GM offering 'flex cash' incentives

DETROIT — General Motors is offering a new incentive program to Chevrolet dealers that some argue resembles controversial stair-step incentive programs and gives unfair advantages to larger retailers.

The national program awards dealers a package of "flex cash" based on sales from the previous month, according to documents obtained by Automotive News. Dealers can use the cash to discount nearly any 2017 or 2018 vehicle. The incentives can be used in increments of $50 up to $4,000 toward the purchase of a new vehicle or up to $2,000 for leases, according to dealers who confirmed details of the program.

The program, which resets each month, was introduced in October and appears to run through at least Jan. 2.

Three dealership officials who asked to not be identified, citing fear of repercussions from GM, called the program unfair to smaller dealerships that aren't able to sell as many vehicles as their larger counterparts and gain a sufficient amount of flex cash to remain competitive.

"It's just another way of tiered pricing," said one dealer who owns multiple stores in Chevrolet's South Central region. "I think the playing field should be the same for everybody."

"The amount of flex cash we typically have to use is not a huge amount," said another dealer. "It makes it very difficult for our customers who do any type of shopping around."

Their comments echo those of National Automobile Dealers Association Chairman Mark Scarpelli, who last month said programs that create opaque or inconsistent pricing — he emphasized stair-step incentive programs — could have a long-term adverse effect on consumer loyalty and brand health.

GM declined to comment directly on the program, saying the company develops "programs with input from our dealer councils, and a key objective is to deliver programs that are simple to implement for the dealer, and create value for customers, dealer and the company."

Flex cash follows a similar GM program featuring "instant value certificates." Both programs, according to dealers, offer increased incentives based on sales.

They followed the end of GM's long-running "bonus tag" promotion, which was unpopular with many dealers and confusing to some customers. The bonus tags, launched summer 2016, were assigned by dealers to specific vehicles and couldn't be reassigned mid-month, often creating a wide pricing disparities for mostly similar vehicles.