GM Dealers Turn to Service as Bankruptcy Taxes Customer Loyalty
By Angela Greiling Keane
June 1 (Bloomberg) -- The shiny General Motors Corp. cars on Capitol Cadillac’s dealership in
Buyers walk onto the lot so infrequently that you “have to get lucky to spot one,” he said.
Ten miles from the White House, where President Barack Obama said today that GM’s bankruptcy was necessary for the company’s survival, Jobe is plotting the survival of his own dealership, and he sees it in the less-than-shiny bays where cars are repaired.
“Service, I think, for most dealerships right now is what keeps your dealership afloat,” he said. “The one thing we have seen is an increase in service business because people are holding onto their cars longer.”
At dealerships near
“I love this car and this company,” Stephanie Thomas, 39, a human resources specialist at an Atlanta civil engineering firm, said about the GM Saturn she was having repaired at a dealership in Decatur, Georgia. “The bankruptcy doesn’t change that.”
She said her nine-year-old Saturn -- a brand GM plans to shed -- has 119,000 miles on it and has had no problems except for the fuel valve she was having replaced.
Across town, retiree Clara Williams said she hasn’t lost faith in the company that was the world’s largest carmaker for more than seven decades.
“I don’t think it matters too much for customers,” Williams said as she waited at a Chevrolet dealership in
Repaired Not Replaced
The tendency to get GM cars repaired rather than replaced by a new model is what worries Jobe at Capitol Cadillac, the second-largest Cadillac dealer by sales volume in
The dealership sold about a dozen Cadillacs in May, “probably our slowest month ever as far as Cadillac sales go,” and the immediate future isn’t looking much brighter, said Jobe, who heads the Cadillac National Dealer Council and serves on GM’s National Dealer Council.
Sales this year will likely be “depression era,” he said.
“Long-term, certainly bankruptcy’s the right move,” he said. “Short-term, that remains to be seen whether customers will continue to buy cars from a company in bankruptcy.”
Tom Durant, 59, the owner of Classic Chevrolet in Grapevine, Texas, said the recession made GM’s bankruptcy inevitable and the news about it has probably contributed to the sales slowdown this year.
“When your manufacturer is making headlines almost daily it does affect sales,” Durant said. “But what’s happening to GM now had to be done at some time.”
Customer Loyalty
Durant and his employees are counting on customer loyalty to the Chevrolet brand, Durant’s reputation and faith that GM will ultimately emerge as a strong competitor.
“People trust us,” said Durant. “They know we will be here regardless of what happens to GM. And Texans are not going to give up their trucks and SUVs.”
The bankruptcy does pose two specific problems for dealers, said Jobe: the availability of parts and cash flow.
If service is to keep GM dealers in business, they must be able to make repairs, and “with today’s announcement, parts supply becomes a question,” he said.
Cash flow is another concern for Jobe because the dealership pays customer rebates and for warranty-covered repairs upfront and submits the expenses to GM for reimbursement.
“If for some reason that gets held up, it could really put a crimp on the dealers,” he said. “It’s a concern. This is a once-in-a-lifetime thing.”
Some Opportunities
Still, the trials of bankruptcy pose some opportunities too, Jobe said.
“Obviously the dealers that do make it through this are going to be in a good financial position,” he said on a morning with no sales customers in sight. “There’s obviously going to be some pent-up demand there once the economy recovers.”
If your Saturn needs repairs go to Saturn of Greenville, Saturn of Asheville, or Saturn of Spartanburg to see our service special. You can also schedule your Saturn service appointment online.
To contact the reporter on this story: Angela Greiling Keane in
