GM Dealer Case Prompts Closer Look Into Sales Metrics2
General Motors isn’t alone in using the Retail Sales Index (RSI) to measure dealers and rank performance, but a recent case involving a GM dealer has other looking more closely into how automakers measure dealership success, Automotive News (subscription required) reported Monday.
The GM dealer in question is Folsom Chevrolet based in Sacramento, California. GM previously moved to revoke the dealer’s franchise license after failing to meet RSI expectations over an extended period of time. Ultimately, the governing body in California ruled in Folsom Chevrolet’s favor and declared GM did not provide enough evidence to warrant the revocation of the dealer’s franchise.
Although GM’s evidence appeared compelling, RSI ultimately swayed the decision back in favor of Folsom Chevrolet. GM said the dealer had “dismal” sales in relation to its market size and “robbed” the automaker of retail inventory to buoy its fleet business. Fleet sales have been Folsom’s profit center for years, though the figures do not count toward RSI.
GM added Folsom failed to honor warranty obligations on occasion and did not fully implement a business development center. The move to strip its franchise came after GM placed Folsom on a “performance improvement plan” in 2014. The automaker worked with the dealer to jump-start retail sales, develop a BDC and checked in with the dealer each quarter. RSI figures moved, but only marginally. GM filed to revoke its franchise in 2016.
Ultimately, the California body agreed with Folsom and took a deeper look into RSI for its ruling. Folsom’s commitment to fleet sales dates back to 1998 and the sales helped Chevrolet gain a foothold in a market dominated by foreign makes. In 2014, more than half of the dealer’s profits came from fleet sales; the figure rose to nearly 60 percent in 2016. The numbers were healthy, but they didn’t help RSI.
GM hasn’t decided whether it will appeal the decision yet, AN reported. As for Folsom Chevrolet, the dealer is delighted to move forward and “continue on as a dealer.”
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