Post Titanic Tuesday, GM is desperate to do something, anything to move its moribund metal. I speak here not of the pricing blowouts, finance deals and BOGO offers at the sharp end. I refer to the manipulation of dealer relations. Forcing dealers to stock vehicles that no one wants to buy. Back in the day, they used to call this practice “channel stuffing.” These days, they call it “pretending we’re a viable business to our Congressional overlords.” Automotive News [sub] reveals GM’s latest contribution to the genre: the more-than-slightly-ironically named “consensus program.”
The program has two parts. First, GM assigns dealers a sales objective through March 2. Second, GM “recommends” a “consensus number” to dealers—the number of vehicles for the dealer to order. Sweet, eh?
The bonus cash payout ranges up to $1,250 per vehicle depending on the percentage of consensus that the dealer orders and the percentage of the sales objective the dealer sells, dealers familiar with the program say.
At the high end, if a dealer takes 100 percent of the consensus and sells 100 percent of the sales objective, the dealer gets $1,250 per vehicle. At the low end, if a dealer takes less than 75 percent of the consensus and sells 60 percent to 99.9 percent, the bonus is $250 per vehicle.
So, if one dealer declines The General’s “request” to show the automaker’s inventory love during the time of war, that dealer suffers. A nearby competitor (i.e., a nearby GM dealer) who takes additional inventory earns more GM bonus cash. They can charge a lower price for the vehicles he or she doesn’t sell.
The trade calls this manufacturer-sponsored internecine conflict “two tier” pricing, or, to use a more technical term, “the same old shit.”
GM justifies their most recent dealer abuse as an effort to keep their inventory under control.
At the end of January, GM had 801,000 vehicles in inventory, down 103,000 units from January 2008. Cars make up 64 percent of current inventory and trucks the rest. . .
During a sales call today, GM sales chief Mark LaNeve said supply is about 105 days and GM would like to have “a little less inventory.”
“We’d like to run more at a 75- to 90-day rate,” said LaNeve. “We keep trying to get there. We are planning production schedules to get to the 75- to 90-day supply. It’s God’s work. We have to keep after it.”
As far as I know, GM marketing maven Mark LaNeve is not a Jesus freak. I’ve never heard him inject God or, God forbid, morality into a discussion of his work. However, if this is a true come to Jesus moment, rather than simple blasphemy, one wonders why God’s son would instruct the head of GM sales and marketing to bother himself with GM’s inventory levels. As Ken Elias has pointed out, LaNeve would be far better off seeking truth and reconciliation than filling GM dealer lots with unwanted product.
Yes, sixty days’ supply is the generally accepted industry ideal. But this is pre-meltdown math. New vehicle sales sank 37 percent across the board in January. They’re heading south from there. Bottom line: Chrysler and GM aren’t building much of anything—they’re just trying to clear out their existing inventories. The “days supply rate” for today’s car market is about as useful a metric as “rolls of toilet paper” at Graceland during Elvis’ terminal constipation days.
As one of the Apostles would have said (if he’d been Welsh), get your own house in order, boyo. If LaNeve still has a purpose in life, or at least within GM, sorting out the mess that is GM’s branding is it.
Obviously, LaNeve’s not calling the shots in terms of product (who needs product?) or brand culling (who needs eight brands?). Product is Car Czar Bob Lutz’ baliwick. Brand-i-cide is CEO Rick Wagoner’s responsibility. Good luck with that. Even so, LaNeve could, even with the current lineup, help GM at least start to find its way through the wilderness.
He could define GM’s brands.
GM’s marketing maven could/should make the case for whatever brands GM decides to keep. How about a series of ads: “This is what a BLANK is” (one USP per brand, please)? The current models don’t have to actually meet the criteria. Again, nobody’s buying cars. But a tightly-focused coherent example or eight of “the vision thing” would give Americans a reason to support GM. For Joe the Taxpayer, $40b+ of long-term debt is a meaningless abstraction. Cars they understand.
These are the times that try men’s souls. By thy deeds thy shall be known. The times are making it increasingly, inescapably clear that GM is a shell of a company led by lost souls. It’s a perfect time for someone with guts, character, passion and humility to step up and show what they’re made of. Unfortunately, men without these traits continue to pilot GM to its death.