GM Peer Group Determination

[Michael White]

I am confused about how GM determines peer group classifications. In our case we are a large Buick Pontiac GMC dealer, located very close to San Jose International Airport, and am a drop off repair facility for PMT for in transit repairs. There are no GM dealers in our area with our equal franchises close to our size (28 techs). After the merging of the warranty reports, we are significantly under peer. This is good. But how can GM make it fair? We have recieved some rather pricey engine repairs from rental car companies, and some very expensive repairs from PMT related to very poor assembly on GM's part. Case in point, a rear end assembly that was exploded because the person who assembled the carrier assembly did not put the lock pin in the spider gear shaft. The shaft came out while the truck was being driven. There was nothing saveable. How is it fair to dealers that have significant rental car company repairs (major blown engines and transmissions) and PDC in transit repairs.Both situations are unique in a market area.
thanks.

[robc]

WINS now determines peer groups by three things; size of dealership, geographical location, and product mix.

The location matches are not nearly as close as you would be lead to believe. First, geographical proximity is not a rule, it's a guideline. If GM can not find enough dealers close to you to make an exact match then they will look else where. In your case, think of like stores near Sacramento, Medesto, Stockton, Fresno, Santa Rosa, Salinas, etc. etc. If they still couldn't find enough stores, maybe they'd pull in stores from like areas such Norfolk, Va for an extreme example ... who really knows, but size and location are easy to match up and never much a determination on warranty expense. I look at the numbers across the country every day, there simply are not any regional differences that makes any location **that** more different that any other. Slight variations might always exist, but GM can get darn close. It is soooo rare that it matters that the stores be close to you that I wouldn't even worry about it.

Now product mix is a concern ... a big concern. Let's say before reorganization the expense per division ranged from GMC at the high end ($290 CPVS) to Buick on the low end ($200 CPVS). GM seems to think that this means everyone should average $250. They are trying to match up some like franchises, but it's not working very well. Most dealers are finding themselves either well over peer, or well under. In your case if you got rid of either Buick or Pontiac, or started to service a lot more GMC's you'd find your expense rapidly out of line.

I hope GM figures out how unfair this type of comparison is, and how it isn't helping anyone (especially for them). Chrysler I believe has a workable solution, where they weight the individual vehicle's CPVS to arrive at a better number. That way they account for differences in product mix. That might not be a perfect solution, but it would be a world better than what we have now.

Concerning the influence of rental vehicles as types of customers -- they very well could be influencing your expense. However, I would want to see exact figures, (i.e., how many vehicles you serviced came from the rental fleet v. others, how much they cost to repair v. retail customers, what types of failures they seemed to have v. retail, etc., etc., etc.) before I would ever make that assumption as being the real cause of my expense.

Are there others out there who are really struggling to make sense of the new DA report?

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** Rob, Editor WD&S **
Help is only a message post away!
robc@dealersedge.com

[jrcal]

I also noticed a big drop in my figures when our reports were combined. You are correct about the combined numbers for Buick vs GMC. The trucks are a lot more expensive to repair and drive your numbers up.
As for peer comparison, I would like you to know we are a small dealer ( 7 techs ) and are next to an Enterprise store so we see a lot of those type of repairs mentioned earlier. We have seen a complete rear axle assembly come apart because of a missing retainer and it drives our warranty numbers way off the scale sometimes. My point is I think the larger stores will have numbers which only have a small monthly fluxuation due to their large volume of repairs. Smaller dealers have wild monthly fluxuations because just one major expensive repair can jump their numbers off the scale and stay there for the 3 month average.

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JC

[robc]

Whoops, let me follow-up to my previous post, because I see that my point was far from clear. So much for the "editor's" efforts on the subject

Size does effect expense to a degree, and there's no doubt that smaller stores are more prone to wild swings based on the repairs they perform.

I meant to say in my previous post was that matching up size is easy for GM to do, even if they have to grab dealers outside of your local area. As long as the dealers are THE SAME SIZE, within reasonable guidelines it shouldn't make much difference what part of the country they come from.

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** Rob, Editor WD&S **
Help is only a message post away!
robc@dealersedge.com

[GreggT67]

Rob,

Product mix does seem to be a problem with the new GM expense reports. I know of a Olds/Cadillac store. Cadillac comprises about 75% of their warranty work for GM and Olds 25%. I looked back at their December numbers and their Olds expense was only 10% above peer and Cadillac was 28% over peer. When the new report came along and I looked back at their December numbers, they are now 70% over peer for December. Looks like GM needs to do some serious work on this report.

[MARY SHERICK]

OUR REPORT SHOWED A DRASTIC DROP. WE ARE A CADILLAC/OLDS DEALER ALSO. OUR MIX IS ROUGHLY 70 PERCENT CADILLAC AND 30 PERCENT OLDS. OUR PREVIOUS NUMBERS WERE AT PEER AVERAGE WITH OLDS AND 15.00 PER CAR UNDER ON CADILLAC. WE ARE RUNNING NOW ABOUT 20.00 BELOW PEER WITH THE COMBINED REPORT. THE DEALERS I HAVE TALKED TO ON AVERAGE HAVE SEEN A DROP IN THEIR COMPARED EXPENSE PER VEHICLE. THIS REPORT SEEMS TO BE A CLEARER PICTURE OF THE DEALER'S WARRANTY EXPENDITURES, WHEN A MULTI-LINE FRANCHISE. IT EVENS OUT THE SPIKES THAT MAY BE DUE TO ONE SPECIFIC HIGH EXPENSE AREA IN A SINGLE LINE. I KNOW ONE SMALL STORE(8 TECHS) THAT CARRIES CADILLAC/CHEVY/OLDS/PONTIAC/BUICK AND EVEN THEIR NUMBERS ARE 15 PERCENT BELOW PEER AVERAGE. THE NUMBER OF LINES CARRIED ALSO WILL AFFECT THE REPORT. THE IMPORTANT ISSUE IS TO BE ABLE TO JUSTIFY THE DOLLARS YOU SPEND TO REPAIR THE VEHICLES. THAT GOES BACK TO MAINTAINING COMPLETE AND ACCURATE DOCUMENTATION.