New GM Taking Heat for Loyalty Oath

Robert Farago
by Robert Farago

When TTAC received a copy of GM’s letter to dealers “asking” them to lobby against the dealer cull rollback bill, we blogged it as a “ loyalty oath.” More than a few commentators said pish-posh [paraphrasing]; H.R. 2743 was nothing more than an SOP lobbying campaign. The fact that the letter told dealers to cc GM’s National Dealer Council Chairman Duane Paddock left little doubt in our (OK my) mind that New GM’s dealers were being told in no uncertain terms to toe the New company line (i.e. shiv their former colleagues). Automotive News [AN, sub] reports that “General Motors executives have been pressuring individual dealers to sign a statement saying they oppose legislation that would restore terminated dealerships’ rights, according to a U.S. senator, a dealers group and dealer representatives.” Point counterpoint after the jump.

“Some dealers fear that GM could take action against them if they do not sign a letter of opposition” to the bill, Grassley said in a letter to GM CEO Fritz Henderson. “It’s alarming to have GM corporate leaders force dealers — some who are losing everything they worked hard to build — to take an active stand against it.”

GM’s Washington spokesman Greg Martin’s e-mail reply: “Many dealers who signed participating agreements are ready to move forward, and so are we as a new company. Certain proposed legislation puts our progress and viability at risk. We have a right to have our voice heard, too, and we look forward to responding to Senator Grassley’s letter.”

So nothing about blackmail, then. Well, except from New GM dealers . . .

Three dealer representatives said that they had received complaints from a total of about 20 individual dealers who had been contacted by GM managers.

“They felt tremendous pressure to sign the form,” Don Hall, head of the Virginia Automobile Dealers Association, said in an interview today. He said he received complaints from 10 to 14 Virginia dealers.

im Jackson, head of the Colorado Automobile Dealers Association, said he had received similar complaints from about a half-dozen retailers in his state.

“Some had received three or four calls each from GM asking them to sign the letter and then to call back when they actually sent the signed statement,” Jackson said in an interview.

Jim Moors, franchising director at the National Automobile Dealers Association, said he got several calls from dealers who complained “that they felt coerced” by calls from GM offices.

Question: why is New GM treating its dealers like this? Someone ought to send them a copy of How to Win Friends and Influence People, stat. Not that I’ve read it . . .

Robert Farago
Robert Farago

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  • Buickman Buickman on Jul 12, 2009

    further proof as to my theory - Camaro. GM makes a hot car, only gives the dealers the smallest of margin even though the market will bear a higher price. result? dealers charge over list by thousands and customers pay it. end game? dealers get bad image and the perception becomes it would be an improvement to cut out the middle man and buy direct. Robert, can I have my tin foil hat back now please?

  • Fincar1 Fincar1 on Jul 12, 2009

    "This sort of thing was normal procedure in the USSR. Why are we copying that system?" For the same reason we elected Barack 0bama, and for the same reason we elected Democrat senators and representatives who pass legislation aimed at centralizing power in the federal government.

  • Teddyc73 As I asked earlier under another article, when did "segment" or "class" become "space"? Does using that term make one feel more sophisticated? If GM's products in other segments...I mean "space" is more profitable then sedans then why shouldn't they discontinue it.
  • Robert Absolutely!!! I hate SUV's , I like the better gas milage and better ride and better handling!! Can't take a SUV 55mph into a highway exit ramp! I can in my Malibu and there's more than enough room for 5 and trunk is plenty big enough for me!
  • Teddyc73 Since when did automakers or car companies become "OEM". Probably about the same time "segment" or "class" became "space". I wish there were more sedans. I would like an American sedan. However, as others have stated, if they don't sell in large enough quantities to be profitable the automakers...I mean, "OEMs" aren't going to build them. It's simple business.
  • Varezhka I have still yet to see a Malibu on the road that didn't have a rental sticker. So yeah, GM probably lost money on every one they sold but kept it to boost their CAFE numbers.I'm personally happy that I no longer have to dread being "upgraded" to a Maxima or a Malibu anymore. And thankfully Altima is also on its way out.
  • Tassos Under incompetent, affirmative action hire Mary Barra, GM has been shooting itself in the foot on a daily basis.Whether the Malibu cancellation has been one of these shootings is NOT obvious at all.GM should be run as a PROFITABLE BUSINESS and NOT as an outfit that satisfies everybody and his mother in law's pet preferences.IF the Malibu was UNPROFITABLE, it SHOULD be canceled.More generally, if its SEGMENT is Unprofitable, and HALF the makers cancel their midsize sedans, not only will it lead to the SURVIVAL OF THE FITTEST ones, but the survivors will obviously be more profitable if the LOSERS were kept being produced and the SMALL PIE of midsize sedans would yield slim pickings for every participant.SO NO, I APPROVE of the demise of the unprofitable Malibu, and hope Nissan does the same to the Altima, Hyundai with the SOnata, Mazda with the Mazda 6, and as many others as it takes to make the REMAINING players, like the Excellent, sporty Accord and the Bulletproof Reliable, cheap to maintain CAMRY, more profitable and affordable.