To the Editor:
I read the article about the tiff between General Motors and its dealers over the new parts program ("GM wants more parts at stores," April 22).
My analysis of the program indicates my store will lose $20,000 a year after we add back the new grid payout. That is our loss if we maximize the payout.
However, I'm concerned about two other issues.
First, customer satisfaction is going to take a hit when dealership staffers try to maximize the new payout (which will impact gross profit and their pay).
Dealers will be penalized for picking up parts from other dealers -- specifically, parts purchased from GM by another dealer that I need to get my customer on the road that day. Now, to maximize my grid payout, I'll have to order the parts from GM and hope to get them the next day (if they are stocked at the warehouse). In March, GM back-ordered or cross-shipped 24 percent of my daily orders.
Second, the new program will mean dealers will have more obsolete parts that need to be returned for lack of sales because we must keep them longer. Under the Retail Inventory Management program, we had to keep parts for 12 months before we could return them. Under bankruptcy, GM made dealers extend that holding period to 15 months. Now, under the Service Lane Parts program, it is 18 months. The changes make no sense and are counterintuitive to GM cutting dealers' return reserve in half.
This program will be detrimental to dealers' parts department profitability and return on assets -- and, most important, customer satisfaction.