We thought things were bad when General Motors announced it was delaying incentive payments to dealers by two weeks (ten more days, hang tight guys). As usual, it gets worse. We now hear from Automotive News [sub] that GM is using its November Re-Consensus Dealer Cash Program to dump more inventory on its hapless dealers. An undisclosed formula determines eligibility for GM’s dealer incentive program, the gist of which is the less inventory you have, the more you have to order to receive incentive cash. Seems fair, right? Don’t worry, it’s not. Forbes reports that Detroit dealers are actually carrying historically low inventories, but that “days on hand” is what’s killing them. And now those (relatively) low inventory numbers are what GM is using to foist their cars on the dealers. A Montana dealer with a 365-day supply was asked to take only one Malibu sedan and one Silverado to get $3,000 dealer cash on his 2008 and 2009 models of the Traverse crossover, Tahoe and Suburban SUVs, and Impala sedan and $2,000 on Cobalt compact cars. But if you have less than 365 days worth of inventory (and in this market, who knows how long it will take to actually work through that much) you are going to be ordering more cars to get the cash… or watch your sales go to another dealer who does.
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Is this a normal practice within the auto industry, in general? I mean, does (did) Toyota use similiar extortion tactics to unload slow-selling Tundras and Seqoias on dealers when their inventory is finally exhausted and they refuse to take anymore of the them?
If not, it’s just one more indicator of what’s wrong with the domestic auto industry. The manufacturers repeatedly screwing the dealers does nothing but set up a situation where the dealerships will use every underhanded trick they know to foist unsaleable product on consumers. No wonder domestic dealerships have such poor reputations.
The beatings will continue until morale improves.
There is no honor among crooks, any more…
I guess this is one way to thin the dealer ranks.
So GM is packing the channel in the middle of a recession. Yet Another sign that they are desperate for cash to keep the lights on.
Hopefully the new post Ch11 GM will move to a demand pull model like Toyonda use rather than their current production push model.
Hey
Can you send me a good size (800×600), nice resolution copy of that pic to my email?
It’s a parking lot filled with Isuzu cars and would like to keep :)
Thanks
Jerry York will be interviewed on Bloomberg at 4PM today.
“you are going to be ordering more cars to get the cash… or watch your sales go to another dealer who does.”
Threat or promise?
Stingray: sorry, that’s as big a version as we could find
My heart weeps.
Not!
How can a dealer have a 365-day supply of vehicles? That is, imagine if that dealer never ordered another car again. At his current rate of sales, he wouldn’t sell everything he has on the lot until a year from today. I wonder how many model year 2007 vehicles (or 2006s!) he still has.
Admittedly, this isn’t that unusual for a GM dealer. Look at their monthly sales charts-you will frequently see small numbers of sales of vehicles that have been discontinued over a year ago-meaning that they have sat around that long on some dealer’s lot, gathering dust.
http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewmonthlyreleasedetail.do?domain=3&docid=50002
According to this, in October 2008, GM dealers sold three brand new Buick Rainers, 13 brand new Buick Terrazas, and two brand new Saturn Relays. The last model year for all three vehicles was 2007, and I believe that for the two minivans, production actually ended in late 2006.
there are “Rats in the Glovebox”.
oh for the people to listen. shame.