General Motors has taken one-third of the current candidates it trained in its minority dealer program out of the running for dealerships and offered them $50,000 each to soften the blow.
Acting on the advice of an earlier independent evaluation of its minority dealer program, GM reassessed its current group of 24 trained candidates who were awaiting dealerships, said Eric Peterson, general director of minority dealer development.
Eight candidates were found to lack sufficient management experience to be considered for a store; the other 16 were deemed ready to become dealers when an appropriate dealership becomes available, he said. GM currently has 294 minority dealers, up from to 278 in December 1997.
The eight candidates were told they can reapply to the program within two years if they get senior management experience at a dealership.
Peterson met with members of GM's Minority Dealer Advisory Council last week, where members opposed the removal of trained candidates from the program. The dealers argued that GM, having already accepted the candidates, should help them get the additional training they need.
Said one dealer: 'We insisted on the reassessment and retraining, but we do not support the removal of candidates.'
WHAT GM OFFERED
Peterson said GM notified the candidates about three weeks ago that they will not be considered for dealerships, and offered them:
A $50,000 goodwill gesture. Many currently are working in dealerships. 'Our expectation is that they will continue in those jobs,' Peterson said.
Any remaining cash stipends associated with the program. Candidates undergo one year of training and then agree to work at a GM dealership for one year. During that two-year period, GM pays candidates a monthly stipend of $5,000, which is in addition to the salary the candidate earns working at a dealership. Candidates who still are within that two-year window will receive any remaining money.
Outplacement services for candidates who decide to pursue a career outside the retail automotive industry.
'It's a very nice package. We weren't going to short anybody; that's not the intent at all,' Peterson said.
He said he knows the news came as a blow to some candidates, but said it is even more devastating for an unprepared dealer to go in a store and fail.
'Our challenge to them is that they need to get additional general manager or senior management experience so that they can learn the operation of a store,' Peterson said.
In August 1997, GM hired Washington attorney Weldon Latham to study its minority dealer program and determine why so many minority dealers fail. Latham, a senior partner at Shaw, Pittman, Potts & Trowbridge, presented the report to GM in June.
One of the report's 215 recommendations was that GM upgrade its dealer candidate selection and training and remove unmotivated or poorly qualified candidates from the program.
Peterson said he and his staff are working with minority dealers to help craft a better recruitment and training process for minority dealer candidates.