GM Programs Changes

[dcharette]

What if we all started buying our warranty parts from a bigger dealer at trade price and chaged them out on our repair tickets. Gm would lose as much profit as they gained.

[Gerry Laughlin]

Dchar,
Thats what I was saying. Give them what they have asked for. If I go to the Dealer next door and buy an alternator that I don't carry, and that I would normally get from my WD, GM will pay me my pickup charges. If he in turn handles a similar situation in his store in the same manner and buys it from me, he gets reimbursed the pickup charges. I would lose the discount I normally get from my WD, but it would be made up by the profit on me selling him my alternator. We have both still given good service to the end customer, and the only entity that suffers is GM. Like I said though, it pretty much has to be all dealers doing it this way, because if he doesn't buy the alternator he needs from me, then I lose, which is doing a disservice to the owner of my dealership.
Gerry

[Richard]

What if EVERY GMS+ dealer just dropped the program? THAT might get their attention. I agree with many of the other things I have seen on this string, but be careful, a lot of this could generate a warranty audit, and that savings you got on the AC/Delco part that you didn't pass on to GM on the warranty job could come back to haunt you.

Other things to consider; stop buying into any 'programs' that GM offers, Tires, Accessories, ect. Why should we have to pay $1,000 to $1,500 a yr for the 'priveledge' to sell product for the General? If you havn't signed up for Tires, don't! Do it yourself in-house...the same distributors on the GM program will sell to you directly, often at lower prices!!

[This message has been edited by Richard (edited 04-15-2002).]

[dcharette]

I am buying stock orders from a delco distributor and averaging 12% off dealer and my purchase are about $20,000.00 per month. My increase in profit over 1 year averages about $16,000. By profit I mean 3.75 and the 2.00 = 5.75. That is how I pay bills and make my Dealer money. Now GM changed the program and I would lose another $4000 per year on new discount program. Now my local WD will be selling to my customers, including our CP customer. My dealer has now been turned into a GM warranty repair center only.

We need to start looking at way's to increase our profit. I would like anyone to tell me how as a medium size dealer how I can make up my revenue loss. As I see it I will be loosing about $30,000.00 per year in profit alone. I have heard from the WD's in my area that say they won't be able to give good prices due to there revenue loss, So where do I go. GM? I don't know about anyone else, My paycheck will lower on this also with no way to get that back.

[Tschube]

This is outrages. My Dealership is very large in wholesale and we depend on the the stock order entitlements for our bottom line profits. We are in a very competitive marketplace and are giving deep discounts to mantain our customer base. I think the only thing to do is to cut the discount levels to my customers to maintain our net profit percentages. They also stated in the broadcast that they will be increasing the margins on parts but said they would not touch parts that are collision related like sheetmetal or lighting. So I'm wondering how we are going to pick up extra gross profit on the new margins. The only catagory we will pick gross profit percentage is wholesale. It is the only catagory that we work discounts of of List price. Internal, Warranty, and Bodyshop all work of of cost basis. Our customer pay and retail have pricing matrix so the new margins will not effect my profit.
I think its sad that GM has cut total entitlements from 11.75% to 9.25 % Thats is over 20% of your discounts that is usualy clear profit. This is very hard for me and my Dealer to swollow. It has made him think about his return on investment and wondering if its all worth it.

[This message has been edited by Tschube (edited 04-15-2002).]

[dcharette]

I think that is what they want, is for the Dealers that have large wholsale to lose also. Someone mentioned to me that Gm was even looking into having a controlled inviroment and an area the the dealers can sell in also. I do not know that for a fact but if they will restrict the WD to areas, who's to say they won't do that to the Dealers. If that was to happen, you as a large wholesaler would be limited to where you can sell.

[scotstrong]

With the manufacturer turning into our worst source of stress and business turmoil and loss of profit, is it any wonder that well-qualified people are migrating away from this business at an accelerating rate?

[Michael White]

Just had our parts rep in today. If we continue doing business like we did last year, we would see a $15K reduction in profit. this is after calculating increases in parts sales due to the addtional mark up.
GMSPO is the most profitable devision of GM. and they are the least friendly of GM. they shoudl concentrate on improving their systems and do something so a overnight deleivery for a Aztec or Rondevouz will not take 3-4 weeks and not come in damaged. Do all of you know you GM does not have a system to reimburse you for damaged parts from Mexico??
Mike

[Gerry Laughlin]

I have tried to stir up some interest here and among my local dealers in responding to the GMSPO changes, but it seems as though a what will be, will be attitude is out there. I also find it amazing how many parts managers did not even know about the changes. Like I said in my first post, GM is betting on our complacency and it is a pretty safe bet. What the heck, I personally will survive by tightening up different aspects of my operation.
Besides my anger with GMSPO, I do feel a little resentment towards some of my peers though, every time someone has complained on this forum about the split with service they are basically flamed and accused of not working together with the service department. Thats BS. I am like most other managers on this forum and believe that working together with my best customer (the Service Department) is in my best interest and in the dealers best interest. But we are in an age where comparison information abounds, and this information is used in our industry primarily to gauge how well we as managers are performing our job. How many of you guys are in dealer 20s. Dont you receive a comparison booklet? Your local dealer association is also probably sending out information to the dealer to be used for comparisons. Profit Centers whole goal is comparison data. I guarantee if any one of you falls to far outside the norm that appears on these sources of information you are going to be called to answer.
Comparison data was used by GMSPO against us; by comparing our discounts to other manufacturers they were able to justify the cuts. Without knowing all the facts it almost appears as though they were justified. But we all know that the other manufacturers arent forcing the parts department to split their profits. The Ford dealer down the street has basically the same expenses as me, his people cost about the same, our rent and electric are similar, yet I am expected to be on par with him while he gets to keep all profit on parts. The information used by GMSPO to compare us to other manufacturers is basically skewed, and until the split goes away it will continue to be so.
The truly amazing thing was how Duane Miller responded to the question posed to him about the split. He didnt even know that the split is outlined in the GM Standards of Accounting and is NOT an internal dealer decision. Gee, thats brilliant, I would expect a man in his position to have a better grasp of how and what conditions he forces his customers operate under.
Lastly, I hope to God that I am not being to paranoid here, but I fear that with the push to pay retail markup on warranty parts that GM may be a laying out a path to pay markup based on our acquisition costs on parts not purchased directly from GMSPO. Since GM pays extra if we pick up a part from another dealer, I dont believe that in their minds that that it would be wrong to pay less if we procure a part from a WD. If my eventual goal was to pay based on acquisition cost, I know the first thing I would do is limit the places I would have to look in an audit situation. That sounds a bit like what GM is doing with the WDs. I hope that it is just a matter of me becoming cynical in my dealings with GMSPO and the loss of the nave belief that GMSPO is going to do what is right.

Gerry Laughlin

[dcharette]

I have a Dealer friend in another state who called me and said he has talked to Duane Miller and point blank asaked him if he is going to raise WD's prices also. He came right back and said no he is not going to. So what that tells us it that We are the ones to take the whole hit on this new program. If the WD's are selling to our customer,jobber stores where do we fall in? Like I said earlier we will become the GM Warranty centers of america only. We need to get to our 20 groups like Gerry said and get this word out.