Chevrolet designated a pool of 13 ad agencies for the 27 new area marketing groups.
Nine of them were chosen to represent 26 of the 27 groups.
General Motors' Chicago dealers oppose the automaker's push to merge their local dealer marketing groups into regional organizations.
By creating regional groups, GM's goal is to spend more money on local advertising and less on administration.
At the same time, GM wants local advertising to mirror its national brand advertising. GM said it will accomplish this by restricting regional accounts to a small pool of ad agencies.
But in the Chicago area, GM dealers said they fear that their advertising needs will become secondary in regional marketing groups. The dealers also say that some of the dollars they contribute for local advertising will be spent in other parts of their regions.
Those were among the concerns they expressed in a Nov. 25 letter to Ron Zarrella, GM's vice president of marketing. Chicago's GM dealers said they believe the changes proposed by GM will harm their marketing and sales efforts. The presidents of the Chicagoland Buick, Chevrolet, GMC, Oldsmobile, and Pontiac dealer associations wrote Zarrella and requested a meeting.
Chicago's five associations, which represent 269 dealers, have these concerns:
Advertising funds would be unevenly distributed within the region.
Local advertising needs would become secondary to regional goals.
Regional advertising would ignore local market trends.
Casey Wickstrom, president of the Chicago Chevrolet Dealers Association, said Zarrella answered the group's letter.
Wickstrom, principal of Wickstrom Chevrolet in Roselle, Ill., declined to give details of Zarrella's response, adding, 'We're going to be able to come up with something that is good for both sides.'
There are a lot of dollars at stake. In 1996, GM's Chicago dealer groups, excluding Saturn, spent $20.6 million, according to Competitive Media Reporting. The New York City-based advertising research group also said dealer associations industrywide spent $1.5 billion on advertising last year, and Chevrolet's dealer groups spent $157.5 million on advertising last year.
A look at Chevrolet shows how ad agencies are losing business through the dealer group consolidations.
When Chevrolet combined 206 local dealer marketing groups into 27 area marketing groups, it cut the number of ad agencies used from 79 to a pool of 13 from which the area marketing groups could select.
So far, 20 of the 26 officially formed area marketing groups have contracted with just four agencies.
Ron Daniels, Chevrolet's regional marketing service manager, said he saved the most difficult area marketing group - Chicago - for last. During the week of May 5, Daniels said negotiations were in the early stage.
'The main thing we have to do is sit down and make sure we both understand where the other one is coming from,' he said.
Under the old formula, Chevrolet matched the funds dealer groups contributed for local advertising. In the new system, advertising dollars are still matched by Chevrolet, but they can be allocated throughout the region regardless of the amount of local contributions.
Even dealers who support the regional marketing groups have some gripes. Robert Peltier, principal of Peltier Pontiac-Nissan in Tyler, Texas, said he thinks Pontiac's area marketing philosophy will yield high-quality ads at the local level.
But, he added, 'They (Pontiac officials) do have the purse strings now, and if you want to push Grand Ams in your market and Pontiac wants to push a different product, they're going to win. And they're going to push what they have the most of.'
Pontiac declined to comment on the issue.
Chrysler Corp. switched to centralized regional dealer groups in 1992. Ralph Martinez, principal of Chrysler-Plymouth-Jeep-Eagle, Lincoln-Mercury, Mitsubishi and Oldsmobile stores in Portland, Ore., said under the new system a board of directors picks what it wants to run from the ads Chrysler offers.
'But when you're on fire and you're selling cars like crazy and they're (Chrysler) running their spots, you don't even care what they're running,' Martinez said.