DETROIT -- General Motors is funneling cash to dealers in major California markets to help them renovate stores, another step in GM's push to buff up its dealer network in growth markets where its sales have trailed the overall market.
In recent months, GM offered upfront cash payments to about 100 dealers in and around San Francisco, Los Angeles and San Diego, in amounts ranging from several hundred thousand dollars to more than $1.5 million, according to people familiar with the matter. More than three-quarters of the dealers agreed to take the money, one of the sources said.
The sources said the cash comes with strings attached:
-- Dealers must agree to maintain their locations as GM-only points for 10 years.
-- The money must go toward renovations or relocations, to be completed by a set deadline.
-- Dealers who violate the terms must repay the money and pay a penalty.
GM spokesman Tom Henderson acknowledged that the automaker is "engaged with dealers in San Diego, Los Angeles and San Francisco metro markets" on facility improvements, but said the details are confidential.
"We're continuously exploring ways to improve the customer experience, which includes upgrades to dealership facilities," he wrote in an e-mail.
The targeted payments underscore GM's commitment to build customer retention in part by transforming Chevrolet, Cadillac and Buick-GMC stores into contemporary, inviting places for customers to shop and have their cars serviced.
"We do have specific programs for certain areas of the country to help spiff those [dealerships] up and bring them into the 21st century," GM CEO Dan Akerson told Automotive News last month, without naming any target markets. "There are certain cities, I know, where our market share is the lowest."
Akerson said he's "concerned about how some of our dealers look like they were right out of the '50s and '60s."
Akerson and North American President Mark Reuss have emphasized customer retention as a key to sustaining GM's comeback from its 2009 bankruptcy.
Buoyed by success with fuel-efficient small cars such as the Chevrolet Cruze, GM officials have high hopes for increasing market share in California by wooing traditional import buyers.
The money for dealership improvements is on top of the quarterly payments GM makes to dealers under its nationwide image program known as Essential Brand Elements. Under that 2-year-old initiative, dealers who agree to renovate stores and work on training, digital strategy and customer retention receive quarterly payments that amount to around $50,000 to more than $500,000 a year, based on sales volume.