GM dealers seem to worry more about effect of recalls on bonuses

Article by Andrew Christian, on June 2, 2014

A number of dealers at General Motors are concerned that their quarterly incentive bonuses would be hardly hit by the spate of recalls that the carmaker has issued so far. GM told dealers in recent weeks to stop selling a number of high-volume vehicles that the carmaker later recalled over safety glitches.

These models include Chevrolet Cruze and Malibu sedans, Chevrolet Suburban and Tahoe SUVs, and the Chevrolet Traverse, GMC Acadia and Buick Enclave crossovers.

According to dealers, it is hard to close a sale when buyers cannot even test drive their preferred units or even take them home due to the recalls. If such thing occurs, dealers might not be able to achieve their sales targets and thereby fail to get tens of thousands of dollars in factory incentives.

Under GM's Standards for Excellence program, dealers need to top their sales in the previous quarter by at least one unit to avail of the quarterly bonus. Dealers also need to achieve a certain customer-satisfaction rating target.

But the recalls are making it harder for them to top their previous year sales figures. This should worry GM dealers, since they have become more focused on getting the incentives from the SFE program to increase their bottomline, as profit margins for new-car sales industrywide have been declining.

The program doles around $10,000 for a small dealership to more than $150,000 for big ones. One of those dealerships affected by the stop-delivery orders was Ourisman Rockmont Chevrolet in Rockville, Md., near Washington.

According to General Manager Dug Dugger, the retailer lost up to 15 sales in May, or around 12 to 15 percent of average new-car volume, noting that some buyers have been unwilling to wait and instead opted to buy another brand.

GM has so far issued 30 recalls covering 13.8 million vehicles in the United States, including some models called back more than once. Dug remarked that while his dealership qualified for the SFE payment in the past two quarters, it might not in the second quarter.

A GM spokesman, however, said the carmaker will consider case by case whether the stop-delivery orders would affect a dealer's SFE qualification. [source: automotive news - sub. required]

Topics: gm, dealer

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