GM and its dealers "kiss and make up"

In 1998, General Motors Corp. had such bad relations with the United Auto Workers, a bunch of strikes broke out. GM spent much of 1999 making peace with the union.

Last year, GM relations with its dealers went bad, turning ugly when the automaker announced a plan to buy nearly 800 dealerships.

GM dealers went ballistic. They were furious - and said so, publicly. They saw the automaker's move as a turf invasion. GM executives didn't expect that strong reaction - and said so, privately.

Now the auto company is trying to make peace with dealers.

In an unprecedented first move towards that end, top GM executives - led by Chairman Jack Smith - showed up at the 2000 National Automobile Dealers Association convention in Orlando to tell its retailers at a closed-door meeting that the GM dealership buy-out plan is dead.

Mr. Smith says GM will put the same amount of effort into dealer relations as it did last year patching up union relations.

GM's meeting with its dealers in Orlando was extraordinary. It was the first time a GM chairman attended an NADA franchise meeting. GM billed it as a new beginning in rebuilding dealers' trust and confidence in the corporation.

"We now know we are partners again," says outgoing NADA Chairman James Willingham, one of the most vocal critics of GM's would-be foray into owning dealerships. "This is an absolutely momentous occasion."

GM's top guns joined Mr. Smith on stage, facing a mass of dealers in a 3,000-seat hall at the Orlando Convention Center.

There was GM President G. Richard Wagoner Jr., North America President Ron Zarrella, vehicle brand marketing Vice President John Middlebrook, retiring sales and marketing Vice President Roy Roberts and his impending successor William Lovejoy, currently vice president of GM's Service Parts Operation.

"We are going to fix this relationship," vows Mr. Roberts.

Dealers will judge GM on its deeds, says Lou Kairys, NADA chairman of industry relations and owner of GM dealerships in Virginia and Maryland.

"And they made commitments that are hard to back away from," Mr. Kairys adds.

Another corporate commitment at the meeting is that GM's venture into e-commerce is being structured with dealer input and participation. Dealers had been skittish about whether e-GM would cut into their action.

So, is the fence fully mended?

"That remains to be seen," says dealer Milton Barnes of Classic Chevrolet in Anaheim, CA. "The theme of the meeting was deeds not words."

Mr. Roberts agrees: "Our chairman said, 'It's deeds, not words.' I'd say, 'Watch my hips, not my lips.'"

GM executives stopped short of branding the GM dealership buy-out plan as an utterly bad idea.

Instead, they admit they handled it badly, especially by failing to get dealers' input before announcing the GM Retail Holdings effort last fall.

"If we had the dealer input, it might have worked," muses Mr. Roberts.

He adds, "If you ask if we learned a lesson, the answer is, 'You bet we did.'"

Mr. Lovejoy, who replaces Mr. Roberts in April, told dealers at the franchise meeting that he's committed to improving relations with them.

Some observers say a reason for Mr. Roberts' departure is that GM's dealership relations got so darn bad.

"Somebody had to take the fall," says dealer Bill Wolf of Bill Wolf Chevrolet, Belvidere, IL. "But I'm ecstatic Bill Lovejoy is taking Roberts' place. Bill's a dealer guy. You can trust him."

Mr. Wolf thinks GM executives' peace efforts at the NADA franchise meeting represent a turning point in dealer relations.

"I'm happy they finally had the guts to admit they made a mistake," he says.

GM has a way to go towards normalizing relations with dealers, says Don Charbonneau, owner of Charbonneau Buick Pontiac-GMC in Dickinson, ND.

"They dug a deep hole they now got to wiggle out of," he says.

It was important for the GM chairman himself to attend the NADA franchise meeting, says GM dealer John Delorme of Thorson Motor Center in Pasadena, CA.

"Smith had to settle things down," says Mr. Delorme. "He was effective and direct. It was a good move on his part. He said he wanted to get along, and General Motors Retail Holdings is not the way to do that."

Mr. Zarrella scored some points with retailers, too, says dealer John Agresta of Agresta Oldsmobile Pontiac-GMC in Williamston, NJ.

Mr. Zarrella is the GM executive who proclaimed at the meeting that the GM dealership buy-out plan died the quick death in Detroit.

"This is a great opportunity for Zarrella," says Mr. Agresta. "He's got a lot of bad press over the years. This is a chance for him to get closer to the dealers."

Dealer Peter Brandow of Brandow Chevrolet in Florence, NJ, concurs. "There's a lot of bridge-building going on," he says.

Adds Mr. Roberts, "We kissed and made up."