GM amends parts program, gives incentives to dealers to expand inventory

Article by Anita Panait, on April 23, 2013

General Motors is implementing an overhaul of its parts program and is providing incentives to dealerships to boost up their inventory for more same-day repairs and to buy more of parts directly from the factory. The program that was launched on April 1, 2013, was tagged by GM as a major push to keep service customers happy.

GM’s around 4,400 dealerships can earn extra cash if they stock the parts GM recommends and if they acquire those parts from the carmaker rather than from AC Delco wholesale distributors. However, some dealers complain that they are spending thousands of dollars into extra parts just to comply with GM's voluntary program.

In some cases, dealers say they were buying parts they claim won't move as quickly as GM believes, thereby needlessly tying up cash. Some dealers also claim that GM's incentive payments would not be enough to compensate for the higher cost of buying more parts from GM and fewer from wholesalers, which usually sell at a 10 to 20 percent lower than the factory's price. This shows that although carmakers and dealers usually have the same objective, they disagree on how to achieve it.

Some dealers raised questions on GM's chief rationale for the new system -- that it will improve same-day service rates. They claim that the new system could affect their flexibility to scavenge for needed parts instantly from local distributors or other dealerships since doing so would hurt their chances to earn bonus cash.

A parts manager for a midsized Buick-GMC-Cadillac dealership told Automotive News that the parts are not those “that were hard to come by anyway.” The manager remarked that they need a brake pad or a water pump as they could “always run out and get one." Steve Hill, vice president of customer care and aftersales for GM North America, remarked that the program will be "financially attractive for the average GM dealer."

Headquartered in the Renaissance Center in Detroit, Michigan, General Motors Co. is engaged in designing, building and selling cars, trucks and automobile parts around the world. The company also provides automotive financing services through General Motors Financial Company, Inc. (GM Financial). The carmaker’s automotive operations are effected through automotive segments such as GM North America (GMNA) and GM Europe (GME).

GM was established and capitalized by William C. Durant – majority owner of Buick Motor Company -- on September 16, 1908 as a holding company. On September 17, 1908, GM acquired Buick Motor Company, as followed by more than 20 companies including Oldsmobile in 1908 as well as Cadillac, Cartercar, Elmore, Ewing and Oakland or Pontiac in 1909. In the same year, GM acquired the Reliance Motor Truck Company, Rapid Motor Vehicle Company, Welch and Rainier.

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