Mark LaNeve is Insane

Robert Farago
by Robert Farago

I have no idea why Mark LaNeve still works for General Motors. The former Cadillac man was serving Kool-Aid on the bridge when CEO Rick Wagoner was Richard Nixon channeling Captain Queeg. When Old GM sank into bankruptcy, LaNeve (and Bob Lutz and Fritz Henderson and the whole damn crew) should have gone down with the ship. Instead, they transferred to another boat and headed straight for the same iceberg. No surprise there: hitting icebergs is who they are and what they do. I’m not saying that LaNeve’s recent remarks about culling GM stores [via Automotive News] reveal that he’s wrong to trim the automaker’s bloated dealer network. I’m saying that LaNeve is going about it the wrong way. Here’s my thinking . . .

GM’s market share continues to erode. Blame the U.S. economy all you like, but the automaker’s volume is shrinking like a sea island cotton polo shirt in a vat of boiling water. GM suits may think their [remaining] products are category killers (WE WIN!), but they’re not. And even if they were, GM’s branding is so bad that Bob Lutz is in charge.

As PCH101 will tell you, these product-related deficiencies mean that New GM can’t compensate for lost income by raising prices (although they’re trying). Longer term, GM’s product development process is in chaos, and they have limited financial resources to sort it out.

Bottom line: GM doesn’t have the time to kick the competition’s ass, or convince anyone that they have if they did. So New GM has to play the cards they’ve been dealt; they have to stop believing that the next card will be the next big thing (e.g. Cruze control, Voltmania, Cadillac SPORTWAGON? etc.). By the same token, GM has to play their cards conservatively. The time for doubling down (e.g. GMT-900) is over.

GM’s rural dealers are not GM’s trump card. Again: they don’t have one. But small town dealers are the only face cards the company’s got left. Switching metaphors (that one’s played-out), rural dealers are GM’s last redoubt. The General troops are dead on both coasts. The heartland is the last place in America where GM’s products don’t have to be significantly better than Toyondissan’s to move.

Contrary to the MSM’s meme, GM’s sales in “flyoverland” are not down to knee-jerk patriotism. As AN rightly points out, GM’s survival in small town America can be attributed to one simple fact: rural dealers are local dealers.

In Paynesville, a town of 2,200 about 75 miles northwest of Minneapolis, several of [closed Chevy dealer Doug] Hawkinson’s customers say that if the store closes, they’ll abandon GM.

“I would look for something different to drive,” says customer Jim Langmo, owner of Langmo Farms in Paynesville. “Service is greater than the vehicle’s brand.”

That should be music to the ears of a nationalized car company whose branding is in complete shambles. But how can it be when the automaker in question is walking away from [at least] 900k rural customers? Don’t worry; be happy; they’re worried.

GM’s top sales executive admits that he’s worried that GM will lose customers.

Mark LaNeve, GM vice president of U.S. sales, says there are about 3 million “free agents” — current GM customers who bought vehicles from stores that will close. About 30 percent of those customers are in rural markets, he says, meaning that about 900,000 GM owners are up for grabs.

As part of its plan to trim 1,350 U.S. stores by Oct. 31, 2010, GM plans to eliminate about 500 dealerships in rural markets.

“In the major markets, I’m completely confident,” LaNeve said in an interview in late August. “In the rural markets, I’m a little worried about retaining the customers where we wound down a dealer. I’m nervous about that.”

I bet you’re thinking this is the money shot: the quote that proves that LaNeve is insane. After all, A) Anyone at GM who’s completely confident about anything is deranged and B) High anxiety without corrective action is a sure path to the nuthouse. But no. The really wacko bit comes next.

When GM’s dealership consolidation is completed, GM will have 1,500 dealerships in rural markets and 2,500 in metro areas, LaNeve says. He is confident that GM can retain most of its customers because GM’s U.S. dealership count will outnumber that of most rivals.

So GM’s main defense against the negative effects of dealer cuts is the size of its dealer network. Go figure.

Robert Farago
Robert Farago

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  • Charleywhiskey Charleywhiskey on Oct 06, 2009

    What does it cost GM to support a small rural dealer?

  • FreedMike FreedMike on Oct 07, 2009
    George Bruce : October 6th, 2009 at 10:14 pm The best thing that could possibly have happened to auto workers and the taxpayers would have been to run GM and Chrysler through a real bankruptcy and sell the assets, designs, tooling and trademarks to private investors who might have invested sufficient additional capital to give the companies a chance. Let's get real, George...GM was $180 billion in debt. What investor could have bought them? Only one: Uncle Sam.
  • Varezhka The biggest underlying issue of Mitsubishi Motors was that for most of its history the commercial vehicles division was where all the profit was being made, subsidizing the passenger vehicle division losses. Just like Isuzu.And because it was a runt of a giant conglomerate who mainly operated B2G and B2B, it never got the attention it needed to really succeed. So when Daimler came in early 2000s and took away the money making Mitsubishi-Fuso commercial division, it was screwed.Right now it's living off of its legacy user base in SE Asia, while its new parent Nissan is sucking away at its remaining engineering expertise in EV and kei cars. I'd love to see the upcoming US market Delica, so crossing fingers they will last that long.
  • ToolGuy A deep-dive of the TTAC Podcast Archives gleans some valuable insight here.
  • Tassos I heard the same clueless, bigoted BULLSHEET about the Chinese brands, 40 years ago about the Japanese Brands, and more recently about the Koreans.If the Japanese and the Koreans have succeeded in the US market, at the expense of losers such as Fiat, Alfa, Peugeot, and the Domestics,there is ZERO DOUBT in my mind, that if the Chinese want to succeed here, THEY WILL. No matter what one or two bigots do about it.PS try to distinguish between the hard working CHINESE PEOPLE and their GOVERNMENT once in your miserable lives.
  • 28-Cars-Later I guess Santa showed up with bales of cash for Mitsu this past Christmas.
  • Lou_BC I was looking at an extended warranty for my truck. The F&I guy was trying to sell me on the idea by telling me how his wife's Cadillac had 2 infotainment failures costing $4,600 dollars each and how it was very common in all of their products. These idiots can't build a reliable vehicle and they want me to trust them with the vehicle "taking over" for me.