In their first-ever speeches at a General Motors make meeting, Jack Smith and Ron Zarrella took personal responsibility for communicating poorly with dealers. They promised to do better in 2000.
During the meeting Smith, GM's chairman, and Zarrella, president of GM North America, promised to:
End all efforts to own and operate dealerships.
Include dealers in all vehicle sales over the Internet.
Work with dealers to change franchise laws in some states.
Restructure groups of dealerships in select markets in partnership with dealers.
Outgoing NADA Chairman Jim Willingham, in a joint press conference with GM officials after the meeting, said the make meeting marks the start of a better relationship with GM.
'We had that partnership when (GM) had over 50 percent of the market,' he said. 'We can have that (relationship) again.' Willingham is a GM dealer in Long Beach, Calif.
The press conference was led by Roy Roberts, GM group vice president of North America vehicle sales, service and marketing, who will retire April 1. Smith and Zarrella left after the make meeting and did not attend the press conference.
NO MORE FACTORY STORES
Dealers' chief complaint in 1999 concerned GM's attempt to buy up to 10 percent of its 7,700 dealerships through a new business unit, GM Retail Holdings. GM, under pressure from the NADA and its dealers, later said it would scale back that effort. At the Jan. 23 make meeting it went a step further.
'Ron Zarrella made it absolutely clear, (GM Retail Holdings) is dead,' said Jon Agresta, owner of Agresta Oldsmobile-Pontiac-GMC in Williamston, N.J. He called the make meeting a 'watershed moment.'
Roberts said GM should have talked to dealers before it moved forward with GM Retail Holdings. 'Maybe if we had had dealer input, there might have been a way to do it,' he said.
GM Retail Holdings and GM's Internet activities also stirred up suspicions that GM would try to sell vehicles directly to customers over the Internet, bypassing its dealers.
Roberts dismissed those suspicions, pointing out that e-GM, the automaker's new electronic commerce unit, 'from day one started with dealer input.'
The mood after the crowded make meeting, held in a 3,000-plus-seat auditorium, was noticeably upbeat. GM and dealers found some common ground on previously unpopular issues, such as GM's efforts to change state franchise laws and the expansion of GM's initiative in the San Fernando Valley in Los Angeles to other markets.
NADA officials and top GM dealers approved GM's attempts to change franchise laws in some states, as long as GM fulfills its promise to work with dealers. Willingham said some states' franchise laws are too strong and limit GM dealers' ability to compete, and still others are too weak.
In the San Fernando Valley, GM bought a number of dealerships and consolidated them into five locations. The company brought in dealer Wes Rydell as a partner to operate the stores. Rydell eventually will buy out GM.
SMALL AREA, MANY STORES
'I have no problem with San Fernando Valley,' Willingham said. 'They had 13 dealers in that small area operating. They couldn't make enough money to hire the best people, to rebuild and remodel, because they were all struggling to stay alive. You can't split that much market up by that many dealers.'
By combining them into five locations, with GM financing and $1 million from Rydell, 'that's how you can help fix a weak marketplace,' Willingham said.
Roberts said GM will invest in dealerships in other markets where there are too many dealerships and GM's market share is ailing. Roberts would not identify those markets.
Michael Grimaldi, GM vice president of field sales, service and parts, added: 'Some of these major (market) reconstructions require substantial investment, and it's really a form of us and our dealers going in with the understanding that the vision is for the dealer ultimately to be the operator and owner.'