With its dealers struggling to sell vehicles from a brand that might be sold, General Motors has paid Hummer dealers early bonuses and is in talks to buy out stores.
"Hummer is quietly getting dealers to sign off on their stores and making deals with each one," Tim Kelly, a Hummer dealer in Chattanooga, Tenn., told Automotive News.
Kelly said GM is "tiptoeing through a legal minefield" by trying to shed Hummer, trying to avoid the lawsuits that ensued when it killed Oldsmobile. He said he doesn't think that dealers "are going away without a fight, but I think GM is handling it the right way by making peace with each dealer, one by one."
In early June, GM had said it was considering "all options" for Hummer, including sale of the brand. Last week, a GM spokeswoman wouldn't say whether GM is making bonus payments or is buying out dealers.
But several dealers confirmed that GM is buying out stores from owners. One owner said he is holding talks with GM about selling his store but had signed a confidentiality agreement.
GM came to dealers' aid after putting Hummer on the chopping block. GM tweaked its Standards for Excellence bonus program, paying Hummer dealers second- and third-quarter bonuses in advance as if they already had achieved them.
The bonuses were paid based on dealers' performance in the second and third quarters of 2007. While the amount paid differs among dealers, the average bonus is at least six figures, dealers said.
The bonuses paid under the program "can be substantial," said Ed Williamson, a Miami dealer. Williamson said GM made the changes to get its dealers through a sales plunge. In June, Hummer's U.S. sales fell 59.3 percent to 2,072 units.
Williamson's store, Williamson Cadillac-Hummer, sold 31 Hummers in June, tying for the top-volume dealership in the country for the month. When business was at its best in 2006, Williamson averaged more than 100 new Hummers a month.
"There's no question that there are some people out there that might have considered our truck," Williamson said of consumer attitude in recent months. "If they're thinking GM is going to sell it, they might not have come in to look."
Adding to their struggles, dealers said, much of their best sales staff fled their Hummer lots after GM put the brand up for sale. Hummer dealer Mike Daugherty said he cut his sales staff in half since GM started shopping Hummer.
Daugherty said $4-a-gallon gasoline took away about half the business at his Hummer store in Sacramento, Calif. The other half disappeared after GM announced it might sell the brand.