Lovejoy says GM should help dealers find alternative sources of income

Bill Lovejoy, GM's group vice president of North American sales, service and marketing, says the company should help dealers find alternative forms of income as margins on new-vehicle sales continue to wane.

"Dealers have to find other sources of income and we have to help them find other sources of income," says Mr. Lovejoy at a preview of GM's 2002 product lineup.

Among the alternative sources of income Mr. Lovejoy suggests as future sources of alternative income for GM dealers are: On Star for used vehicles, more aggressive accessories sales, sales of the new XM Radio system and streamlining the service department.

Mr. Lovejoy says there is a lot of money to be made by outfiting used vehicles for On Star and selling subscriptions to the service.

"Dealers haven't done a good job with accessories, mostly because of the set up of the dealership," he explains.

Mr. Lovejoy says having F&I people sell things like upscale floor mats and truck bed liners isn't the way to go.

"The F&I guy can make more selling life and disability," he says, noting that salesmen or a separate accessory department should work that part of the business.

XM Radio is a new service that is like the commercial-free music available on digital cable and satellite TV. It'll be available on Cadillacs in 2002 and on most GM vehicles by 2004. Dealers will be able to sell and retrofit the equipment to vehicles and sell subscriptions.

Mr. Lovejoy also foresees a time when dealers can improve their service departments to make them even more profitable. He even likes the idea of having a preferred customer service like the express car rental operations.

He envisions a customer coming into a service department after sending an e-mail describing the service he wants or the problems with the car. Showing a card and dropping off the vehicle without waiting. A loaner car would be issued immediately and the customer would be on his way.

"It's a tough thing to mandate, but we have some dealers working on parts of it," Mr. Lovejoy says. "A dealer needs to be the place to go for a number of automotive needs."