LOS ANGELES -- How to do away with a damaged brand? One way is the Isuzu way: Starve dealers of product over a long period and dribble out the bad news in small doses.
At least it has proved to be a relatively inexpensive way to dismantle a sales network. And in the end dealers didnt complain too much. So is Isuzus M.O. a template for other carmakers with brands on the bubble?
On Jan. 31, Isuzu stopped delivering new light-duty vehicles to dealerships in North America -- a year after announcing it would do so. The remaining 214 Isuzu dealers offer only parts, service and warranty repairs.
Only about half a dozen dealers have cut ties with the company, said Terry Maloney, president of Isuzu Motors America LLC. Two dealers have brought lawsuits, which are pending.
I think we did it right for the consumer, the dealer, and the company, Maloney said. They thought we were fair. Just the fact that so many dealers signed up for the service agreement shows that.
He said the service business will provide dealers with steady income.
As GM ponders what to do with Saturn, Saab and Hummer -- after paying $1 billon to shut down Oldsmobile earlier in the decade -- the Isuzu approach may offer a few pointers.
I do feel Isuzu has created a good model, Maloney said. The majority of the dealers wanted to continue as service dealers. The dealers who terminated did so for good, sound reasons.
Isuzu last year booked a ¥4 billion (about $44.5 million at current exchange rates) charge to wrap up its U.S. operations.
John Frith, head of retail channel solutions at dealership consultant Urban Science, said Oldsmobile dealers had to shut down completely.
Isuzu will keep its service business going for a while, Frith said. It softens the blow. Its not just turning off the income stream.
The Isuzu plan works pretty well because it is considering the effect on the dealers, he added. The manufacturer and dealer group are working together. You need a long enough lead time so you can serve the customers interest and minimize the impact on the dealer.
But applying the Isuzu model to Saturn would lead to disastrous legal effects, said analyst Jim Hall of consulting firm 2953 Analytics in suburban Detroit.
Its not applicable to Saturn, Hall said. Every Saturn is a standalone. In some cases it is the absolute antithesis of Isuzu. In Saturns case you would be starving them of a facility.