You’d have to be a fairly trusting GM dealer to participate in what The General calls its Essential Brand Elements program. After all, it’s just the kind of dealership re-branding exercise that HUMMER dealers were forced into shortly before the brand was consigned to the ash heap of history. And once again, GM is asking dealers to create ideal showcases for its brands while keeping compensation for the renovations on a highly trust-dependent basis. GM wants brand-specific dealership rebrandings complete within three years, but will only pay for them over the next five to ten years reports Automotive News [sub]. And the payments won’t be fixed either, but will rather be tied to the dealer’s annual vehicle shipments using “a seasonally adjusted formula that takes into account the price of the vehicles sold.” According to Chevy’s Sales Manager Kurt McNeil, those payments could “conceivably” cover the recommended changes over the ten-year period. Are you feeling the trust yet?
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Category: Dealer News
Here’s a question: You want to do something, but it’s against the law, what do you do? Abandon the idea? No, if you’re Chrysler you sue the government. Detroit News reports that Chrysler LLC are suing officials from Oregon, Maine, North Carolina and Illnois for laws which “unduly burden New Chrysler with the obligation to provide the rejected dealers with rights that this court determined that the rejected dealers do not have,” as lawyers for Chrysler wrote.
According to Reuters, GM has sent a letter to its dealers offering $7,000 for every new Saturn or Pontiac they can move to a rental or service fleet between now and January 4. The plan would essentially make dealers the first buyer of the remaining Pontiacs and Saturns, which would then be operated as fleet vehicles or be sold as low-mileage used cars. In any case, the single objective is clear: get those dead brands off the books at all costs. With 7,900 vehicles left at Pontiac as of the 14th of December and upward of 5,000 left at Saturn as of the beginning of the month, the cost to GM could easily approach $100m. But as they say in the advertisements, their loss is your gain…. as long as you’re interested in one of the G6s or Auras that dominate the dead-brand straggler inventory. Where’s Oprah when you need her?
Normally we’re more than a little skeptical of the Center for Automotive Research’s home-town homerism. But then, the Detroit-funded think tank usually has its rose-colored shades firmly in place. This time around, their findings are surprisingly pessimistic. CAR’s chief economist Sean McAlinden tells Reuters
If [Chrysler’s] market share drops to like 6 percent in the next two years, that’s a 40 percent drop in market share and they only dropped their dealerships by 25 percent
With Chrysler’s sales falling by 20 to 50 percent each month since bankruptcy, this strikes us as a very real possibility. Which means dealers hoping to be reinstated by recently passed arbitration legislation will face an uphill slog. And, according to Automotive News [sub], an expensive one. Reinstatement arbitration will carry a pricetag of between $12k and $100k. If Chrysler’s sales continue to decline in the short term, and with no new product on tap they seem certain to, Chrysler may be forced to re-think a number of elements of its much-vaunted turnaround plan.
If you haven’t been following the drama surrounding the effort to restore dealers culled during GM and Chrysler’s bankruptcy, you might need to be brought up to speed. In essence both the cut dealers and the automakers have agreed to send create an arbitration process by which dealers could have the decision to cut their franchise reviewed by a neutral third party. The remaining conflict is over the criteria arbitrators should use to judge dealer viability, as the GM and Chrysler proposition would have forced arbitrators to use the same criteria GM and Chrysler did in the initial cuts. That would obviously have yielded the same results as the initial cull, so the dealers pushed for a set of criteria that is more favorable to their interests. Automotive News [sub] reports that a compromise has been reached in conference committee that would allow dealers to present “any relevant information” to make their case. That bill is now been approved by the House [sub] and is headed to the Senate, where its passage is “virtually assured.” But despite having all but guaranteed an independent review, culled dealers still aren’t happy.
It’s officially unanimous: literally everyone thinks the new Jeep, Dodge and Chrysler ads from Sergio Marchionne’s brain trust are crap. Sure, you knew that TTAC doesn’t think much of the spots, but were you aware that Chrysler’s dealer council has requested that Chrysler stop showing the ads? Sadly, Bloomberg only quotes one dealer on the plea, who explains that
it is a little difficult for us to understand because it is far different from what we were used to seeing. The message to us is that it is branding, branding, branding, and maybe that will work.
As soon as GM and Chrysler agreed to review their dealer cull decisions, the culled dealers in question began complaining that the review would not improve their situations. According to the aggrieved dealers, the new review would be based on the same allegedly flawed data as the initial cull, meaning nothing would be changed. By GM’s own admission, only 39-51 of the over 1,000 dealers cut would even stand a chance at reinstatement. Now, Automotive News [sub] reports that a new measure has passed the House of Representatives which would allow dealers to “present any kind of relevant information during the arbitration.” The measure comes in the form of an amendment to the House Financial Services bill, which is headed to a conference committee in which House and Senate leaders must arrive at a compromise in order to send the bill to President Obama.
Bowing to legislative pressure, GM and Chrysler have announced today that they will initiate reviews of the dealer cull undertaken during bankruptcy. GM is announcing a “Comprehensive Plan To Address Dealer Concerns,” while Chrysler characterizes its agreement as a “Binding Independent Review Process for Discontinued Dealers.” Both firms take pains to thank Senator Dick Durban and Rep Steny Hoyer for their leadership in preparing the non-legislative conclusion of months of bitter acrimony. Culled GM and Chrysler dealers, you know who to make your campaign donations to… unless you’re a member of the dissident group the Committee To Restore Dealer Rights. According to Automotive News [sub], the group says the new plans will only allow “between 39 and 51” culled GM dealers to be reinstated. “The GM proposal guarantees that they would win every arbitration,” says one member of the committee, who alleges that the new process is based on the same allegedly flawed data the initial cull was based on. Hit the jump for the plan outlines.
North of your border (not mine), GM dealers are slightly annoyed. In fact, they’re fuming. Topnews.us reports that Bob Slessor, owner of a dealership for GM has sued the firm after he was informed that his dealership would be closed before the end of 2009. And don’t think he’s the only one, 12 dealers are submitting multi million dollar lawsuits against the automotive arm of the U.S government. The lawsuits hinge on the way GM approached these dealer closures. Bob Slessor claim that GM used “high handed and oppressive” tactics. The plaintiffs are looking for a permanent injunction against their terminations and $1.5 million in punitive damages. The report didn’t state whether that figure was in U.S or Canadian dollars.
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As congress nears the end of the 2009 legislative session, culled GM and Chrysler dealers are pushing hard for the rapid passage of the Automobile Dealer Economic Rights Restoration Act. Meanwhile, nearly two dozen members of the Senate Commerce Committee from both parties are calling on GM and Chrysler to resolve outstanding disputes with culled dealers in hopes of defusing the situation by non-legislative means.
Given the federal government’s ownership stake in Chrysler and GM, it is our shared obligation to ensure all impacted dealers are treated as fairly as possible. We continue to urge you to take all actions necessary to uphold the assurances you provided earlier, as well as to achieve a mutually agreeable and timely outcome to the negotiations between Chrysler, GM and the dealers. Chrysler and GM’s unprecedented bankruptcy has greatly impacted dealers, consumers, employees, small businesses, and communities across the country. It is crucial that outstanding issues be resolved as expeditiously and efficiently as possible to provide the least amount of hardship to Chrysler, GM and the dealers.
GM’s response to the senatorial call out? “Those discussions are still underway,” according to spokespeople, who refused to characterize the discussions for Reuters. Meanwhile, two examples of possible mitigating action by GM and Chrysler are not off to good starts.
The long-rumored Chinese invasion may be coming sooner than we expected. Automotive World reports that Chinese automaker Brilliance has signed letters of intent with 36 US dealers in preparation for a US market launch. According to the report, Brilliance intends to launch products in the US as soon as it acquires 100 dealers. Apparently Brilliance’s US distributor is targeting former Saturn dealers, Roger Penske’s US network, Hummer dealers and the Galpin group. Rumors are even swirling that Brilliance could buy the Saturn name to re-brand its US-market products.
Autoblog ran this picture purporting to show the locations of future dealers of Mahindra and Mahindra pickup trucks. This piqued our interest because we’ve been curious to see how the Indian firm’s plans to bring diesel-only compact pickups and SUVs to the US market would play out for some time. Over a year ago Mahindra said it would be delaying its US launch (originally planned for Spring 2009) until the fourth quarter of 2009 because, as Mr Mahindra himself put it “my family’s name is going onto this vehicle, and it’s not going to fail.” Well, here we are in the fourth quarter, and Mahindra is still calling the dots on the map “potential” outlets. They’ve also apparently pushed back the launch date again, to the first quarter of 2010. Automotive News [sub] reported way back when that Mahindra’s distributors (Global Vehicles USA) were asking for $200,000 in franchise fees. Maybe finding folks willing to pay that amount for the honor of selling diesel-only compact trucks and utes are hard to come by. Either way, it’s getting to be defecate-or-get-off-the-pot time.
You might have thunk that car dealers would stop being skunks, what with the economy going thunk and the end of cash for clunk. But noooooooo. If anything, tough times have seen an increase amount of the same old story, same old song and dance down at the car lot. “You pay what we pay is back!” Little Rhody’s Flood Automotive Group proclaimed, before switching to free tires for life. And what of this? WYTV in Ohio reports [breathlessly] that Greenwoods Hubbard Chevrolet brought in the punters by selling used cars for $5. “Denny Denoi, General Manager of Greenwoods Hubbard Chevrolet said, ‘It’s just something that we wanted to do instead of taking some of these older cars to the auction we decided we would just sell them to the people of the Valley.'” That said, “The catch with this $5 car sale is that there were only 3 cars for $5, and those 3 lucky people’s names were actually pulled from a box.” But that’s OK, right? “Denoi said the sale was a success, and that most of the customers left the dealership happy, even though they didn’t get to drive away with a car for $5. ‘There’s [sic] some people who walked away with some great deals and some people who needed some cars that got some good transportation, and for the most part, I think 95-percent of the people are thrilled today.'” I wonder if GM’s new Sales Maven Susan Docherty will take that one national.
Automotive News [sub] has more bad news for Saab dealers and customers. Saab’s prospective new owners have put the hit out on 81 of Saab’s current 218 US dealerships. If all goes according to plan, a measly 137 US Saab dealers will remain. Saab’s thin and uneven sales and service network has been an issue for the brand forever, and this isn’t going to make it any better. “The target date to close the sale of Saab is Nov. 30, but it could take until year end, says Mike Colleran, COO of Saab Cars North America in Detroit.” Don’t count on it.
While other brands are busy closing down dealers, Volkswagen is buying them. They buy the big ones, to be exact. The smaller ones have been eliminated ever since yours truly has been working for VW.
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