Don’t Let the OEM Be the Only One Telling the Story
By Micah A. Andrews
Seasoned dealers are well familiar with receiving the standard boiler-plate OEM performance letters which periodically summarize (usually incorrectly) the dealership’s recent activities and performance. The letters typically have the same stock language about ensuring the dealership is “in compliance with your performance obligations under the Dealer Agreement” and language about the performance metrics being the “minimum standard” to meet the dealer’s contractual commitments. Letters addressing facility standards or service performance often have language about the dealer acknowledging that such standards are “critical and material” provisions of the dealership’s commitments. The letters often conclude with an empty promise about the OEM standing ready to “assist” the dealership in meeting its obligations.
What the letters never state are relevant conditions affecting the dealership or the substance of the two parties’ actual verbal conversations. The letters never state, for example, that the dealer has been continually requesting adequate vehicle allocation in a needed make or trim to no avail. They never acknowledge that the OEM has had a strike, recall, or part delay frustrating the dealer’s ability to complete a repair or to sell a category of new motor vehicle product. Nor do they memorialize actual conversations the dealer and zone representative have had about the realities of the dealership’s unique employees, operations, or facility. It is likely most dealers’ experience that the boilerplate OEM letter is followed with a telephone call from the zone/district representative telling the dealer “not to worry about the letter,” that it is “no big deal,” and “just a box that needed to be checked” for corporate.
The problem with these one-side letters is that they are not a “big deal”… until they are. Unfortunately, if a dispute does arise between a dealer and OEM, all experienced dealer lawyers have seen the OEM use their written records to create their own narrative of what transpired over time between a dealer and OEM. Whether in front of a Judge, Jury, or Hearing Officer, the OEM will line up their periodic letters to tell a one-sided story of the OEM continually reminding the dealership of the need to “address failures” and how the OEM was “eager to assist.” A dealer who has not instituted a practice of promptly and consistently responding to the OEM letters (and documenting that response in a file) is left in a difficult position – one in which they are fighting an uphill battle to accurately explain what has occurred over time.
Alternatively, a dealer who does institute a practice of responding to OEM letters is in a significantly strengthened position. The dealer will have their own collection of historical communications – letters which highlight the realities outside the control of the dealer that are the real cause of any alleged performance failure by the dealership. The OEM’s boiler-plate letters have little credibility in the face of real dealer communications summarizing specific concerns, issues, or conditions impacting the dealership’s operation.
For this reason, a dealer is wise to institute a practice of promptly responding to OEM periodic letters, being careful to highlight what statements they believe are inaccurate. A dealer should also memorialize any verbal communications that have recently occurred with an OEM representative. If an OEM is failing to allocate motor vehicle product in appropriate makes and models, this should be highlighted. If the OEM is fine with a non-conforming condition at the dealership facility or acknowledges a part delay or recall that is negatively impacting the dealership, this should be memorialized. These realities are the real factors affecting the dealership’s operations yet are strategically eliminated from the narrative when the OEM is the only party telling the story. Don’t let this be the case, ensure that you are telling your story as well.
Questions about statements or claims made in a periodic letter or questions as to how to appropriately respond should be directed to your experienced dealer lawyer.