• Nov 17, 2008
From November 28 to December 11, GM is holding back incentive payments to dealers, including dealer cash and customer cash. Why? in the words of Mark LaNeve, GM's VP of North American sales, because "Anytime you can delay any kind of a payment, it helps cash flow" And cash is probably the most important four-letter word in any GM dictionary.
The withheld payments don't cover all the monies that GM sends to dealers, just various incentives. According to Automotive News' numbers, the two weeks of extra cash could let GM hold on to an extra $300 million. If GM needs $14 billion per month to operate, $300 million would extend the lifeline by... almost another day. Payments after December 11 would resume on a weekly basis, but with the new two-week delay, something like an employee paycheck. GM discussed the plan with the National Dealer Council beforehand and, unsurprisingly, the council understood. Follow the jump to read LaNeve's letter to dealers.

[Source: Automotive News - Sub. Req.]

GM LETTER TO DEALERS

To All Dealers:

I am writing to you to update you on changes we are going to implement with regard to the incentive payment schedule.

As I discussed in the IDL last week, one of the biggest issues facing General Motors is our liquidity. That is the cash we have on hand to pay for our regular operating expenses.

In this cash crunch, we have examined every aspect of our business in an effort to improve cash flow, including our relationships with all of our key stakeholders, like suppliers, agencies, employees and dealers. In this regard, we are implementing minor changes to incentive payment timing. So, what does this mean for you? Basically we are delaying the payment of the incentives by two weeks. Here is the new schedule that will be in effect until further notice:

· Incentive applications previously scheduled to be paid on November 28th and December 4th will be delayed to December 11th and December 18th respectively. Please see the attached payment schedule.

· Weekly incentive payments will continue thereafter reflecting one week of dealer application activity. On average, payments will be made approximately 2 - 3 weeks after a valid dealer application has been processed by GM. Effectively this is a 2 week delay from the current schedule.

· As a result of this retiming you will not receive any incentive payments on November 28th and December 4th.

This liquidity crisis has an obvious effect on all of us. As you are aware we are asking the federal government for some temporary relief. I need your continued help in talking to Congress. There are three things you need to ask your congressional delegation for:

· First, ask the government officials to approve a new $25 billion loan package to help us deal with our current liquidity crisis.

· Second, while the rules for the distinctly separate and already approved $25 billion loan package for investments in technology and enhanced fuel efficiency have been issued, we'd like to see that program move as fast as possible, so we need to encourage the government to minimize red tape and act on loan applications as quickly as they can.

· Third, the automotive industry needs some additional government support to stimulate retail sales, like making interest on car loans tax deductible, etc.

We've set up a website that will assist you in making your voice heard in Congress and to help spread the message. Please visit www.gmfactsandfiction.com. If you have not already done so, please call and e-mail your congressional representative.

This is a critical time for our industry, your dealership, and General Motors. Please continue to do what you do best, selling vehicles one customer at a time. Please make every effort to integrate your promotions with the recently announced Red Tag sales event.

Together we can work through this crisis. As always, thank you for all of your hard work and effort.

Good Selling.

Mark R. LaNeve

GMNA Vice President NA Vehicle Sales, Service & Marketing


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    • 1 Second Ago
  • 7 Comments
      • 6 Years Ago
      what a plan. stiff your dealer network and force them to go to the banks for bigger working capital loans; the same banks the Feds are having trouble getting to loan money from the bailout they have given; the same bailout GM is now trying to tap into to subsidize its broken business model a bit longer. So, in effect, GM is now competing against its dealers for taxpayer cash. Yeah, that makes sense!

      Of course this smacks of desperation because it IS!

      Maybe after forcing a few of its dealers into bandruptcy GM will do the only smart thing it has done in the past two decades: go Chapter 11 itself and begin to deal with reality.
      • 6 Years Ago
      Tax deductible car loans? Are they nuts??

      When you're watching Ralphie whine and beg for a Red Ryder BB gun on A Christmas Story at Thanksgiving, think of GM and the bailout. Though Ralphie actually makes some sense and is less annoying...

      • 6 Years Ago
      At this point GM needs to do more than just trim the fat to keep costs down, they need to take a machete to their own organization and downsize like crazy. GM sales down 40%? well, cut costs 40%, this will mean laying people off and discontinuing models that aren't selling well. And I've said this before, but for the love of God sell Saab, it's gotta be worth something...
      • 6 Years Ago
      Dear GM,

      Enclosed is $5 dollars to help the company through these tough times. Its not much but I know every little bit helps. America doesnt want to admit it, but we need you to survive. Good Luck.
      • 6 Years Ago
      Will the last one out please turn out the lights?

      Chapter 11 Jan 2009
      • 6 Years Ago
      Reporting live from the State of Michigan, We're F@CKED!