DETROIT — General Motors is transforming its more than century-old business operations through data and new technologies. And now it's encouraging its dealers to do the same.
The automaker has rolled out a slew of GM-developed tools that dealers traditionally would outsource to third parties and has refined its dealer reward programs to more heavily weigh technology initiatives in order to drive profits for the company and dealers.
Many retailers have voiced concerns over the factory's growing initiatives, as well as the pace of change, but GM North America President Alan Batey isn't making apologies or excuses for the changes.
"That's our responsibility," he said. "We have to drive a very strong business, and our dealers have to change, and they have to implement new processes and new tools."
Batey, 55, who also oversees Chevrolet's global operations, spoke this month with Staff Reporter Michael Wayland, Director of Editorial Operations Dave Versical and Tom Worobec, editor of Automotive News TV, about the changes occurring in the industry — from dealership showrooms and factory floors to GM's C-suites in Detroit.
Q: What is the state of GM's U.S. dealership network?
A: Change is not always easy for people, but it's a requirement. It's not easy these days being a franchised dealer. You've got to be very digitally savvy. You've got to invest in [business development centers]. People don't come and kick tires anymore. You know the average customer is coming to one dealership to buy a vehicle. And so you've got to work really, really hard.
We've created programs that really are designed to support the dealers to get after these business opportunities. We arguably have more adjacency opportunities than any other OEM because our cars are so connected.
Many dealers have voiced concerns that the changes are occurring too quickly. What is GM's reaction?
It's the world we live in. [CEO Mary Barra] said it: "We're going to see more change in this industry in the next five years than in the previous 50." It's no different for dealers.
You have to be proactive. You have to disrupt yourself. You have to find new profit opportunities and new revenue opportunities. And so, yeah, we don't apologize for that. It's the reality of the industry we're in.
I actually have dealers also applauding us that we're so proactive and moving so fast. We were the first in the U.S. to really implement BDCs right across our network, and so we continue to lead and not follow. I'm not going to apologize for that.
How have dealers responded to GM-developed programs that were typically outsourced to third parties?
The biggest challenge for all franchised networks really is that there are so many different dealer operating systems. It makes the interfaces more difficult than if you are running a network with just one operating system, so that's one of the challenges that the dealers have.
What's also happening is there's so much technology coming at a dealer today. It's hard for them, in many cases, to really understand how it's all working and how it benefits. ... This has happened really quickly, and we really felt that we needed to take a leadership role in helping the dealers really figure this out. ...
I would say the dealer reaction has been really positive. To your point, there's just a lot of things happening at once, and they would love the world to slow down — but it ain't slowing down for anybody and you have to be proactive.
Does GM need more dealerships in the U.S.?
Does the company need to shrink the network?
No. ... Our focus has been on running a business. … We have a Chevy store in every town and wherever you need support, it's going to be there 24/7, and so we use it as a competitive advantage.
Consumers continue to move away from cars to crossovers. How does GM plan to address this?
We're in some ways in a perfect position because we just launched an arsenal of new crossovers, and we've been able to fully capitalize on that opportunity. Having said that, I still maintain that the car segments are very important.
To put it into perspective, through May, the compact car segment was still bigger than the mid-SUV segment.
GM has announced an aggressive rollout of 20 full-electric or fuel cell vehicles globally by 2023. How many should we expect in the U.S.?
We're obviously on record that we believe in a zero-zero-zero [crashes-emissions-congestion] future. And so that commitment is obviously going to mean that you're going to start to see additions to our portfolio. We'll actually be making some announcements in the not-too-distant future and showing you some enhancements to the range and that will continue.
Does that mean we will see new types of vehicles and categories like Ford has promised?
Again, when you listen to our customers, there's a lot of people that have made the move to crossovers and love it and are not coming back. You know, there are those people. ... But there's also those people out there that don't want to drive a crossover.
To your point, we have to reimagine, "What is the car of the future and what could that possibly be?" And so that's the way that we're thinking about these things, rather than, "We're out of this and then we're moving over here." Things evolve.
What does GM think about the NAFTA negotiations?
There's a lot of uncertainty. Our business, as you know, is very complex. And the supply chain is a very complex Rubik's Cube of different elements, which you know whenever you hear something … we have to obviously evaluate that and then obviously proactively get back with the administration and explain the effects.
From our perspective, we're on record as saying we believe that a modernized strong NAFTA agreement is good for North America. We passionately believe that. An exit from NAFTA, we don't think is going to be good for the U.S. It's not going to be good for the industry.
What about China and the trade tariffs?
With regards to China, the interdependencies between the two from being the biggest and second-biggest automotive markets in the world are real. We hope that we can get to a really strong good position that's good for both countries.
There is a lot of uncertainty, but when you're in my role, you have to focus the whole organization on what you can control. ... We're focused on what we can control and running the business on a proactive basis.
How is preparation going for production of the next-generation Chevrolet Silverado and GMC Sierra?
I haven't got the first one in my dealership yet, but I would say, as we're sitting here today, we feel we're in a good place. Things are going well, but launching trucks is not easy. You know there's a lot of derivatives. It's a lot of complexity. It's difficult to do. But at this point in time, we feel good about where we're at.
Are full-size pickup incentives higher than expected?
No, I would say that our truck business is pretty much in line with what we had expected from an incentive perspective, because we knew that FCA was going to run this dual strategy of having the older truck and the newer truck, so we knew that was going to happen.
How are GM's U.S. sales through the first half of '18?
The things that we've been talking about over the last three or four years are all the things that are still alive today. You know, the discipline, the building the brands, the focus on the customer experience, the focus on the adjacencies; these things continue. But specifically around your question, the retail industry will be flat, but the total industry through June is probably going up a couple of points. We'll be up more than that. But we're very disciplined and we're doing all the things that we have set out to do. Our rental penetration will be about 10 percent, which is absolutely where we wanted it to be.