GM sets strict standards for remaining dealerships - Houston Business Journal:

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As seeks to pare down its dealership network as it followsd Chrysler into a federally backe Chapter11 bankruptcy, the car dealershipsd that remain in business face dauntinfg new demands from the manufacturer that could bringb major changes to the way they do Not long after GM sent out letters to hundredss of dealerships telling them they would be the automaker this week sent a separate letter to thoss who would remain in business. The “participatiom letters” lay out GM’s new expectations.
No more will dealershipsx be able to sell all their GM cars undere the same roof along with the brands of othermanufacturers instead, a new policy require s some dealers to upgrade their showrooms and givezs GM greater oversight over their marketing Susan Garontakos, a spokeswoman for GM, said that betweenh 4,100 and 4,200 dealers received participation letters as the companh seeks to reduce its dealershipl network from more than 6,000 to between 3,60 0 and 3,800 by the end of 2010. Garontakosx emphasized that each participation letter and agreement sent to dealerws was individual toeach dealer’s circumstances. “Therde are different requirements for each she said.
“There are various scenarioz of what individual dealers are expecter to signup for.” Expect some consolidatiobn of car brands as sales thresholds are increased and the companu seeks to work with a smallef network of bigger dealers, she said. But Bud Smail, CEO of , a Greensburg dealership network whose stable of car brandsincludews Honda, Mazda and Kia, along with GM’sw Cadillac, GMC and the soon-to-be eliminated described the letters in bracing terms. “It’s a very difficul contract,” he said. “It’s very one-sided.
” He said Pennsylvania’ss strong franchise laws offer no given GM’s bankruptcy “GM is able to get away with this becaus e they’re in bankruptcy,” Smail “If they weren’t in bankruptcy, they wouldn’t be able to do anythiny like this.” What exactly are GM dealershipsw being asked to do? Many details remainm unknown. Smail, who is on the boardc of the , along with affiliated local trade organizations, expected to get more information from GM on June 12 when a dealert meetingis scheduled.
But GM expects its car brandw to be sold and showcased in thei owncustom showrooms, or “channeled” in company-speak: its volume sales leader; Buick and GMC, its middle price-point models, paired together; and Cadillac, GM’s premium brand, will all have to be sold in separatde showrooms. Garontakos, however, said she doesn’ty see the expectations for exclusive, stand-alone dealershipsd as new. “We want the best performingy dealers, in the best locations aligned with the brands thatthey sell,” she said. “Tha is the requirement.
” While Smail expects to sign the agreement theletterd demands, he said he won’t make any other big decisionse without more clear direction from GM. Right now, Smail sellsa GMC, Pontiac and Cadillac in one GM-dedicatede facility, which his company invested $2 milliojn to upgrade last year. Henry Syzmanski, head of the automotiver group forStrip District-based Schneider Downs & Co., said GM is expecting total commitmentf to its new plans even though the plans themselvees are subject to Dealers that “duel” or pair car brande that don’t conform to GM’s merchandising strategyt may be dropped, Syzmanski said.