This article was originally published in Maclean's Magazine on June 15, 2009
GM Dealers Vow They Will Live to Sell Another Day
Moray Keith is the first to admit he's seen better days for his chain of GM dealerships in Metro Vancouver. A few weeks ago, a white truck pulled up to the door outside the Dueck on Marine Drive showroom. A group of men in black shirts from Starbucks rushed in, and with no warning began tearing apart an in-store coffee outlet - part of that company's downsizing efforts. Not only that, the air conditioner was on the fritz, and the building's glass walls were heating up the showroom floor like a giant greenhouse. And then, of course, there was the small matter of that bankruptcy.
Car dealers are an inherently optimistic lot. But the past few months have been enough to test the mettle of even the most exuberant salesman. Car sales have collapsed, and after weeks of speculation, so too has the General, in a spectacular US$172-billion flame-out. Yet, across Canada this week, GM dealers like Keith (whose family owns three GM dealerships with total sales of around $400 million) remained remarkably upbeat about the upheaval going on around them. "I think it's the best thing that could happen because you have people looking forward now at what GM is going to be like as a new entity," he say. "In GM's strong times, this store has always been the big store in Canada. We'd like to get back to that point."
It's true that for months, if not years, questions around GM's viability have hung over the company, poisoning its reputation with customers. The quality of the vehicles had improved, with the Chevy Malibu and Cadillac CTS winning numerous awards. And GM was slowly streamlining its unwieldy array of brands. But progress was slow. Dealers hope the bankruptcy will offer the ultimate opportunity to reshape the business. Already, brands such as Saturn and Hummer are being hived off, while the unionized workers have agreed to concessions that finally bring GM's costs in line with competitors. "It had to happen," said Tom Lariviere, a Dueck salesman. "My only question is, why didn't it happen sooner? We'd have been out of it by now."
There are risks to this strategy, of course. Huge ones. Will customers be further scared away by the stigma of outright bankruptcy protection? And just what will officials in Washington and Ottawa, who together will control 60 per cent of GM, do with their clout? On this front, dealers and salesmen remain cautiously hopeful. Keith believes the warranty guarantees offered by U.S. President Barack Obama and Canadian Prime Minister Stephen Harper should erase any fears customers have about buying GM.
In fact, Obama has suddenly become something of a hero to many a GM dealer. At North York Chevrolet Corvette, an aging brick building behind a lot jammed with new Chevys in Thornhill, Ont., manager Jim VanDusen called Obama's speech on Monday "outstanding." "We've been here for 40 years and we're not going anywhere," he says. News that GM won't seek bankruptcy protection in Canada is reassuring. What's more, cars like the new Equinox are selling, says VanDusen. Has he seen any declines? "Nope," he says, bluntly.
VanDusen may be hopeful, but even on the showroom floor it's clear this is a struggling company. There were just two shoppers during the time Maclean's was there on Monday. At another nearby GM dealership, filled with highly polished Cadillacs and soon-to-be-extinct Pontiacs, a salesman says he's "still very optimistic." That word is repeated again and again, at every car lot. But there's not much else to say. He's been ordered not to talk to reporters, because the owner doesn't like how the dealership has been portrayed.
In other parts of the country, dealers were equally reticent about seeing their woes laid bare. GM dealerships in Calgary on Monday afternoon were veritable automotive mausoleums. At Shaganappi Pontiac Buick GMC in the city's south end, a spectacular red 1955 Buick presides over the showroom, testament to the glory days. Rob Dzikewich, the dealership's general manager, opted to "decline comment." At Calgary's downtown Stampede GMC Pontiac Buick, a salesman said no one was surprised by the bankruptcy filing. "I didn't wake up this morning and say, 'Oh my God!' " he said. "We knew it was coming." He's been able to give customers the best deals of his career in the last six months, he says, adding hopefully: "GM Canada hasn't declared bankruptcy." Both Shaganappi and Stampede are rumoured to be closing as a result of GM's shakeup. What then? "We'll do something else," he says, maybe sell a different make of car.
In the end, no amount of restructuring will help unless customers like what GM has on offer. But there's hope there too. As news of the bankruptcy swept the markets on Monday, Don Leung drove up to the Dueck dealership in his shiny silver Mercedes SLK 350. Leung is on the hunt for a crossover with more storage room, and he's liked some of what he's seen in GM showrooms. "I'm a consumer so I'm asking myself how can I spend the least amount of money for what I want," he says. He's not worried about the warranty, nor does he have any doubt GM will emerge from bankruptcy protection a healthier company. The key is attitude. "Sometimes they forget about who the most important guy is," Leung says. "And that's the customer."
See also AUTOMOTIVE INDUSTRY.
Maclean's June 15, 2009