DETROIT - General Motors has told dealers that it will move slowly - but will not abandon its plan - to buy up to 770 of its dealerships.
GM Chairman Jack Smith tried to appease dealers last week by promising to proceed slowly and involve the retailers in the discussions, said Lou Kairys, chairman of industry relations for the National Automobile Dealers Association.
Smith met with NADA Chairman Jim Willingham along with other officials from both sides at GM headquarters here last week.
GM may set up an 'alternative distribution' dealer council, GM spokesman Terry Sullivan said. But the council would not work solely on GM Retail Holdings, he said.
GM Retail Holdings is the new entity established to invest between $2 billion and $4 billion to buy up to 10 percent of GM's U.S. dealerships in 130 metropolitan markets.
Smith was unavailable for comment after the meeting with NADA officials, the company said.
WALL STREET SKEPTICISM
At the meeting, NADA stressed to GM's executives that a barrier remain between the automaker and its independent dealers.
'NADA has struck no deal to accept GM owning dealerships. We are dead set against them or any other manufacturer getting involved in the retail business,' Kairys said.
Wall Street investors, meanwhile, are skeptical the retail plan will improve GM's stock, said Stephen Girsky, an analyst with Morgan Stanley Dean Witter & Co. in New York.
'Now (GM is) trying to calm Wall Street's concerns by saying the roll-out is going to be slow,' Girsky said.
Ron Zarrella, president of GM North America, recently told a meeting of analysts that GM's investment in the retail plan will be immaterial for the next three years, Girsky said.
Kairys said Smith and other top GM officers were surprised by dealers' strong opposition to GM Retail Holdings.
'I don't think they realized how excited the dealers would be when they announced the plan,' Kairys said.
NADA Chairman Jim Willingham, in a speech last week to the Automobile Press Association in Detroit, said he felt betrayed by GM when it announced the plan, which he called a 'slap in the face' to dealers.
Dealers fear that GM will give better inventory and favorable treatment to its factory stores. They also suggest that a strong GM sales effort on the Internet could persuade customers to bypass independent dealers and buy from GM's factory stores.
A news release sent out after the Smith-NADA meeting created confusion, Kairys said. In it, Roy Roberts, vice president of GM's North American Vehicle Sales, Service and Marketing operations, said the company had 'no intention to own factory stores.' This led many to conclude GM was backing away from its plans.
GM spokesman Sullivan said Roberts meant GM would still own stores but would not bring in managers without retail experience to run them. Experienced retail managers will run the GM dealerships, Sullivan said.
GM dealer morale, already rocked by ordering blunders and the company's recent reorganization of its field staff, will suffer even more from GM's foray into retailing, Girsky said.
Said Kairys: 'We appreciate being looked at as partners with the manufacturer, but we are against factory ownership of dealerships in any way, shape or form.'