Remaining GM Dealers To Get a Pay Cut

Remaining GM Dealers To Get a Pay Cut

By Michelle Krebs September 11, 2009

"Don't worry about the profit margin -- you'll make it up on volume."

Anyone familiar with any kind of retailing has heard that platitude, but General Motors Co. dealers will be the latest to find out if it works.

GM reportedly plans to chop a half-percent from dealer margins as the company -- goaded by new chairman Ed Whitacre -- scrambles to regain slipping share and revenue.

It's another blow to GM's beleaguered dealer body, which the company has been whittling down to match its declining market share and loss of four former marketing divisions. The company earlier this spring told 1,100 of its 6,000 dealers it would not renew their contracts next year and is trying to eventually reduce its dealership count by close to 40 percent.

GM's North American sales boss, Mark LaNeve -- who might find it useful to pack a Darth Vader costume -- reportedly will inform dealers of the new margin allowance as part of a broad new marketing strategy beginning next week that will feature Whitacre in one commercial.

Pennsylvania seems to be doing what it can to aid embattled dealers -- even those already given termination notices.

The state's governor, Edward G. Rendell, last week signed a bill making changes to Pennsylvania's Board of Vehicles Act to give automakers less time (45 days instead of 60) to object to a dealer request to add another vehicle brand.

According to the governor's office, the Act also "prohibits manufacturers from requiring an unreasonable expansion, construction, or modification of a dealer's facilities in light of the market and economic conditions."
 
Pennsylvania's Board of Vehicles Act additionally "extends the time period when a dealer can return a car to the manufacturer after a franchise termination from 120 days to 18 months and increases the maximum number of miles registered on the odometer from 500 to 750." -- Bill Visnic

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.