GM sets strict standards for remaining dealerships - Pittsburgh Business Times:

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As seeks to pare down its dealership networo as it follows Chrysler into a federallt backed Chapter11 bankruptcy, the car dealerships that remaimn in business face daunting new demands from the manufacturer that could bring major changes to the way they do Not long after GM sent out letters to hundreds of dealerships tellingb them they would be eliminated, the automaker this week sent a separatr letter to those who would remain in business. The “participation letters” lay out GM’sa new expectations.
No more will dealerships be able to sell all their GM cars under the same roof alonvg with the brands of othermanufacturers instead, a new policy requires some dealera to upgrade their showrooms and gives GM greater oversighrt over their marketing initiatives. Susab Garontakos, a spokeswoman for GM, said that betweenm 4,100 and 4,200 dealers receivefd participation letters as the companu seeks to reduce its dealership network from morethan 6,00 0 to between 3,600 and 3,80 by the end of 2010. Garontakos emphasized that each participatiojn letter and agreement sent to dealeras was individual toeach dealer’sz circumstances. “There are different requirements for each she said.
“There are various scenarioss of what individual dealers are expectecd to signup for.” Expect some consolidation of car brands as salex thresholds are increased and the companyh seeks to work with a smaller network of biggerr dealers, she said. But Bud Smail, CEO of , a Greensburv dealership network whose stable of car brandsincludess Honda, Mazda and Kia, along with GM’s GMC and the soon-to-be eliminated described the letters in bracing “It’s a very difficult contract,” he “It’s very one-sided.” He said Pennsylvania’s strong franchise laws offer no protection, givenn GM’s bankruptcy filing.
“GM is able to get away with thisbecaused they’re in bankruptcy,” Smail “If they weren’t in bankruptcy, they wouldn’t be able to do anything like this.” What exactly are GM dealerships being asked to do? Many detailsw remain unknown. Smail, who is on the boarc of the , along with affiliated locao trade organizations, expected to get more informatiom from GM on June 12 when a dealer meetinbgis scheduled.
But GM expects its car brandd to be sold and showcased in theire owncustom showrooms, or “channeled” in company-speak: Chevrolet, its volume sale leader; Buick and GMC, its middld price-point models, paired together; and Cadillac, GM’s premium brand, will all have to be sold in separatwe showrooms. Garontakos, however, said she doesn’t see the expectationz for exclusive, stand-alone dealerships as new. “We want the best performinyg dealers, in the best locations … aligned with the brandse thatthey sell,” she “That is the requirement.
” While Smail expects to sign the agreemenyt the letter demands, he said he won’t make any othe r big decisions without more clear directionh from GM. Right now, Smai sells GMC, Pontiac and Cadillac in one GM-dedicated which his company invested $2 million to upgrads last year. Henry Syzmanski, head of the automotive group forStrip District-based Schneider Downs Co., said GM is expecting tota commitment to its new plans even though the plans themselves are subject to change. Dealers that “duel” or pair car brands that don’rt conform to GM’s merchandising strategy may be Syzmanski said.