One thing that really burned my ass under Henderson’s reign was that he continuously referred to GM’s dealership network as “customers”.
Why did that upset me? Because if dealers feel that they are a customer and should be treated as such, it makes it impossible to put the end-consumer first. On top of that, it’s very difficult to implement new approaches to sales and service. In other words, where else would business (GM) try and tell a customer (a dealer) how to run their own affairs?
So if GM dealerships are not GM’s customers, what are they? Like the thousands of other companies with which GM builds relationships in order to produce and market the company’s vehicles, dealerships should be treated as suppliers: they are suppliers of marketing, suppliers of vehicle service and suppliers of sales service. In simple terms, GM dealerships provide a service to GM and multiple services – along with the ability to buy a product – to the consumer. If anything, the dealerships should be kissing GM’s butt (like some suppliers do) since it’s GM that allows them to earn a living.
It’s no secret that even after the failure and rebuilding of GM, it’s still business as usual at some dealerships. For example, it’s still common for dealers to employ sales reps who know less about the product than the customer walking through the door.
This one issue alone is reason enough for customers to dread the dealership experience. Consumers now see how much gobble-dee-gook a poorly educated sales rep is dishing them when they already know everything the salesman knows and then some. Problem is, the sales reps don’t realize what is occurring in this scenario and end up burying themselves and any deal.
Over the last 20 years, the buying habits of the American consumer has changed dramatically. How? We are now able to sit down in the comfort of our own homes and do our own research on our own time. We can make up our own minds about a vehicle to the point where the only reason for going to a dealership is to test drive something. But even the lack of a test drive will not stop people from ordering vehicles these days – GM had almost 12,000 Camaro orders before the first car was even built yet. That number would have been even higher had many consumers been able to by-pass the dealer.
Less known (even to GM brass) are the more unethical practices occurring in the trade surrounding the sale of their vehicles. For example, did you know that even though you custom ordered a vehicle to your specifications and put a deposit down, the dealer is under no obligation to sell it to you? In fact once the car arrives at the dealership, he is free to ask even more for the vehicle, citing “market conditions” as the reason for spiking the price. Keep in mind that this is despite the fact that you have a written contract (fine print is a bitch).
Last year, I was contacted by someone who had ordered a 2010 camaro back in September 2008. He had ordered it exactly as he wanted it and spent the entire winter dreaming about the shiny new Camaro that would be in his driveway shortly after they begun production in April 2009. Once his car arrived at the dealership, the salesman called him and told him to “come on over to sign the papers, the car is here!” How excited he was – he grabbed his particulars and headed down to the dealership. Once there, he was brought into the office and was told that the car would now be $3,000 more due to “market conditions”. It was $3,000 that he had not budgeted for and could not come up with. In the end, the deal went south and the car was put on the lot with a price above MSRP.
What was the result of this scenario? The dealer either got itself a short term spike in profit because someone most likely ended up paying more than MSRP; or the dealer got itself a lost sale that our would-be owner does not know about. For GM though, both scenarios resulted in one less customer for the next 10 years. If that customer turned around and bought a Mustang, their next car will most likely be a Ford as well and the individual will do nothing but curse the GM name to anyone who would listen. That’s the unfortunate part, the dealer is the face of GM and rarely does the customer comprehend the separation of the two.
So how can GM face the challenge of ensuring that good dealerships are properly recognized? First, they need to change their internal and dealer culture so that all clearly understand who works for whom. This simple change will allow GM employees who work on the sales side to come up with better strategies and programs that focus on the consumer as well as send a message to the dealerships that there are expectations to be met. Secondly, these new strategies must reward dealerships who perform well and penalize those who perform poorly. The “Turn-and-Earn” program is a good start but I don’t think it goes far enough on the penalization front. The CSI program has value except it is highly inaccurate due to only measuring those who purchased a car and not those who tried to purchase a car but left in dismay (huge gap). GM still has about 1,500 dealerships more than it really needs, so stripping someone’s franchise away should certainly be a possible outcome of poor performance.
GM must also better educate the consumer so that they understand poor service is not the normal practice with GM dealers and that certain practices (legal or not) are not something GM condones. Consumers understand that they have a choice in picking the manufacturer for their hard earned money but GM should also educate the consumer about the choice they have within the GM dealer network. Do you know which GM dealerships have the most awards and the reason the merit behind these awards? Me neither and it’s GM’s job to let you know before you decide to walk into a dealership. There’s only one customer and that’s you.
