DETROIT – SomeCorp. dealers here are worried an Aug. 8 meeting called by the auto maker’s marketing chief will center on reducing the amount of money they get for employee-discount vehicle transactions.
Mark LaNeve, GM North America vice president-vehicle sales, service and marketing, sent letters to metro Detroit dealers inviting them to the meeting at the Rock Financial Convention Center in suburban Novi.
According to dealers, the letter says the meeting agenda includes the GM Employee Purchase Program “and other related topics.”
The purchase program allows for employee discounts of varying amounts on vehicles, depending on the make and model.
GM pays dealers 5% of the manufacturer’s suggested retail price to offset lower margins and other expenses in connection with such deals.
Some dealers worry GM at the meeting will announce a reduction of that percentage, as part of the struggling auto maker’s efforts to pare expenses and employee ranks to mitigate losses.
“I hope I’m wrong, but I don’t believe there will be any positive to come out of a meeting with dealers to discuss the employee purchase program,” says one dealer who asked not to be named. “I sure don’t think they’re going to tell us they are increasing our percentage.
“GM can do two things. Either take the money out of the employees’ discount, which I don’t think they are going to do for various reasons, or take it from the dealers. It’s an opportunity to save money, but at the dealers’ expense.”
Another GM dealer, active in the upper ranks of the Detroit Automobile Dealers Assn., says the letter prompted him to try to learn more about what will happen next Friday.
“I’ve been making calls but haven’t learned anything,” he says. “I’m curious if they are going to make changes to the program or just talk about it.”
GM spokesman Peter Ternes says the meeting is one of several LeNeve holds throughout the country with regional dealer groups to discuss various issues.
“They can range from corporate topics to dealer marketing group changes or advertising issues,” Ternes says. “I don’t know specifically what Mark will talk about, but I doubt if it is just one issue. If it were, it would probably be a conference call.”
The discount program primarily affects Detroit area dealers because of the number of GM employees who live here.
Some changes have been made in the program recently, and it is possible the meeting was called in part to shed more light on those.
For example, GM is widening the employee-discount program by allowing each active worker and retiree to extend eligibility to an additional person of their choosing.
It also informed Saab dealers it no longer will extend employee discounts for Swedish-made 9-3 cars, effective for the ’09 model year. Employee discounts will remain for Saab’s 9-5 and 9-7X models. The latter is made in the U.S.
A Saab dealer says GM field representatives told him the 9-3 employee discount was ending because of a currency exchange imbalance between the U.S. dollar and Swedish krona.
The dealer says he replied: “Why are you picking on Saab dealers? The Saturn Astra is made in Belgium. Why not end employee discounts on that European import, too?”