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.
Non-GM Brands verboten? Ouch.
“…and even if you do get to keep your franchise agreement, you’d better toe the line. If you don’t, your office will be full of IRS auditors while OSHA and EPA people are in your shop looking for violations. We’re the government, and you don’t f4 with us.”
Change you can believe in.
Let’s just see where the Nanci Pelosis and the Harry Reids of this world take General Motors. After yesterdays news regarding the “Beat” (or whatever the hell its called) mini-car…if THAT is the shining star …the beacon of light that GM is heading towards, then God Help us all.
This guy is right on the money…he speaks the truth. See if what he says does not apply to what is happening now in the U.S. auto industry (hint, it most surely does…GM and Chrysler now “officially” (through official state-sponsorship) stand for NOTHING):
So, I guess the successful local Toyota/Chevy dealer will need to decide which brand it keeps. Hmmm, I wonder which it will be?
This could prove to be interesting. Wonder what these “upgrades” will include, if they really want to drop some dealers. Maybe diamond encrusted urinals and gold plated toilet partitions? Italian leather wallpaper? Wool carpet? I’m curious to see how GM plays this as they go for dealer cull, round two.
bluecon-Amen to your question.
I predict disaster. Quality, reliability, design and service will plummet from their current lofty pinnacle.
Uncle Barry will continue to pour more of our money down the hole trying “to get it right” and it will sink faster than they can print the dollars they are busy devaluing.
Cheerio,
Bunter
Lumbergh +1
Too many GM dealers have been running on inertia for too long. Tales from the field of a Cadillac sales cubicle the size of a diner booth and right next to the staff toilet so you come away feeling special; service waiting areas in the parts area of the dealership, in among the boxes; of sales types who have the presence and character of carny barkers.
And how does it work when the Buick Pontiac dealer also owned and ran the Mazda Mercedes dealership directly across the street? Many dealers, like many other professionals who deal with autos, are remarkably unsentimental about brands and brand loyalty. It’s all just metal to them. And if that works that way (and it does) then all too often the customers just look like marks.
For Detroit the brand loyalty wars were fought and lost in the dealerships. As all good generals know the first step to win the battle is to prepare the battlefield.
This is the first meaningful post-bk announcement to GM’s dealers, and it’s a double single finger salute TELLING them to upgrade their facilities or else…
As if it’s been the physical buildings that has driven former customers to Toyondissan dealerships. Any guidance on better warranty or customer service?
I do wonder what will happen when one of the top performing dealerships tells GM to “sit and spin” when handed this contract.
GovMo has a ready-made sales channel for its products even if it shuts down its existing dealer network. I mean, every town already has a post office. Put the Aveos near the stamp machines and the CTS-Vs in the post office box lobby.
Ok, here is a general franchsie question…
Do franchises have a certain set of guidelines to follow form each automaker? Given that each state has Byzantine laws, there seems to bee a need for uniformity. Chrysler dealerhips differ in so many ways. In Detroit area, compare Oakland Dodge with Golling. It’s like comparing apples and oranges…BUT for the same company.
Same old arrogant overbearing and insufferable GM attitude. Why don’t they upgrade their PR/marketing department? This turkey is one of the inner circle yes-men who drove the ship onto the rocks. The new GM will not be any different from the old one unless LaNeve and a few more like him join RIR and take a long walk off of a short plank.
says GM’s Mark LaNeve. “They get put into the old company and get a fairly quick termination”
What I don’t understand is why this guy isn’t put into the old company and given a fairly quick termination. HE is part of the management structure that navigated GM straight into the rocks with head buried firmly in sand (“The GMT900’s are going to bring back the good old days”). You can rant at Obama and Pelosi all you want, but they didn’t cause this mess, they are just trying to clean up after.
“We expect them to perform well on customer satisfaction scores and sales”
Do what we say, not what we do. Why does Mark LaNeve still have a position at GM ?
The new GM may well fail, but I take no glee from that. I do have to take issue with the implication from some that domestic dealerships are somehow more cut-throat and worse bastards that their “foreign” competitors. At 62, I’ve been in and dealt with a LOT of dealerships at virtually every store (except the luxury brands).
ALL customers are seen as potential marks until the customer shows himself otherwise. It is the nature of the business, especially in areas where there are many choices. Repeat business is a worthy goal for any salesman, but the pressure is to get the sale NOW. This from a guy with two Toyota’s in the garage.
Not that I would ever stick up for GM, but I do believe the truth here is that they could simply cull any dealers they want to within the rules of C11, without demanding facility upgrades. Taking advantage of the situation to get the dealerbody to upgrade their showrooms is nowhere near as bad as taking advantage of the general population by filing for C11 rather than C7.
They forgot Option 3: Upgrade *and* die.
How about requiring GM to upgrade its products and reliability first? Not that it matters to me. I don’t intend to set foot in another GM dealership. This from a man who currently drives a CTS and has owned two Pontiacs, two Buicks, and two Chevorlets.
Wait wait wait. Whenever TTAC writes about the car buying experience, people say dealerships are dumps and dealers are scumbags.
Now, TTAC is reporting on how GM plans to improve its dealership system. And all of a sudden I see that dealers are perceived as being victims. Poor guys forced by evil Government Motors to take on needless hardship. Where’s the consistency here?
What “Bigsby” wrote above – he’s right.
GM and the other manufacturers should pressure the dealers to run good operations. Too many dealers are presently very shabby.
I don’t see anything wrong with GM demanding to have spiffy dealerships.
What “Martin Schwoerer” wrote above – he’s right on the money also.
Right on sitting@home! My sentiments exactly. My now former local GM/Toyota dealer built a brand new facility (financed by the “old” GMAC) at the urging of GM (opening in March 2007, just as the economy was starting to tank) and that was his undoing. The facility cost $10 million to build. The “new” GMAC (Cereberus) cut off his credit lines when he was one month late on his mortgage. The dealer was trying to re-structure his mortgage but GMAC was too busy getting bailed out. Now we have no more new car dealers here (Amador County, CA) and those of us who bought GM cars aren’t going to drive one hour away to buy them anymore. Rocket scientist LaNeve commented in our local paper “that GM doesn’t finance dealers and we hope the dealer owner finds new financing to re-open”. He couldn’t. If my local dealer had not been forced to build a new facility by GM (and Toyota) he would most likely still be in business. LaNeve needs to go — yesterday. He is part of the problem.(BTW – The new facility (valued now at $5 million sits empty) in Jackson, CA waiting for GMAC to unload it at a fire sale!
Here’s my stupid question. If having a small dealer body with modern facilities and a focus on customer satisfaction was the goal, why not drop all the dealers save the Saturn Ones and make them the new Chevy-Buick-GMC-Cadillac Store? Only 400 or so dealerships, almost all in pretty new facilities, supposedly they treat their customers better than the other lines. If the reason GM can’t make money is that there are too many dealers that would surely cure it.
This is what the dealers should be saying to GM.
These incompetent failures at GM (led by you LaNeve) have obviously been planning these closures for some time. Now they are making their move, hiding like the sissy scoundrals they are behind the veil of bankruptcy. All they are capable of is blaming everything and everyone but themselves. It’s time we all join forces and rid ourselves of the one and true reason for GM’s decline, and that is the absolutely worse excuses for management ever. These fools are nothing more than clowns in business suits. They are causing heartache and destruction across our country and it’s time we act like the Americans we are, and defend ourselves against this economic terrorism. It has become incumbent upon us to rise up against these self serving, isolated, insulated, egotistical, lying bastards!
I am ready, willing, and able to lead the charge.
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.
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.
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.
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.