DETROIT -- General Motors will delay incentive payments to dealers next week in an effort to save cash.

The payments for dealer cash, customer cash and other incentives will be delayed from Nov. 28 until Dec. 11, Mark LaNeve, GM's vice president of North American sales, service and marketing, said in an interview with Automotive News.

Letters to dealers explaining the delay are to be sent today, LaNeve said.

He declined to estimate the amount of delayed payments. On average, GM spends about $3,600 per unit in incentives, according to Edmunds.com. Based on GM's U.S. October sales, the company sold about 84,000 vehicles in two weeks. That amounts to total incentive payments of about $302.4 million for two weeks.

"We're trying to improve cash flow across the whole company and looking at everything," LaNeve said. "One area where there's a lot of cash outflow is between us and the dealers."

He said GM considered all the areas in which it pays dealers, including holdback, warranty reimbursements, incentives and wholesale floorplan assistance. Those payments add up to "billions of dollars over the year," LaNeve said.

"Of all the things we looked at, this was the least disruptive to dealers," he said.

Delay of 7 to 14 days

GM typically makes weekly incentive payments to dealers, usually on a Friday, for vehicles the dealers sold the previous week, LaNeve said.

"So depending on when you sold the car, it could be delayed anywhere from seven to 14 days," he said. "The payment they would have gotten on November 28, they won't receive until December 11, but then they're back on schedule after that to weekly payments."

LaNeve said he discussed the delay with GM's National Dealer Council before enacting it. The dealers understood the pressing need for cash, he said.

"We're only giving them a two-week delay in cash flow, and most dealers have enough cash to handle that," LaNeve said.

He said that of the billions of dollars that GM sends to dealers, this is a small fraction. But because GM is doing no leasing and little financing -- given the credit crunch at its credit arm, GMAC Financial Services -- the payments still hurt the automaker as its liquidity dries up, he said.

GM ended the third quarter with $16.2 billion in cash. The company has said it needs $11 billion to $14 billion to operate. GM warned it could run out of cash soon without federal loans.

Said LaNeve: "Anytime you can delay any kind of a payment, it helps cash flow."

Dealers reached today reacted with a mix of understanding and concern.

"If they postponed it for two weeks that does not surprise me, it definitely would help them," says Leonard Fichtner, owner of Fichtner Chevrolet in Laurel, Montana.

Fichtner has been a dealer since 1961 and he admits he is worried for his store's future.

"Our liquidity is good, our store is okay. But what's next?" Fichtner says. "General Motors is on the hot seat, but so is their dealer body with us not knowing what is coming down the line."

GM LETTER TO DEALERS

To All Dealers:

I am writing to you to update you on changes we are going to implement with regard to the incentive payment schedule.

As I discussed in the IDL last week, one of the biggest issues facing General Motors is our liquidity. That is the cash we have on hand to pay for our regular operating expenses.

In this cash crunch, we have examined every aspect of our business in an effort to improve cash flow, including our relationships with all of our key stakeholders, like suppliers, agencies, employees and dealers. In this regard, we are implementing minor changes to incentive payment timing. So, what does this mean for you? Basically we are delaying the payment of the incentives by two weeks. Here is the new schedule that will be in effect until further notice:

· Incentive applications previously scheduled to be paid on November 28th and December 4th will be delayed to December 11th and December 18th respectively. Please see the attached payment schedule.

· Weekly incentive payments will continue thereafter reflecting one week of dealer application activity. On average, payments will be made approximately 2 - 3 weeks after a valid dealer application has been processed by GM. Effectively this is a 2 week delay from the current schedule.

· As a result of this retiming you will not receive any incentive payments on November 28th and December 4th.

This liquidity crisis has an obvious effect on all of us. As you are aware we are asking the federal government for some temporary relief. I need your continued help in talking to Congress. There are three things you need to ask your congressional delegation for:

· First, ask the government officials to approve a new $25 billion loan package to help us deal with our current liquidity crisis.

· Second, while the rules for the distinctly separate and already approved $25 billion loan package for investments in technology and enhanced fuel efficiency have been issued, we'd like to see that program move as fast as possible, so we need to encourage the government to minimize red tape and act on loan applications as quickly as they can.

· Third, the automotive industry needs some additional government support to stimulate retail sales, like making interest on car loans tax deductible, etc.

We've set up a website that will assist you in making your voice heard in Congress and to help spread the message. Please visit www.gmfactsandfiction.com. If you have not already done so, please call and e-mail your congressional representative.

This is a critical time for our industry, your dealership, and General Motors. Please continue to do what you do best, selling vehicles one customer at a time. Please make every effort to integrate your promotions with the recently announced Red Tag sales event.

Together we can work through this crisis. As always, thank you for all of your hard work and effort.

Good Selling.

Mark R. LaNeve

GMNA Vice President NA Vehicle Sales, Service & Marketing