GM Officially Declares War on Dealers

Robert Farago
by Robert Farago
gm officially declares war on dealers

Yesterday, TTAC reported that GM wasn’t waiting for bankruptcy to launch a dealership jihad: a 42 percent cull designed to placate The Presidential Task Force on Automobiles and, let’s face it, common sense. After that report, one of our GM moles gave us a heads-up that GM Marketing Maven Mark LaNeve was addressing the dealers live via satellite on some super-secret mission. Turns out it wasn’t LaNeve’s four missing “weekly updates” on GM’s reinvention. Automotive News [AN, sub] reports that Mark was using GM’s bird to flip the bird at GM dealers. In fact, the sales chief has declared war on his “underperforming” stores, vowing (by omission) not to pay the terminated dealers a penny in compensation. “There was no money for anything other than what the franchise agreement calls for,” a dealer informed. “Meaning we can send back new cars, parts, special tools and some signage.” And once again, AN has withheld critical information. In this case, it’s a two-day delay on LaNeve’s characterization of the dealers caught in the cross-hairs.

Starting in May, GM will meet with or send a letter to about 1,000 to 1,200 GM dealerships informing them that “they will not be part of a reinvented GM going forward, and we’ll work on a transition with them,” LaNeve told Automotive News on Monday.

LaNeve characterized the group of dealerships as “very poor performing and not adhering to the sales and service agreement obligations.” For example, the dealership might be dualed with a non-GM brand or have poor customer service ratings, inadequate facilities, poor new-car sales or inadequate working capital.

Are we to believe that AN agreed to an embargo on its interview with LaNeve ’til after his dissed the dealers? C’mon, guys, it’s over. Kow-towing to GM at this point is like praising the high school drama teacher for her production of “The Crucible”—after your child has graduated.

Anyway, once again, GM’s timing sucks. After not doing anything about its dealer bloat for decades, they can’t wait a month for a bankruptcy judge to clear the way for clearing the decks. LaNeve’s preemptive strike will alienate store owners (both current and future) and these guys are known for their high testosterone levels. In other words, screw them and they’ll screw you.

Not to mention the fact that franchise holders are deeply enmeshed in their local communities. The word on GM’s welfare checks is already out, dragging down business. “Picking” on the dealers. Will. Not. Help.

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2 of 20 comments
  • Cugrad Cugrad on Apr 29, 2009

    I find it somewhat humorous that GM is screwing underperforming dealers in a similar way to how dealers screw their sales guys. Karma's a b#$%^

  • Jacob Jacob on Apr 30, 2009

    I am not sure why this article generating is so much anti-GM whining here. Now that GM's market share is about half what it used to be during th heydays, it is clear that lots of dealerships have to go, one way or another.

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