Dealers, consumers push back against General Motors

One dealer, who requested anonymity, said in an email that he outsold a rival GM dealership, occupied a better location, earned consistent profits and spent heavily on the stores but now faces a shutdown. "They have ruined my life financially and have affected the lives of each one of my employees," said the dealer, who added he signed the agreement for the "token" payments… – said since she is a taxpayer and now a shareholder in GM, the company should divulge the specific criteria for the decisions. "A few instances I am aware of strongly suggest the criteria was based more on corporate politics than logical and fair criteria," she said.

The Toronto Star
June 19, 2009

Dealers, consumers push back against General Motors
Anger erupts over shutdown decisions and payments, but GM says customers will benefit in long run
Tony Van Alphen

Bob_Slessor.jpeg

Bob Slessor, president of Robert Slessor Pontiac Buick GMC, says lawyers are looking into the forced closing of his decades-old dealership. Glenn Lowson Photo for the Toronto Star

General Motors' controversial decision to force the closing of hundreds of dealerships is triggering a backlash from store owners who are now contemplating legal action at the same time consumers express outrage about losing service.

One GM dealer confirmed yesterday he has hired legal counsel, and a small group of retailers may fight the automaker over pending shutdowns and an alleged lack of fair compensation.

"We've got a litigation team looking into this," said Bob Slessor, president of Robert Slessor Pontiac Buick GMC in Grimsby, east of Hamilton. "We're reviewing our options."

A public petition calling for GM to reconsider the closings has now topped 2,300 names, with people lambasting the company for forcing them to travel long distances for future service and for unilaterally closing popular stores rather than letting the market decide.

"I don't know how GM expects to maintain customer loyalty when it treats its dealerships like this," said one consumer in comments on the petition. "What a bonehead decision," added another petition signee.

GM of Canada Ltd., which is fighting for survival, announced last month that it would close 240 – more than a third – of its 705 dealers by the end of October 2010, when their current franchise agreements expire. The company also wants to cut another 50 stores through attrition.

GM offered "wind down payments" to dealers who agreed to close by the end of this year.

The proposal would pay most dealerships anywhere from a few hundred thousand dollars to more than $1.5 million under a formula related to 2008 retail sales. They would also get an allowance for signage removal.

Dealers could not sue GM or speak about any terms in the confidential agreement.

GM said the closings are necessary so it can become more viable over the long term under a restructuring plan that includes $10.5 billion in loans from the federal and Ontario governments.

Government sources said almost 200, or 80 per cent of affected dealers, signed the early closing offers.

"This reduction, while difficult, will ultimately benefit our customers and the dealers who serve them," said GM spokesman Stew Low. "The restructured dealer network will have increased profitability driven by increased per-dealer sales allowing them the resources to better service customers.

"A smaller, more focused dealer network will save GM costs in the areas of dealer support, systems support and processing, ordering, training, advertising support, field sales and service support (from) GM people."

But Slessor, one of the first dealers to publicly criticize GM over the closings, said in an interview many owners, including himself, had no input in the decisions to close profitable stores with decades of experience, loyalty and service.

He also rejected suggestions that GM will save costs by cutting dealers, and then expect consumers to believe it.

"They have downloaded costs of many services to the dealers," he noted.

Slessor acknowledged GM had to reduce the dealership network because of sliding sales and market share, but says the company is cutting far too deeply.

"The ‘new’ GM has seriously underestimated the customer backlash with respect to purchasing their new products and the ability for remaining dealers to service the customer base," he said.

"In my case, it has gone beyond frustration for customers. They're loyal and they don't understand this. They're willing to change brands in order to receive the convenience. And they're writing GM to tell the company."

Slessor and other dealers said they are appalled GM would close them down after they spent millions of dollars in improving or "imaging" stores in recent years at the company's insistence.

One dealer, who requested anonymity, said in an email that he outsold a rival GM dealership, occupied a better location, earned consistent profits and spent heavily on the stores but now faces a shutdown.

"They have ruined my life financially and have affected the lives of each one of my employees," said the dealer, who added he signed the agreement for the "token" payments.

Meanwhile, one signee of the petition – which started at a Guelph dealership targeted for closing – said since she is a taxpayer and now a shareholder in GM, the company should divulge the specific criteria for the decisions. "A few instances I am aware of strongly suggest the criteria was based more on corporate politics than logical and fair criteria," she said.

Another petition signee said he doesn't understand how the governments could spend billions on saving thousands of auto production jobs then insist on store reductions that will kill more jobs.

"It is utterly inconceivable."

http://www.thestar.com/specialsections/recession/article/652643


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