By WADE DANIELS
Jim Lynch is making major changes at General Motors Corp. dealerships in the San Fernando Valley, where he is charged with reversing a slump that has turned the Valley into one of GM's poorest-selling markets in the nation.
The Detroit carmaker is depending on Lynch and a few colleagues from Rydell Co., a big owner of successful dealerships in the Midwest, to lead its largest effort ever to turn around a poorly performing market.
In the Valley, GM has a market share of about 13 percent, compared with 20 percent in California and more than 30 percent nationwide, said GM spokeswoman Anne Marie Sylvester. General Motors wants to raise the number of cars sold in the Valley to about 11,000 a year from the current 6,000.
In pursuit of that, GM has put Lynch in charge of day-to-day management responsibilities for eight of the 11 Valley dealerships GM has bought in the past two years. The company plans to consolidate them into a handful of superstores offering most or all of GM's six brands, rather than the usual two or three.
But first things first. Before the consolidation begins, Lynch has some work to do at the existing dealerships.
"What I'm doing right now is making these lots perform at their maximum," said Lynch, who was previously executive general manager of Rydell Chevrolet in Grand Forks, N.D. (one of 30 Midwest dealerships Rydell Co. owns or manages). "There are a few fundamental changes in the way business will be done here, immediately."
Since arriving in the Valley in May, his first moves have included extending the hours for automotive service to evenings and weekends and changing the sales commission structure to head off efforts by salespeople to push expensive cars or extras on customers who don't need or really want them.
Under the new system, salespeople are paid a base salary and a flat rate for each car sold, instead of a percentage of the sale amount. On top of that, the sales force is given a bonus based on the dealership's overall sales volume.
"A sales associate is paid the same whether they sell a $45,000 Corvette or a $4,500 used car," said Lynch, who explained that the system has been implemented successfully at Rydell dealerships in the Midwest. "We want salespeople to have an ego and to sell, but too much is too much."
Also, Lynch implemented a no-haggle policy on car prices, because the company has found that customers are largely uncomfortable with negotiating.
Over time, Lynch, his Rydell colleagues and GM officials will devise a scheme for reconfiguring the dealerships into superstores. But first, GM wants to buy another three or four Valley dealerships, which it is currently negotiating to do. It is also looking for property on which to build the superstores.
Altogether, GM plans to spend between $50 million and $100 million on its Valley project, Sylvester said.
"The reconfiguration of the Valley is the biggest such project we've ever undertaken," she said. "It's of special interest because market share is especially low and there is great room for improvement."
The Valley reconfiguration is a component of GM's "Project 2000," a strategy to reduce the number of dealers selling its cars across the country to 7,000 from the current 8,000. In many cases this involves the consolidation of several dealers into a few superstores.
In the Valley, GM has so far bought and closed Sterkel GMC Trucks in Woodland Hills and a Pontiac-Buick-GMC dealership in North Hollywood. Sylvester said those dealerships may be revived as part of a Project 2000 superstore, but a decision on that could be months or years away.
Most Valley dealers said GM has made fair offers for their lots and has negotiated fairly.
At least one dealer, however, alleges that GM has been less than fair in its buyout attempts. GM promised in February of 1997 to award the Livingston Motor Car Co. of Woodland Hills a GMC truck dealership to add to its Pontiac and Buick lines, said Stephen Livingston, general manager and president of the Woodland Hills company. However, two months later, GM officials reneged on the commitment and said they wanted to buy Livingston out.
"They decided they wanted my dealerships and said I would never get the GMC franchise," Livingston said of GM officials. "They have reiterated their offer several times, but I want them to keep their previous commitments to award me the GMC franchise."
Sylvester declined to comment on Livingston's claims of unfair treatment, saying the company does not discuss negotiations.
For reprint and licensing requests for this article, CLICK HERE.