GM Delays Dealer Payments To Conserve Cash

General Motors Corp., seeking low-interest federal loans to stave off financial collapse, said it will delay reimbursing U.S. dealers for sales incentives by about two weeks to preserve dwindling cash.

The move postpones payments to almost 6,500 dealers even as the largest U.S. automaker urges them to lobby Congress for the US$25-billion industry bailout bill that Senate Democrats began debating Monday. GM (GM/NYSE) said it won't disclose the savings.

"It is indicative of the impact that low liquidity has on this company," Rebecca Lindland, an analyst with IHS Global Insight Inc. in Lexington, Mass., said in an interview. "This could really hamstring dealerships from getting more inventory, making payroll. It's a very serious action."

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sold2early - 11/18/2008 11:18:40 AM

+5 Boost

Those dealers better sprint to the bank to cash those checks..

EnnNorak - 11/18/2008 8:24:28 PM

+1 Boost

There are many companies today, I suspect, that are delaying commission payments to their sales force. These companies will lose their best people sooner than later. Dealers being screwed around like that should retaliate by witholding payments for the inventory they are virtually forced to buy.

I hope that, when all is said and done, that GM and other car makers will end up selling directly to the public on line at fully disclosed wholesale prices. I have yet to find a dealer that adds any value to the car acquisition process.

Whelan - 11/18/2008 11:20:43 AM

+3 Boost

Wow, I would find another job. I worked for Acura sales for awhile and those incentives were your bank. You get paid nothing. $150 a week in salary and everything is incentive, bonus, and sales money. So them holding back is bordering fraudulent and I would contact the BBB on this. It is illegal to withhold pay.

holmstar - 11/18/2008 11:45:43 AM

0 Boost

I imagine this is a situation where their contract states something on the order of they must reimburse for incentives within a month of submission. Where up until now they would normally reimburse within two weeks, but now they are making use of the limits of the contract.

This is just theoretical of course. The actual situation could indeed be in breach of contract.

holmstar - 11/18/2008 11:49:39 AM

+1 Boost

Honestly, I'm surprised that GM isn't already shutting down production, or at least running the factories every other day or something of that nature... Currently they seem to be running full speed toward the edge of a canyon, screaming that they are going to die and that someone needs to build them a bridge, and not bothering to even try to slow down.

Foreigner - 11/18/2008 12:09:53 PM

+1 Boost

My thoughts exactly.

Agent009 - 11/18/2008 12:58:19 PM

+1 Boost

The UAW contract prevents them from doing so in many cases.

Whelan - 11/18/2008 4:30:59 PM

+1 Boost

If you closed a plant every other day the UAW would have a field day with them.

XYZZ - 11/21/2008 12:40:46 AM

+1 Boost

at the LA int'l auto show, gm and chrysler were NO SHOWS.

the halls were FILLED with product from asia and europe. (oh yeah, and ford.)

is this A PORTENT of the marketplace in a coupla years' time? WHO will even miss gm and chrysler? (other former dealers and uaw folks.)

XYZZ - 11/21/2008 12:46:54 AM

+1 Boost

other THAN former...

otoh, even they may be glad they're gone, once they stop wailing about the fact the teats they've sucked so hard for so long on have gone dry.