Saturn has informed its 438 dealers that they must collectively eliminate an $8.5 million deficit in the fund they use to pay for dealership computer systems.
That revelation comes on top of the much-debated decision by General Motors to switch computer vendors at Saturn dealerships beginning in August 2007.
Saturn dealers use a dealership management system from the Automotive Retail Group, a division of ADP Dealer Services. In December, GM informed Saturn dealers that they must switch to a Reynolds and Reynolds system in August 2007, when the ADP contract expires.
GM contends it has negotiated a better deal with Reynolds than dealers can get on the open market.
The $8.5 million deficit is in Saturn's Vehicle Fund, which has been used since 1990 as the mechanism to collect funds from each Saturn dealership to cover the expenses of the ADP system.
Saturn dealers had been paying a monthly charge of $2,090 per facility and a $37 charge per vehicle sold. But from October 2003 through May 2006, the fund's balance dropped from a $1.2 million surplus to the $8.5 million deficit.
During that time, GM made adjustments to its production schedule, reducing the volume of vehicles produced, "primarily contributing to the deficit we have today," wrote Jill Lajdziak, Saturn's general manager, in a letter to dealerships obtained by Automotive News. Another contributing factor was a $19 million system upgrade charge from August 2002 spread over five years.
Saturn's solution to the deficit is twofold: Increase the monthly charge by $500 per facility, and increase the per-vehicle charge from $37 to $51. The increases began July 1 and will be collected through December 2007.
"We all knew we all had to cough up the money," says Stuart Lasser, who owns three Saturn stores in Mount Olive, Livingston and Denville, N.J. "It's a lot of money. I'm not thrilled about it. It's one of those things you really don't have a lot of say about."
Marty Raymond, GM's director of global retail programs, says Saturn dealers were involved in the decision to increase the charges.
The decision was made by the Retail Information Technology task force, which is made up mostly of dealers, and the Franchise Operations Team, Saturn's version of a national dealer advisory council.
"I don't think anybody's happy to have an increase, but it's something we all agreed upon," says Tom Carpenter, president of three Saturn stores in the Columbus, Ohio, area and a member of Saturn's Franchise Operations Team.
You may e-mail Ralph Kisiel at [email protected]