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.
This definitely generates lots of ticked off people, as if GM hadn’t already ticked off enough folks. Time to reap what they’ve sown.
I just read an article about Chrysler’s 46 bondholders and how they haven’t all agreed to the cram down.
Seems like someone could position themselves to make money on a Chryco and/or GM BK and then go buy enough debt to be one of the key bondholders. Then go on vacation for a few months.
What’s Obama going to do? Use the CIA/FBI to track you down and then waterboard you until you agree to the cram down?
“What’s Obama going to do? Use the CIA/FBI to track you down and then waterboard you until you agree to the cram down?”
No. They’ll just change the rules unilaterally and essentially “legally” steal what people thought was theirs.
Just like what they’re doing with
every
thing
else
@menno:
I know one shouldn’t feed trolls, but please, pray tell, what do you mean by stealing
every
thing
else
?
Especially considering without government loans GM and Chrysler would long have been in ch7, leaving next to NOTHING to bondholders and ABSOLUTELY NOTHING for shareholders.
This is a perfect picture.
Devastating, wasteful and ultimately pointless warfare.
Truly amazing. A couple of weeks ago it was very clear Chrysler would go away. The Feds would save GM at any cost as you can’t say D1 with a straight face. Taking Chrysler down would help make everyone else a little healthier (except taxpayers, maybe).
Now it seems that GM is taking steps to make the almost unimaginable happen. GM will go away and the D2 Will be Ford and some really crappy small Chryslers.
Vega +1 – this is a salvage operation. Without government intervention there would be noting left of either Chrysler or GM – no dealers, no workers and not a cent for either bond or share holders not to mention a bunch of p*@#ed off car owners with no warranty.
@carguy
Not sure I agree with that. GM and Chryco would have gone Chapter 11 in Sept. In Sept. many people believed that the economy would turn around by now, so I’m willing to bet someone would have bought the good parts of both companies, maybe even merged the good parts.
Fast forward to now and the downturn is showing no signs of letting up. GDP -6.1 this morning.. Unemployment has been on a terror pace since Sept…. etc…
This is a MUCH worse time for GM and Chryco to go into BK, so liquidation is much more likely now than it would have been in Sept.
Bush made a bet that the trillions he pledged would turn things around by now. GM & Chryco wouldn’t be making money now, but the would be closer to break even.. disaster averted.
So now 8 months later, things are going to hell everywhere and liquidation is much more likely.
Just opens space in the channel for Hyundai, VW, Tata, Mahandria, Greely and whoever else enters or gains share.
Underperforming dealers. How about underperforming product? Solstice and Sky convertibles years overdue. Volt vaporware. Hybrid Yukons. Aussie, Korean and Europe imports shamelessly branded as US cars. Defects in product like intake oil seals. Did the dealers agree to VEBA? How about GMAC, did dealers get in on sub prime mortgages?
These guys deserve to be run by the government.
Dealers are not the most favorite people in all of this but to screw them ahead of the bankruptcy smells like GM trying to preserve assets to hand over to the UAW and the Obama team.
When a large object falls miles to earth a large crater is formed. We are about to see a very large crater this summer. If the US is not in depression now it will be after this mess.
Liquidation for GM was a given back in 2006…Chapter 11 had a chance in 2005.
Michigan could secede and create it’s own counterfeit racket called “Michigan Dollar”…Declare a peg of 1 to 1 with the US Dollar then print up $100B and give it to GM for free…It is the only viable alternative and it would make Robert Mugabe proud.
GM is doing this outside of court because there isn’t going to be a bankruptcy court. There is no way the PTFOA is going to be able to get away with the shenanigans they have planned with a high profile bankruptcy judge in charge.
LaNeve characterized the group of dealerships as…for example…the dealership might be dualed with a non-GM brand…
Non GM brand? Does this include SAAB, Hummer, Pontiac…?
LaNeve characterized the group of dealerships as…for example…the dealership might be dualed with a non-GM brand…
mpresley:
Non GM brand? Does this include SAAB, Hummer, Pontiac…?
Hahahaha, that part about Pontiac made me cough up a bunch of crackers! For anything to be funny, it’s gotta have a little bit of truth to it…
Messiah Motors lives!
GM or GMAC does not give a shit about local rural communities or the dealers who have sold millions of GM cars for them, as my now -former GM dealer could attest. Who needs bankruptcy or some heavy-handed actions by LaNeve and company when they have worked in secret with GMAC to kill off “underperforming” dealers. With the economy in the toilet, you could label ALL GM dealers as underperforming and close them all down. The new $10 million GMAC-financed new facility that my former local dealer operated now sits empty with the lights still on. How smart is that? GMAC will sell the place for a loss and we the taxpayers will cover the loss. If they had worked with the dealer principal, they would still be getting paid and GM would still be selling a few cars. They are just f*****g idiots.
Sounds like a huge class action suit waiting to happen. I’m guessing the dealer associations could respond with lawsuits…what about GM’s poor performance, not providing competitive product despite dealer input and requests over the years, and so on?
GM is trying to put the blame on the wrong people. GM failed to provide the right products (the right models for the marketplace, quality, reliability) at the right time…no wonder some dealers are “under-performing” and had to dual-brand, selling other manufacturer’s models, in order to survive.
Jaguar moved to India. Pontiac is about to vanish. But exactly what has happened to Saab, Hummer, Saturn, Opel, and Volvo? Collateral damage?
GM is making another strategic error in the heavy handed approach to decimating its dealer body. Under the disguie of terminating for poor sales effectiveness; they have dealers who have for year and year not been sales effective; yet they renew franchise agreements every term. All of the sudden, they think they can take that stick out of the drawer and beat them over the head? I don’t think so. Also the sales and service agreements requires the factory to notify a dealer of this defiency and work with them to correct it. Any judge,including a bankruptcy judge will see thru that. Maybe bankruptcy court is where this needs to be.Since GM has given a “take it or leave it approach” they will leave many dealers no alternative but to go to court including bankruptcy court. They will end up looking so bad after dumping on dealers who have represented them.
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#$%^
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.