GM Sends Incentive Offer to Customers of Terminated Dealers
And those dealers go a little crazy…
By Brendan Moore
In a move that has made some dealers howl with anger, General Motors has sent out direct mail pieces to customers of terminated dealers that offer discount certificates of as much as $2000 USD on a new GM vehicle.
The letters were sent to almost a million retail customers and are valid for a 45-day period.
The dealers in question have either already shut down or will cease franchise operations by October, 2010. However, many of these dealers are also involved in the active struggle to convince Congress to force GM to reinstate their terminated dealerships, and view GM’s actions as acting in bad faith. Dealers point to GM’s action as proof that GM has no intention of restoring any of their dealership franchises and considers the outcome of the reinstatement negotiations going on between GM and the dealers, and GM and Congress, as a foregone conclusion – that is, that the decision will be in GM’s favor.
Legislation introduced to restore both GM and Chrysler dealers to pre-bankruptcy status passed the House sometime ago, but is so far going nowhere in the Senate.
The terminated dealers feel that GM is pushing their customers to surviving GM dealers, so that, even if the terminated dealers were to prevail in their fight to regain their franchise, their customers will then be some other GM dealer’s customer.
GM, of course, doesn’t see it that way.
GM says they must move quickly to retain their customers and that they are obligated to try and do that with early and aggressive marketing now. Their point of view is that these now-unmoored customers of the terminated dealerships are up for grabs by any automaker and GM intends to do its level best to keep these customers in the GM fold.
According to the November 16 statement GM filed with the federal government, 1,839 dealers have agreed to cease operations by October 2010.
It is anyone’s guess at this point as to which way the reinstatement struggle will go, but many dealers are optimistic that they will win that battle, and these dealers in particular are reacting with fury over GM’s marketing efforts. They view the customers that GM is soliciting as their customers, not GM’s, and therefore consider the direct mail incentive offer a brazen attempt by GM to make sure the dealerships in question go out of business one way or another.
Industry analysts agree that GM doesn’t have much choice in this matter. If GM doesn’t go after these customers hard, they could just drift away to other brands bit by bit. History confirms this – former Oldsmobile customers did exactly that after their brand went away earlier this decade.
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