General Motors Corp. dealers in two states, maintaining they aren't getting enough local advertising, are starting a quiet rebellion against the car marketer's 10-month-old regional advertising reorganization.
Dealers in Minnesota are banding together to buy their own spots while their Michigan counterparts are demanding more of a say in local ad matters.
Seven Oldsmobile dealers in Minnesota's Twin Cities met last week and agreed to pool their money to buy 1,000 TV commercials. Dealer Wally McCarthy said the group didn't consult GM first, and doesn't want money from the automaker.
Funari Advertising, Minneapolis, will handle the Twin Cities commercials, which will tout a limited-time incentive on the Alero coupe.
Mr. McCarthy said the dealers are upset that GM's year-old North Central region in Naperville, Ill., isn't advertising the Alero deal, announced to them about two weeks ago. But even prior to that, the region wasn't advertising Oldsmobile enough in his area, he said. "We feel we need to have our local areas do some advertising on a collective basis together."
GM officials in Naperville could not be reached for comment.
The move comes only weeks after 80% of Michigan's 350 dealers formed a new, limited liability corporation and requested a meeting with GM executives in Detroit to demand more influence in local advertising, according to a member dealer who asked not to be identified. He said GM wasn't spending enough in the state as defunct dealer groups spent before the switch. As a result, he said, GM has lost share in that market.
TWO SUITS PENDING
In April, GM abolished its longstanding regional dealer ad groups in a massive reorganization that shifted responsibility for $600 million in local ad funding from hundreds of dealer groups to five regions. GM dealers in Illinois and Indiana sued the carmaker over the matter. Those suits are still pending.
After the reorganization, the respective national ad agencies for GM's vehicle divisions won the local business without reviews. In certain cases, the national agencies Buick, Cadillac, Chevrolet, GMC, Olsmobile and Pontiac already handled several regional dealer accounts, but 66 smaller agencies lost their accounts.
Dealer unrest has also spread to Florida, where a GM dealer who sought anonymity complained his area got $7,000 in measured media spending in 1999 vs. $1.3 million during the last full year of the regional ad groups.
John Middlebrook, VP-general manager of vehicle brand marketing for all GM brands except Saturn, admitted "there's a lot of concern" among dealers in the smaller markets about ad support and indicated GM may allow dealers in small markets to pool their money for advertising. "We're not looking at collecting money" from the dealers, he said. "We are listening to our dealers."
A recent dealer survey by consultancy J.D. Power & Associates, however, shows GM dealers are among those most dissatisfied with their manufacturer. The dealer satisfaction index dropped by three points in 1999, the most in a single year, mainly due to GM and Ford Motor Co. dealer dissatisfaction.
More than 3,000 dealer principals were surveyed, roughly 25% of all new-car dealer management. The slide came during the industry's best-ever sales year and was the largest annual drop since the industry's recession in 1989.
Chris Denove, consulting group director at Power, blamed the drop on "Dealers increasingly perceiving the manufacturers are intruding into their domain."
Roy Roberts, VP-group executive in charge of GM sales, service and marketing in North America, retired last week after a year in the post. Although Mr. Roberts said his reason was to go into business for himself, dealers said they believe he was forced out. They cited reorganization glitches and his alleged gaffe in telling dealers last fall GM planned to buy 10% of all dealerships. Within weeks, GM Chairman John F. Smith said the automaker had no plans to do that.
Copyright January 2000, Crain Communications Inc.