DETROIT -- General Motors has informed its 7,000 dealers in the United States that it will impose a 5 percent surcharge on all customer special parts orders beginning May 1.
The surcharge would be paid by dealers not enrolled and active on GM's new electronic parts-ordering system. Some dealers are miffed, saying they will be penalized for something out of their control.
So far, GM has enrolled more than 3,500 dealers on the system but has activated only about 1,100. GM's goal is to have all of its 7,000 U.S. dealers on its new Retail Inventory Management system, or RIM, by December 2007.
It's easy to enroll dealers, which generally see the benefits of GM's automated parts-replenishment system. But before dealers can use the system, GM must certify that their dealership management system vendor is capable of connecting with the RIM system.
Seven are certified
Of the 28 vendors that provide the service, GM has certified seven. GM says it expects to certify another seven vendors by month end and three more during May.
By month end, GM says, 90 percent of its dealer body will be served by a RIM-certified vendor.
The surcharge has become a hot topic among dealership parts managers on Internet bulletin boards and in GM parts managers associations.
The automaker says the surcharge is necessary to cover the rising cost of fuel to ship parts to dealerships and has nothing to do with the new electronic parts system.
"We were simply putting in place a process and an expense mechanism to cover the cost of fuel and freight," says Eileen Healy, executive director of the GM parts channel.
"Everyone else in the industry has done it. We were the last to do it."
GM will not levy the surcharge on those dealers who are active on the new RIM system because it is cheaper for GM to process a RIM order, Healy says.
GM goes through a demanding process to certify each dealership management system vendor. That process includes examining the vendor's system architecture, testing the system and carrying out a pilot phase at the dealership to make certain everything is operating correctly, says Donna Colorito, process information officer at GM's service and parts operations.
RIM recommends a custom parts inventory for each dealer based on national parts sales and the dealership's own history of sales. The recommendation can be approved or revised by the dealership's parts manager.
After approving the parts plan, any time inventory falls below the system's recommended level, an order is automatically entered for the dealership.
Tommy Brasher, owner of Brasher Motor Co., a Chevrolet and Buick dealership in Weimar, Texas, says the RIM system will be good for dealers, and the 5 percent surcharge is probably fair.
Bad timing
"But the timing's not so great," says Brasher, who also is a member of the Chevrolet national dealer advisory council.
"There's a lot of dealers like myself who signed up for RIM several months ago but can't get on yet," he says. In some cases, GM has not certified the dealership management system vendor, or dealers are just waiting to be hooked up, Brasher says.
His store uses a dealership management system from ADP Dealer Services' Automotive Retail Group. Brasher says he plans to begin testing RIM in his store this week.
"I think personally they should not exercise that surcharge, because a lot of the dealers really can't do anything about the fact that they are not on RIM," he says.
The 5 percent surcharge could cost dealers $2,000 to $10,000 a month in increased fees to GM, says a source familiar with dealership parts operations.
'A strong arm'
Tony Russotto, parts manager at Jackson Chevrolet Co. Inc. in Middletown, Conn., sees the 5 percent surcharge as "definitely a strong arm to get dealers to sign up to RIM." The surcharge will have a significant impact on wholesale sales, Russotto says in an e-mail.
"What is another 5 percent going to do?" he says. "It's going to change wholesale from little profit to no profit."
Norm Wrase, parts manager at H&N Chevrolet-Buick in Spencer, Iowa, likes the RIM program and expects other automakers to follow GM's example. His dealership is enrolled in RIM but not yet activated, Wrase says.
He adds: "I would have liked to have seen a timetable of implementation. Since I was signed up but not active, I thought I was safe for a few months. But I did not hear correctly and am scrambling to get things done."
You may e-mail Ralph Kisiel at [email protected]
