GM PLACATES DEALERS ON ADS, THEN DROPS BOMBSHELL

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General Motors Corp. dealers who sought to mend relations with the automaker now find themselves in a pitched battle about its plan to buy and operate dealerships. But the dealers' original proposals to GM regarding advertising and other issues actually produced some satisfactory results.

Senior GM executives told dealers of the company's controversial ownership plan at a Sept. 27 meeting called to respond to a "white paper" from the National Automobile Dealers Association.

Roy Roberts, group VP-GM North America sales, service and marketing, attended the meeting.

SPECIFIC CONCERNS

The NADA, in its document, had listed dealer concerns ranging from poorly coordinated advertising to distribution, training costs and e-commerce (AA, Aug. 9).

NADA Chairman James Willingham last week said dealers were pleased by GM's creation of a National Dealer Advisory Council and its assurance that co-op advertising funds would be continued.

GM dealers had said that advertising had been poorly coordinated in the wake of the reorganization of the GM field staff last spring, which transferred power from local dealer groups to five regional offices.

Dealers also wanted more input into advertising and vehicle development, saying GM's regional offices had been slow to set up dealer advisory groups. And Mr. Willingham, who is president of Boulevard Automotive Group in Long Beach, Calif., said GM has improved regional councils and added a national e-commerce council

However, he said dealers were disappointed that GM rebuffed attempts to bring back local dealer marketing groups.

In a written response to dealers, GM said regional ad spending will be dictated by expected return, competition and media costs.

CUTTING MEDIA COSTS A GOAL

The document said GM is trying to leverage its buying power through the regional offices to cut media rates. GM noted that the consolidated GM media operation, Local Communications, "can purchase media at 20%-25% greater cost efficiencies than traditional methods."

GM also agreed to have more roundtable meetings between its executives and dealers.

But the automaker surprised the dealers when it told them of the dealership acquisition plan. Mr. Willingham said GM developed the plan for a new subsidiary to buy dealerships without "any dealer input."

GM's plan to own dealerships in the top 130 U.S. markets dissipated much of the good will generated by the meeting, he said.

"We think it's absolutely a disaster," he said. "We were doing fairly well until we got to the end of the meeting and they dropped this bomb on us. The whole

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