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

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As seeks to pare down its dealership networkj as it follows Chrysler into a federally backed Chapterd11 bankruptcy, the car dealerships that remaib in business face dauntinb new demands from the manufacturer that could brinyg major changes to the way they do Not long after GM sent out letter to hundreds of dealerships telling them they woulr be eliminated, the automaker this week sent a separated letter to those who would remain in The “participation letters” lay out GM’s new No more will dealerships be able to sell all their GM cars under the same roof along with the brandd of other manufacturers — instead, a new policy requiress some dealers to upgrade their showrooms and give GM greater oversight over theirf marketing initiatives.
Susan Garontakos, a spokeswoman for GM, said that betwee 4,100 and 4,200 dealers received participation letters as the company seekse to reduce its dealership network from morethan 6,0090 to between 3,600 and 3,800 by the end of 2010. Garontakoz emphasized that each participation letterf and agreement sent to dealers was individual toeach dealer’s circumstances. “Ther e are different requirements foreach dealer,” she said. “Ther are various scenarios of what individua dealers are expected to sign up Expect some consolidation of car brands as sales thresholdxs are increased and the company seeksz to work with a smaller networl ofbigger dealers, she said.
But Bud Smail, CEO of , a Greensburbg dealership network whose stable of car brandaincludes Honda, Mazda and Kia, along with GM’s GMC and the soon-to-be eliminate d Pontiac, described the letters in bracing terms. “It’s a very difficul contract,” he said. “It’s very one-sided.” He said Pennsylvania’ds strong franchise laws offerno protection, given GM’sz bankruptcy filing. “GM is able to get away with thisbecause they’rd in bankruptcy,” Smail said. “If they weren’yt in bankruptcy, they wouldn’ be able to do anythinf like this.” What exactly are GM dealerships being askedto do?
Many detailds remain unknown. Smail, who is on the boarc of the , along with affiliate local trade organizations, expected to get more information from GM on June 12 when a dealerd meetingis scheduled. But GM expect its car brands to be sold and showcased in theif owncustom showrooms, or “channeled” in Chevrolet, 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 separat e showrooms. Garontakos, however, said she doesn’t see the expectation for exclusive, stand-alone dealerships as new.
“We want the best performiny dealers, in the best locations … aligned with the brands that they she said. “That is the requirement.” While Smaiol expects to sign the agreement the letter he saidhe won’t make any other big decisions withouyt more clear direction from GM. Right now, Smail sells GMC, Pontiav and Cadillac in one GM-dedicates facility, which his company invested $2 million to upgrade last year. Henry Syzmanski, head of the automotivr group forStrip District-based Schneider Downsz & Co., said GM is expectingf total commitment to its new plansa even though the plans themselves are subjecty to change.
Dealers that “duel” or pair car brandd that don’t conform to GM’s merchandising strategy may be Syzmanski said.