It would be easy - almost irresistible - to criticize General Motors' sales executives for their plan to buy hundreds of dealerships in 130 major markets. But let us now praise GM Chairman Jack Smith for injecting common sense into the process.
Smith stopped the plan dead in its tracks when he learned the broad sweep of its details. Like everyone else except a small handful of GM sales executives, Smith saw the plan as a catastrophe in the making. And he did what a chairman is supposed to do. He kept his company on course.
When GM sales chief Roy Roberts announced the plan, presumably with the full enthusiasm of GM North America President Ron Zarrella, all hell broke loose.
Dealers were beside themselves at the prospect of competing with their own deep-pockets factory. Industry analysts wondered what model GM was emulating: When have factory stores ever succeeded? One Ford Motor Co. executive speculated that GM hatched the idea when Ford first launched its Ford Auto Collection networks in a few cities, but that GM wasn't able to launch it until after Ford's retail networks were already a disaster.
Jack Smith saved GM a lot of money and a lot of bad will.
Where did GM's sales executives go wrong? It was with the notion that everything had to change.
GM sees big public chains buying hundreds of stores. GM sees the Internet allowing it and everybody else to be connected. GM sees distribution as a way to cut costs.
The diagnosis that a lot is changing was right. The prescription was wrong. The GM sales executives saw themselves in a win-lose situation with dealers. One of them would win. But the dealers weren't the problem. In fact, the Internet offers GM and all automakers a win-win.
With proper use of the Net, GM can learn more about its customers. It can trim the bloated inventory that plagues the auto industry by building only what people want to buy. And it can communicate with the entire chain, from suppliers to dealers to customers, more easily and efficiently.
That's the path that GM should take. Jack Smith saved a lot of pointless trouble by keeping GM out of a war with its dealers.