As General Motors tests direct sales to customers in Taiwan and the United Kingdom, it is testing the patience of its dealers in the United States.
GM dealers see the automaker's new Internet initiatives overseas as a sign of things to come from GM's new Internet unit, e-GM. Although GM insists any moves it makes into e-commerce will be done with its U.S. dealers, some dealers believe the company is talking out of both sides of its mouth.
GM fed the controversy last week with a Nov. 8 letter to dealers from Roy Roberts, GM group vice president in charge of North American sales and marketing. In the letter, Roberts calls the dealer franchise system 'the predominant channel for delivery and servicing vehicles for customers.'
Dealers say they don't want to be the predominant channel. They want to be the only channel for new vehicle sales.
Dealers looking for reassurance from Roberts that they held the prime sales and marketing relationship with customers were dissatisfied. The letter did not directly address this question.
Some dealers believe that GM secretly wants to circumvent dealers using the Internet, and that the word 'predominant' is a cryptic reference to that plan. But GM spokesman Terry Sullivan said the word is a reference to all other channels. For example, GM vehicles are sold at auctions, by brokers, and by unfranchised used-car dealers.
'What we're trying to say is the (franchised) dealers will be the biggest players out there,' he said.
Dealers' distrust of GM peaked in late September when GM launched GM Retail Holdings to own and operate hundreds of dealerships. GM said it wanted to use GM Retail Holdings to boost market share; GM dealers said the project made GM their competitor.
Then three weeks ago, after a meeting with officials from the National Automobile Dealers Association, GM Chairman Jack Smith put an end to that mission.
Yes, GM Retail Holdings would invest in some dealerships, but only as a minority partner, Smith said.
In some cases, GM would own a dealership 100 percent, but only temporarily, he said.
Smith said GM Retail Holdings would be similar to the automaker's dealer-development program Motors Holding. Through Motors Holding, GM takes ownership of a dealership and finds a dealer to run it. Over a set period, the dealer buys out GM.
But dealers still aren't satisfied with GM Retail Holdings' new mission.
Some see the GM Retail Holdings stores as possible delivery points for direct Internet sales. Others believe the GM Retail Holdings stores will have an unfair advantage over independent dealers.
Lou Kairys, a Washington, D.C.-based GM dealer who chairs NADA's industry relations committee, said GM knows everything about its independent dealers, from how much money they spend on advertising to what vehicles they are ordering to how much profit they make per vehicle.
How can that be a 'level playing field?' Kairys asked.
'We want GM Retail Holdings to go away,' said NADA spokesman Mike Morrissey.
'Clearly from their message they intend to have some ownership of dealerships, and that's counter to NADA's position,' Morrissey said.
This month GM's Vauxhall subsidiary began selling vehicles to consumers in the United Kingdom over the Internet.
It also has launched a similar project in Taiwan.
To ease dealers' fears of e-GM, GM is setting up a dealer advisory committee on electronic-commerce issues.
The Internet is another potential retail channel, said spokesman Sullivan, but any move into that arena will be done in partnership with franchised dealers.