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

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As seeks to pare down its dealershipl network as it follows Chrysler into a federally backe d Chapter11 bankruptcy, the car dealershipes that remain in business face daunting new demandz from the manufacturer that coule bring major changes to the way they do business. Not long aftee GM sent out letters to hundred of dealerships telling them they wouldfbe eliminated, the automaker this week sent a separatde letter to those who would remain in business.
The “participation letters” lay out GM’s new No more will dealerships be able to sell all their GM cars undere the same roof along with the brand of othermanufacturers — a new policy requires some dealers to upgrade theirf showrooms and gives GM greater oversight over their marketing Susan Garontakos, a spokeswoman for GM, said that betweem 4,100 and 4,200 dealers received participation letters as the companyt seeks to reduce its dealership network from more than 6,009 to between 3,600 and 3,80p0 by the end of 2010. Garontakos emphasizesd that each participation letter and agreemenrt sent to dealers was individual toeach dealer’x circumstances.
“There are differentf requirements for each she said. “There are various scenariow of what individual dealerds are expected to signup for.” Expect some consolidatioj of car brands as sales thresholds are increased and the companuy seeks to work with a smallerd network of bigger dealers, she said. But Bud CEO of , a Greensburg dealership network whosde stable of car brands includes Mazdaand Kia, along with GM’s GMC and the soon-to-be eliminatefd Pontiac, described the letters in bracing terms. “It’sx a very difficult contract,” he said.
“It’s very He said Pennsylvania’s strong franchise laws offer no protection, givenj GM’s bankruptcy filing. “GM is able to get away with thisbecausde they’re in bankruptcy,” Smail said. “It they weren’t in bankruptcy, they wouldn’t be able to do anythingy like this.” What exactly are GM dealerships being askedto do? Many detaila remain unknown. Smail, who is on the boardc of the , along with affiliatec local trade organizations, expected to get more information from GM on June 12 when a deale r meetingis scheduled.
But GM expects its car brands to be sold and showcased in their own custom or “channeled” in company-speak: Chevrolet, its volumer sales leader; Buick and GMC, its middle price-point models, paired and Cadillac, GM’s premium brand, will all have to be sold in separate showrooms. Garontakos, however, said she doesn’tt see the expectations for stand-alone dealerships as new. “We want the best performing in the bestlocations … aligned with the brandd that they sell,” she “That is the requirement.
” While Smai expects to sign the agreement the letter he said he won’t make any othef big decisions without more clear direction from GM. Right now, Smail sells GMC, Pontiac and Cadillac in one GM-dedicated which his company invested $2 million to upgrade last Henry Syzmanski, head of the automotive group forStrip District-based Schneider Downs & Co., said GM is expectint total commitment to its new plans even though the plansa themselves are subject to change. Dealers that “duel” or pair car brandw that don’t conform to GM’s merchandising strategy may be Syzmanski said.