GM: Actions Speak Louder Than Words
Publisher and Editor Mike Roscoe conducted this clandestine interview with a prominent GM dealer. To respond or to recommend a future "Dealer Undercover" segment, write to mroscoe@dealeronline.com.
What's on your mind Mr. Dealer?
I just attended a meeting in Philadelphia, the Northeast GM Dealers Convention meeting at the convention center. While I circulated among the other dealers, I learned that the general consensus is that the powers that be at General Motors need to stop circumventing and undercutting the dealers and stop playing with words. Ambiguous statements create a mass of confusion and contradiction. One of the GM speakers answered a question and I could swear his answer sounded like, "It all depends on what the meaning of the word 'is,' is." GM needs to make substantial changes if they have serious intent to develop an open and honest relationship with their dealers. This is supposed to be a partnership. But GM continuously applies more and more pressure on the dealers while GM itself wants to do less and less. For far too long their consolidation-cutting back on everything just to show a better return to stockholders- has created a hell of a lot of confusion. They cut back while demanding more out of their dealers. I think the only one who has a true perspective on it is Bill Lovejoy, group vice president of GM. I hope the message that he conveyed concerning the partnership between the manufacturers and the dealers in this franchise system was made with sincere intent.
Can you share with me some of the highlights of what he had to say?
It seems that what he stated came from the heart. He understands and knows that the franchise dealers should have a more definite role in factory decision making. The factory should be paying attention to dealers, involving us in decisions that pertain to retailing automobiles, giving dealers whatever support they possibly can so that we can do our jobs as dealers to satisfy the customers. By us doing that and the manufacturer doing its job, they will have more work at the factory and the stockholders will get a better return on their investment.
Hopefully Mr. Lovejoy does, in fact, "get it." Why has he been alone at GM on this?
I don't know, but I see it as a 180-degree directional change in the rhetoric and the filibuster that has been fed to us for years by Roberts and Zarella. It's a welcome change and it will have a positive effect in the NADA dealers' attitude survey if General Motors does as Bill Lovejoy says. But words are shallow. They have got to back it up with action and support the dealer body.
Let's assume that what Bill Lovejoy said was not only from his heart, but is a reflection of a change in direction at GM. What are some of the first things they need to do?
The vehicle owner management system (VOMS) has been screwed up for how many years now? I hope they get a handle on it so that when a sold order goes into the system, we don't have to play patsy with the customers down here, waiting for the factory to make deliveries of vehicles. We are out there trying to capture the orders, getting all of the ingredients for them to make this cake. They have got the ingredients to make this cake, we are getting the orders for the cake, and if they won't bake them, what the hell are the people going to eat?
They will find something else to eat.
Right.
What was it Mr. Lovejoy said that leads you to think this might be addressed?
The man stood up there with a chart that showed his intent is to take the dealers into consideration first, so we can satisfy customers. This seems to be a 180-degree change in the direction of General Motors. It seemed that, up until this point, they wanted to go to the consumer first, and just use us dealers as in-betweens.
What else needs to change?
Dealers need to be allowed to make a reasonable profit. There are all kinds of reports which show how much dealers are making. In reality, the Bureau of Motor Vehicles and the taxes that are being paid by consumers on these vehicles is more than what the dealer actually is making on the vehicle. We have to try to make do the best we can with the little morsels of food, the crumbs that are left. Our gross profits are nowhere near what the Bureau of Motor Vehicles is getting with sales tax.
Yet we are expected to do a wholelot more for this corporation than what the Bureau of Motor Vehicles is doing.
What is it you heard at this meeting that leads you to believe all this might change? GM is not going to make it so dealers make any more profit on a vehicle, are they?
Let's hope they do.
What do you think they need to do to make that happen?
I think a lot of attention has to be paid to the advertising, where they always want to dip their hands into the dealers' pockets. Years ago, we used to make an additional 2% on options. Now, they roll the options up into the base price of the vehicle. That takes 2% from us. It's all of these nickels and dimes, and the overhead they keep jamming down our throats, the mandatory programs. We have to pay for the literature that we pass out to the customers? We are selling their product.
I have never understood that. I have been in several different businesses, one was the office equipment business. Brochures are given to the office equipment dealers in bulk so they can freely disperse them and get information into the hands of potential customers.
I agree with you. There is a very handsome price on the display material that is supposed to be in the showrooms. Why should we be paying for them to make a profit on brochures?
What else does GM need to fix, Mr. Dealer?
General Motors seems to be pitting all of their dealers in competition with each other. Instead of worrying about being in competition against Ford and Chrysler, we're fighting each other. The GMC Denalli is the Cadallic Escalade, the Chevy Blazer is the Oldsmobile Bravada, the Chevy Tahoe is the Yukon, the Silverado is the Sierra, the Suburban is the Yukon Excel, the Astro is the Safari
There is a saying that goes "divide and conquer." If a consumer has a choice between two different GM sport utilities and one Ford, aren't they more likely to buy a GM vehicle that way?
If you had two sons and you put them in the same business, in the same town, selling the same product, what do you think their chances of success would be?
They are going to split the market.
Right.
We covered that dealers need to make more money. We talked about VOMS. We discussed inner-GM brand competition. What else has to change? I once read a book, "The Customer Comes Second." When I first read that title I thought, "This is crazy." After I read the book, I realized the genius of the premise that, if you keep your employees happy, your customers will be happy. If you want happy customers, have happy employees. Therefore, if you put the employee first, then that employee will put the customer first. Then it made all the sense in the world to me. Do you think that maybe GM has started to see the light? That if they have happy dealers, the dealers will then create happy customers?
I hope the message Mr. Lovejoy conveyed is meant from the heart, and that the rest of General Motors is going to follow. We have been fed shallow promises in the past andit has been hurting us. It has been hurting the whole corporation. The logic behind what Mr. Lovejoy is trying to present now seems to be a 180-degree turnaround from what General Motors has been on in the past, and we dealers welcome it with arms wide open.
