General Motors Corp. is prepared to enter into litigation in an effort to stop dealers from selling a GM nameplate and competitive products next to one another on the same dealership showroom floor, according to a top company executive.
GM’s opposition to sharing showroom space stems from other automakers -- namely the Koreans -- offering dealership sales personnel cash incentives in addition to their typical retail commission, says Bill Lovejoy, vice president, GM North America Sales, Service and Marketing.
“If you had a GM product and say a Kia or a Hyundai on the showroom floor, what they (the competitors) would do is provide salesmen cash of a couple hundred dollars. So even if you went in and said, ‘I want that GM product,’ the salesman is trying to convince you to take the other product because he’s getting the $300 commission over and above his normal commission.
“So we went out and told our dealers last year if they had other products on the showroom floor, we were going to contest it; we were going to go to court with them if they persisted,” says Mr. Lovejoy.
In 2000, about 155 dealerships in the U.S. featured showrooms with GM products alongside competitive vehicles. Since GM began taking action, 130 have complied, a GM spokesman says. “They’re going to move the other vehicles off the showroom floor.”
Most of the dealerships are keeping the competitive vehicles on site, but separate entrances are being provided and/or showrooms are being clearly divided, the spokesman explains. The 25 or so remaining dealers apparently have a date with GM in court. “We’re going to get involved in some litigation with dealers,” Mr. Lovejoy reveals.
Of GM’s own practice of providing its salespeople with extra cash to move metal, Mr. Lovejoy says it is only to help Oldsmobile dealerships retain valued sales personnel as the brand is phased out during the next few years. “We typically pay dealers. Dealers pay their salespeople. What we found the Koreans doing is paying the salesmen cash, and if (a GM product is) on the showroom floor with any other product then salesmen are going to fight it. The salesmen are making a living. I don’t blame them. If were a salesman, I’d do the same thing.”