencies that lost business in the change closed or eliminated staff.
The judge ruled that GM’s announcement “left no doubt that it was treating the entire vehicle price as its funds and would decide whether they would be applied to advertising and marketing, subject to dealers’ election to participate in dealer co-op aspects of the program. It would be GM, rather than (dealer marketing groups), which would determine what, if any, amount of money would be spent on advertising with no funds being returned to dealers or DMGs.”
GM downplayed its victory. “The key is to get everyone focused on selling GM vehicles,” a representative said. “We want to move forward and put this all behind us.” K