GM to Dealers: Upgrade or Die

Edward Niedermeyer
by Edward Niedermeyer
gm to dealers upgrade or die

Automotive News [sub] reports that GM will force its remaining dealers to sign “participation agreements” requiring them to complete any upgrades GM requires. If they don’t sign on the dotted line by mid-June they face having their franchise agreements “yanked” says GM’s Mark LaNeve. “They get put into the old company and get a fairly quick termination, like the Chrysler dealers did,” LaNeve said. “Their sales and service agreement will be rejected and put into the old company.” GM will send out letters to its dealers tonight, according to AN, which will detail the requirements to remain a part of GM’s happy family.

“We expect them to perform well on customer satisfaction scores and sales, have their facilities up to speed and not have any non-GM brands in their showrooms,” glowers LaNeve. But, “we’re not right away demanding new facilities,” LaNeve said. “We’re not using this as a threat in this kind of market to get dealers to . . . spend money they can’t afford to spend.” Funny, because that sounds exactly like what GM is up to. Watch this space.

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  • MikeCanada MikeCanada on Jun 02, 2009

    In Canada, there are none of these mixed brand stores. There is Ford store, a Chevy store, etc. No brand mixing. I don't know why it's different here than in America, but it seems to make more sense to only have one companies vehicles on one lot.

  • Kurtamaxxguy Kurtamaxxguy on Jun 02, 2009

    This may make dealers create more ways to force customers to give them a perfect satisfaction rating. In last few years dealers have asked me to do just that after the purchase was completed.

  • Mel23 Mel23 on Jun 02, 2009

    Obviously the detachment from reality remains at GM. Where in the hell do they propose that dealers get the money to meet whatever grandiose plans the GM whizzes dream up? Getting rid of Wagoner was a step in the right direction, but only the first step. Given the length of time that GM has been in a downward glide, I'd say it's likely that the upper ranks are well purged of people with the brains and independence let alone the courage to do what's needed. So, before the feds turn loose of this thing they've put on life support, they need to make it viable by cleaning house at the top. Regarding the non-stop references here to GM as government motors, Lutz was interviewed on Bloomberg today and gave an entirely different take: *** The U.S. government is solely focused on “what does it take to make General Motors an internationally, highly competitive car company,” Lutz said today in an interview on Bloomberg Television. “That was the only focus.” “There is no ideology there at all,” Lutz said in the interview. “There was no expression of ‘well, in exchange for this help you’re going to have to produce this kind of car over here.’ There was absolutely none of that.” *** I know there are many here who take pleasure in downing Obama for whatever variety of reasons, but I think Lutz is telling the truth. He has not been known to be a lefty to say the least. From comments here, GM has been helped as a payoff to the UAW. I haven't read much involvement of the UAW, or any union, with the financials. Maybe the real reason for all the fed involvement is to help salvage the economy with the least negative impact.

  • SSR1212 SSR1212 on Jun 05, 2009

    I am a Chevrolet Dealer in Virginia. The mass dealer closings are really only possible in bankruptcy because bankruptcy law trumps state franchise law. What you say about the dealer's investment is true. It is also true that dealers don't cost manufacturer's anything from a dollars and cents measureable perspective. That is why there is so much outrage directed at the administration and the task force. While I am very upset at the manner in which they are retaining some of us. Basically they are forcing us to sign a very onerous amendment to the existing dealer agreement which basically requires us to sign away all our rights. It is absolutely unfair and unAmerican. The state laws that protect dealers from this kind of heavy handed-ness also make it nearly impossible and extremenly costly to terminate dealers who fail to live up to their end of the franchise agreement. The dealer agreement calls for the dealer to satisfactorily represent the brand in a specific Assigned Geographic Sales and Service Area (AGSSA). How many times have you been to a dealer where: the facilities were old and dirty? the salesforce was untrained? the management unprofessional? the dealer didn't stock a sufficient selection of product? The service department was incompetent? Most importantly, these dealers also tend to perform poorly in the area of retail sales which does cost the manufacturer in the form of lost business. The manufacturer spends a ton of money just trying to get on the consumers list of cars to consider. If he can manage to do that and the consumer's visit to the local dealership is less than a positive experience and he leaves the dealership without buying, the manufacturer has to pray that the consumer will give them a second chance at the next dealership representing the brand. Chances are the consumer will not. So you see, it does cost the manufacturer dearly if the dealer isn't getting the job done. Any time a dealer like this is allowed to continue representing the franchise, he gives all dealers of that brand a bad name. As much as I hate the way they are doing it, this is GM's once in a lifetime chance to get rid of these poor performing dealers. They must take advantage of it. The Chrysler debacle is much worse because their decisions on which dealers to eliminate seem to be unjustifiable. In some cases keeping the poor performer because they own the dealer's real estate or hold the mortgage on the property.

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