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GM battles repair-parts backlog

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GM battles repair-parts backlog

Robert Sherefkin

Automotive News -- April 5, 2010 - 12:01 am ET

In Nebraska, auto dealer Harry Larson had to make a customer wait a month for a replacement Cadillac hood. And that wasn't an isolated incident.

"You would think parts like transmission cooler lines would be an overnight order," says Larson, owner of Larson Motor Group, of Nebraska City, Neb., which sells Chevrolet, Cadillac, Buick, GMC, Dodge, Jeep, Chrysler, Ford, Lincoln and Mercury. "But it was on national back order and took three weeks."

Paul Rubin, co-chair of the GM Dealer Fixed Operations Board, says of General Motors Co.'s nationwide backlog of repair parts: "It was bad."

Back-ordered parts include everything from windshields to Northstar V-8 engine mounts to wiring harnesses to suspension systems. GM is "clearing things up," Rubin says.

"It's not yet acceptable, but it is nearly as good as before the bankruptcy," says Rubin, who sells Buick and GMC vehicles at the White Bear Lake Superstore in White Bear Lake, Minn.

For more than a year, GM dealers and their customers have been frustrated by delays in getting repair parts. GM blames suppliers -- both those that went bankrupt and those that briefly halted shipments while GM was in bankruptcy -- for part of the problem. But the company shares many of those suppliers with other automakers, and by GM's own admission, its rivals' back orders aren't as bad.

And when GM talks about why the situation is improving, it cites changes in its own repair-parts operations, not changes by suppliers.

NADA topic

Both GM and its dealers say the situation is improving, especially since the start of the year. But the repair-parts problem was important enough to be raised at a luncheon GM hosted in February during the National Automobile Dealers Association convention -- the only event GM held for its dealers at the Orlando convention.

GM executives promised dealers the situation would be better -- or at least no worse than at other automakers' dealers. Carey Hamilton, a Nebraska Chevrolet dealer, told Automotive News, "By the end of this year, they said they would be on a par with other manufacturers."

Each year GM ships 60 million replacement parts, a $5 billion business. It says well under 1 percent of those orders are on back order. That means about 100,000 to 200,000 orders, each representing a potential car stuck on the lift -- and an unhappy customer.

New approach

So GM is changing its ways.

The company used to insist on shipping a part from the distribution center closest to the dealer placing the order. But now GM scours all of its distribution centers for requested parts, says spokesman John McDonald.

In an indirect admission that it may have been running too lean on parts, GM has added $30 million in parts to its inventory since December. GM wouldn't say how large an increase that was in percentage terms. GM also now sometimes ships parts by premium freight to cut the wait.

GM also has begun to do whatever it takes to satisfy the customer. Take the case of the low-volume Chevrolet SSR, says McDonald. Replacement parts were scarce, so GM removed a latch from an engineering model of the roadster pickup and shipped it.

Last month, Steve Hill was named general manager of the automaker's Customer Care and Aftersales unit, formerly the GM Service Parts Operations, in Grand Blanc, Mich. Hill declines to say how many parts remain on back order. But he says GM has cut that number by 31 percent since the start of the year to roughly where it was before the parts spike driven by bankruptcy fears.

Measured another way, GM now is at about "95 percentish" daily parts availability, Hill says, meaning about 95 percent of orders are shipped overnight. That is about average for the industry, Hill says.

That doesn't solve the problem of an order placed a month ago, but it means GM is no longer digging its hole deeper.

"We're still not satisfied," Hill says. But he adds that dealers are less upset than before: "I spoke with GM's 30 largest dealers, and for the first time in a year, parts availability was not on their agenda."

Read more: http://www.autonews.com/article/20100405/RETAIL05/304059984/1434#ixzz0kEjUJPbM

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