New Hampshire Rules Cause GM to Halt Program

In a better to be safe-than-sorry move, General Motors has stopped running dealer-incentive programs in New Hampshire in response to a new law requiring automakers to disclose more information about the programs.

GM told its 24 New Hampshire dealers this week that it “will not offer any new dealer sales programs in New Hampshire,” including so-called stair-step programs or other contests that award dealers bonus money for hitting factory-set sales targets.

The move strikes back against a dealer-backed law that took effect this week requiring automakers to provide dealers with advance, written details about their sales incentive programs. The provision requires automakers to explain how they calculated each dealer’s sales target and to disclose the targets of all dealers in the state.

GM contends that the measure will hamstring its ability to quickly respond to market conditions. If GM wants to run a stair-step program on the Chevrolet Malibu to fend off fresh incentives on rival mid-sized sedans, for example, the dealer notifications would delay the move, GM says.

“If we have to build into our timeline the need to share details with and notify all of the dealers about the program, that potentially tips our hand and takes away our ability to respond quickly,” GM spokeswoman Ryndee Carney said.

Advance notice

Some other states require automakers to disclose details about how they arrive at dealer objectives, but only upon the dealer’s request. New Hampshire is the only state where automakers must automatically provide advance notice and a written explanation of the program, Carney said.

Under stair-step programs, automakers typically set monthly unit-sales targets for certain models and pay dealers escalating bonuses as they hit pre-determined thresholds above those targets. Dealers often complain that their sales bogeys are ambiguous.

The disclosure provision was one of several changes that took effect this week under revisions to New Hampshire’s Dealer Bill of Rights law. Other new measures include one that prohibits automakers from requiring dealers to remodel their facilities more often than every 15 years, and one that limits factory audits on incentives or warranty claims paid to dealers to a maximum of nine months after payment.

Carney said GM’s decision to pull dealer sales programs was a response only to the disclosure requirement.

‘Shouldn’t be difficult’

Peter McNamara, president of the New Hampshire Automobile Dealers Association, which lobbied for the changes, believes GM is balking at the requirement for greater transparency. He says notifying dealers of programs in advance and disclosing details “shouldn’t be difficult to do since the manufacturers create the program themselves.”

“Dealers want to know that the manufacturer isn’t simply throwing a dart at a board” to determine their objectives, McNamara said. “If there is a good rationale for why one dealership has a 50-unit objective and another has 25, why not disclose it?”

One New Hampshire dealer who requested anonymity said he believes the disappearance of GM’s dealer incentive money “will cost sales” for GM dealers in the state. He said dealers are worried about losing customers to stores in adjacent states, such as Vermont and Maine, where GM’s stair-step money will continue to flow.

By Mike Colias at www.autonews.com