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Oracle of Delphi

GM's tightrope: Cut stores, rebuild morale

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Last year at his Columbus dealership, Haydocy sold 579 new vehicles. Of that, 270 were Pontiacs, 90 were Buicks, 71 were medium-duty GMC trucks and 148 were regular GMC trucks.

"The loss of Pontiac, I still can't accept it. It was 40 percent of my business," Haydocy says.

General Motors softened its demands on its surviving dealers last week.

The dealers, for example, won the right to meet with a GM representative next year to discuss sales objectives. And the company promises to negotiate reasonable sales improvement goals.

GM is walking a tightrope as it tries to work out of U.S. Bankruptcy Court. To shed thousands of dealerships, it is using tough tactics that are angering many dealers. But GM needs dedicated and enthusiastic dealers to boost sales and work out of its deep financial hole.

"They know they have to be flexible," says Dave Grundstrom, president of Marvin K. Brown Auto Center in San Diego, which sells Cadillac, Saab, Hummer, Buick and GMC. He got the original participation agreement that GM wants surviving dealers to sign.

"The original agreement was really harsh," Grundstrom says. "This did a lot to clarify things and soften it up."

GM asked the survivors to sign stringent participation agreements by Friday, June 12. They require dealers to significantly increase per-store sales, improve their stores, take more inventory and limit their right to protest GM's placing a store near them.

Last week, GM CEO Fritz Henderson testified that nearly all the GM dealerships that received the participation agreement have signed or agreed to sign. About 96 percent of the 1,380 GM dealerships slated for termination have signed wind-down agreements.

GM wants about 3,600 dealerships by the end of 2010, down from about 6,000 today.

GM softens new agreement

GM is demanding that dealers, if they want to continue with GM, improve their operations under new participation agreements. But last week the automaker softened the agreement by saying it will

-- Meet with all surviving dealerships in the first quarter of next year to discuss specific sales objectives and store upgrades.

-- Negotiate reasonable sales improvement goals and other objectives.

-- Let dealers protest if GM adds a dealership to the market within 6 miles of their stores.

Making nice

GM sales chief Mark LaNeve says the company plans to be flexible in working with dealers on such things as goals for higher per-store sales, dealership upgrades and increased inventory. GM also will allow dealers to protest if the company adds a new dealership within six miles of a dealer's store.

GM will concentrate marketing and product development money on only four brands: Cadillac, Chevrolet, Buick and GMC. That will lead to better sales and dealer morale, LaNeve says.

"The risk is that in the transition, we'll lose [customers] before you get to build that base back up," he says. "We're hoping to mitigate that through the slow wind-down process we've set up."

By Friday, June 12, GM wanted closing dealerships to sign a wind-down agreement that offers them a lump sum payment.

In return, they would agree to immediately stop ordering vehicles and sell all inventory by October 2010.

But some dealers say enthusiasm is difficult to muster.

"For a guy like me who lost a store and kept another, nothing can help my morale or how I feel about them canceling one of my agreements," says a dealer, who wished to remain anonymous because he is keeping one GM dealership.

Reduction math

Here's GM plan to reduce its dealership roster.

6,000 GM's current total

1,380 Received letters to wind down by Oct. 2010

520 Expected to close via attrition

500 Will leave when GM sheds Saturn, Saab, Hummer

3,600 Goal for year-end 2010

After GM cut one of his franchises, Cadillac, and killed two of his brands, dealer Chris Haydocy says he'd "be lying if I told you my head is 100 percent in the game."

Haydocy owns Haydocy Buick-Pontiac-GMC in Columbus, Ohio, and has a Chevrolet-Cadillac-Buick store in Bucyrus, Ohio. He will keep his Chevrolet, Buick and GMC franchises, but GM is cutting his Cadillac franchise. He sold about 50 new Cadillacs a year.

About five years ago, Haydocy added a GMC medium-duty truck store and service center. He'll lose that now that GM is phasing out that segment by July 31.

The wind-down of his Pontiac franchise and GMC medium-duty trucks hurts.

Last year at his Columbus dealership, Haydocy sold 579 new vehicles. Of that, 270 were Pontiacs, 90 were Buicks, 71 were medium-duty GMC trucks and 148 were regular GMC trucks.

"The loss of Pontiac, I still can't accept it. It was 40 percent of my business," Haydocy says.

His GMC medium-duty truck business generated $512,000 in revenue last year in service alone.

Says Haydocy: "We want to be a part of the new GM, but — I don't know how. How can we sell enough Buick and GMC trucks to make up for the loss of Pontiac and GMC medium-duty trucks?"

Link: http://www.autonews.com/article/20090615/A.../306159958/1078

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does the grocery store get rid of the meat department, just because ground beef sells for 1.99 a pound?

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What GM is not telling are the deals they will cut with many dealers off the reocrd.

The local Pontiac/ GMC dealer here is all new just built to Spec by long time GM dealer owner. The local Chevy and Buick dealers are old out dated and owned by large chains who refused to put money in them.

The Pontiac is off the record gaining a Chevy and Buick franchise to mate with its strong selling GMC dealer. They right now with the gaining of Chevy will not miss Pontiac and the owner is happy.

The long and short of this is some will get burned unfairly and some will get for poor servies what they should have years ago. In the end the dealers that remain will be better serving to the customer and represent better service for GM.

My local Chevy dealer is excited about this as they will remain and the Chevy dealers that are piss poor 8 miles down the road will be gone and will bring them more work and more money. The press will not interview the dealers that remain and show how they will benefit from this.

There is just more to this than what is in the press.

Edited by hyperv6
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The need to be tough. Most of GM's dealers are a bunch of assholes to begin with.

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The need to be tough. Most of GM's dealers are a bunch of assholes to begin with.

+eleventy billion

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Interesting. We moved our local autocross away from the west side after haydocy enlarged their lot and cut into the lot we used to race in...

Been to Haydocy a couple of times, wasn't real impressed with them...

Never bought a car there...

And yes, most GM dealers are assholes IMHO. This is perhaps the #1 reason I am not currently driving a GM car.

Chris

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Not all are A holes as the Chevy dealer I have is the best dealer I have ever done buisness with.

From Sales to Service they have been over and above anything I could ask for is how I have been treated and respected as a customer.

Doug Chevy here in Akron is an example of what GM should expect from a dealer.

Too bad I can not say the same for some of the other GM dealers in my area.

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