Detroit Chevy Dealers Quit Ad Group

Auto News: Dispute Stemmed From Fee Refunds for Employee Discounts

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DETROIT ( -- In a dispute with General Motors Corp., 44 Detroit area Chevrolet dealers this month disbanded a dealer-factory marketing group that paid jointly for local advertising, according to a report in Ad Age sibling Automotive News.
A dispute over a fee Chevy dealers paid on every vehicle they sold to help fund the local marketing group led to the latest action.
A dispute over a fee Chevy dealers paid on every vehicle they sold to help fund the local marketing group led to the latest action.

Bill Wink, a Chevrolet dealer in Dearborn, Mich., said GM will continue to pay for national and regional advertising in the Detroit market, and individual dealers still will advertise their own dealerships.

The dispute is over a fee the dealers paid on every vehicle they sold to help fund the local marketing group. The fee amounted to 1% of sticker price, excluding shipping. The dealers stopped paying the fee June 30, a dealer told Automotive News.

Fee refunds
Dealers were refunded the fee if a vehicle sold with a GM employee discount. In the Detroit market, sales to GM employees and eligible family members account for 65% to 85% of unit sales, depending on the time of year and available incentives, dealers estimate.

Three Detroit Chevrolet dealers said GM sought to retain the charge on employee sales if the money was needed to cover a shortfall in ad expenses.

The dealers would not disclose the local marketing group's budget or GM's contribution to it.

GM executives "weren't going to refund it if they overspent," said one dealer, who asked not to be named. "They were setting the budgets, not us. We had no control over any part of it. That was exposure we weren't willing to take."

Chevrolet spokesman Terry Rhadigan called the dissolution of the Detroit marketing group "a dealer decision."

"We still have more than 140 (local marketing groups) operating around the country," Mr. Rhadigan said. "We will still be advertising in the Detroit market, from a national, regional and individual dealer perspective."

The dispute also includes vehicle sales to buyers who qualify for a supplier discount, another dealer said. "About half of the one percent comes back" on supplier sales, the dealer said.

GM's five U.S. sales regions subsidize regional advertising, Mr. Wink said.

"The region will still purchase newspaper, radio and TV advertising" in the Detroit area, "but our local group will not," he said.

No revival talk
No talks are under way between the Detroit dealers and GM to revive the local marketing group, another dealer said.

The dispute has not spread to Chevrolet's local marketing groups in other metro areas. Those markets do not share Detroit's large percentage of discount sales, said Roger Moody, co-chairman of the National Chevrolet Dealer Council. Mr. Moody is president of Friendly Chevrolet in Fridley, Minn.

The Detroit marketing group's steering committee included seven elected dealers and representatives from Chevrolet and its advertising agency, Campbell-Ewald. When it disbanded, a source said, the group was "in the black" with "a little cushion."

The source said the leftover money will be used to reimburse dealers the 1% ad fee for vehicles built before June 29 and sold to buyers eligible for an employee or supplier discount.
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