When Bill Lovejoy succeeds Roy Roberts as General Motors' sales and marketing boss in North America on Feb. 1, he will find a daunting to-do list on his desk.
Lovejoy, who is viewed by many dealers as a good manager and listener, must:
Repair GM's broken relationship with its dealers. Dealers' distrust of GM dramatically increased in 1999 when GM announced it would buy 10 percent of GM dealerships. The automaker later backed off the project.
Take GM's San Fernando Valley project, in which GM partnered with a major dealer and consolidated several GM stores in Los Angeles, to other metropolitan markets where GM's sales are soft.
Persuade dealers in several states that their state franchise laws need to be changed. GM wants to protect itself from megadealers and Internet-based buying services by investing in dealerships, something many state franchise laws don't allow.
Improve GM's stagnant market share in the United States. GM's share in 1999 remained flat at 29.4 percent.
What does Lovejoy need from dealers? To tell him what areas to 'focus on that will help them make the difference,' Lovejoy, 59, said last Tuesday, hours after Roberts announced his retirement. Lovejoy is general manager of GM's Service Parts Operations.
His appointment is clearly a signal that GM wants to improve relations with dealers. GM was expected to spell out its dealer initiatives for 2000 on Sunday, Jan. 23, at the National Automobile Dealers Association convention in Orlando, Fla.
Roberts, 60, last week refused to be singled out as a scapegoat for the problems that came under his watch in 1999.
'I'm leaving here feeling pretty good about what I put into the equation,' he said.
In October 1998, GM promoted Roberts to group vice president of vehicle sales, service and marketing. It then gave him the unenviable job of consolidating and reorganizing GM's U.S. sales and marketing organization and field staff. Instead of an organization divided along vehicle lines (Buick, Cadillac, Chevrolet, Oldsmobile and Pontiac-GMC), GM restructured into five regions.
Under the reorganization, GM laid off about 1,000 employees and reassigned the rest. Nearly 40 percent of the field staff, the GM employees that dealers rely on most, were moved.
'We were almost on automatic pilot for three to five months with our dealer body,' Roberts said. 'That in itself would suggest you'd have some problems with communications and getting some things in place.'
Roberts also became the voice of GM's market share woes, each month fielding questions from Wall Street analysts and the press as to why GM was not meeting its 1999 stretch goal of 32 percent of the U.S. market.
THE FINAL STRAW
In 1999, GM launched a new online vehicle allocation system called Vehicle Order Management System. Initially, dealers found it slow and unreliable. Despite changes to the system, many still complain that VOMS is too time- consuming.
Additionally, GM took control of nearly $500 million in local advertising funds and shut down the local dealer ad groups that had been in charge of spending that money.
But the straw that broke dealers' backs came in September when Roberts told dealers that GM had launched a project to own and operate up to 770 GM dealerships over the next 10 years. GM would run the project through a new business unit, GM Retail Holdings, led by GM Vice President Darwin Clark.
Dealer complaints prompted GM Chairman Jack Smith to call off the project. Smith maintained that it was never GM's intention to own 10 percent of GM dealerships but that GM North America officials got carried away.
GM now will depend on Lovejoy to regain dealers' trust. Lovejoy has become popular with dealers through his work at Service Parts Operations and his past job as president of General Motors Acceptance Corp.
'I think that he has demonstrated that he understands the role the dealers play in the business of selling cars and making money,' said Frank Ursomarso, president of Union Park Automotive Group in Wilmington, Del., and a member of GM's dealer advisory committee.
But GM is not making it easy on Lovejoy as it pursues initiatives unpopular with most dealers.
GM still wants more influence on dealerships. Ron Zarrella, president of GM North America and Lovejoy's boss now, earlier this month told Automotive News that GM was working on more projects like the San Fernando Valley project, in which GM owns a part of the stores.
In the San Fernando Valley, GM bought nine dealerships, consolidated them to five and brought in dealer Wes Rydell as a minority partner to run them. Rydell has the ability eventually to buy out GM's share in the project.
'There are some parts of the country where we're simply going to have to do that, where we're prepared to do that,' Zarrella said. 'But we'll do it with dealer partners. We may have to help financially, but we'll give them a buyout clause.'
And last week, in a speech to the Automotive News World Congress, Roberts said GM and dealers need to look at changing some state franchise laws, another taboo subject with dealers.
'Dealers were prompted to write the first generation of state franchise laws to protect their rights,' Roberts said. But today GM and dealers must decide whether those laws 'are even capable of supporting entrepreneurial growth in an information-rich age.'
Roberts, the highest ranked black man in the auto industry, said he will continue to work in the industry.
'I've always wanted to own a company. We have a few things we're exploring right now,' he said.
Jim Muir, owner of Oldsmobile-GMC Truck in Sterling Heights, Mich., said he understands why Roberts might pick now to walk away from GM. Before last year's exhausting reorganization, Roberts was in charge of consolidating the Pontiac and GMC Truck divisions.
'That was not fun,' Muir said. 'I think it came out right, but that was a lot of work.'