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Jared Hamilton
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General Motors announced today that it would delay incentive payments to dealers by 7-14 days to conserve cash. The move could save them quite a pretty penny, but it could also cost dealer dearly as they too are penny pinching. Its a sad day when the auto manufacturers have to say, "its them or us."

Where will it end? If they delay incentive payments 1-2 weeks, will they do the same for warranty receivables soon? Will the 2 weeks turn into 3? Its a slippery slope, who knows where it will end. In what is somewhat of a fair comparison, can you imagine if you called GMAC and told them you couldn't pay off your flooring on your next few vehicles and you needed an extra two weeks and all would be fine? They would have auditors in your dealership before you could hang up the phone to collect every downpayment check or cash receipt your store brought in. Its a sad day when you cant even trust your manufacturer. I hope this gets figured out soon.

Here is the letter GM sent to their dealers:

To All Dealers:

I am writing to you to update you on changes we are going to implement with regard to the incentive payment schedule.

As I discussed in the IDL last week, one of the biggest issues facing General Motors is our liquidity. That is the cash we have on hand to pay for our regular operating expenses.

In this cash crunch, we have examined every aspect of our business in an effort to improve cash flow, including our relationships with all of our key stakeholders, like suppliers, agencies, employees and dealers. In this regard, we are implementing minor changes to incentive payment timing. So, what does this mean for you? Basically we are delaying the payment of the incentives by two weeks. Here is the new schedule that will be in effect until further notice:

· Incentive applications previously scheduled to be paid on November 28th and December 4th will be delayed to December 11th and December 18th respectively. Please see the attached payment schedule.

· Weekly incentive payments will continue thereafter reflecting one week of dealer application activity. On average, payments will be made approximately 2 - 3 weeks after a valid dealer application has been processed by GM. Effectively this is a 2 week delay from the current schedule.

· As a result of this retiming you will not receive any incentive payments on November 28th and December 4th.

This liquidity crisis has an obvious effect on all of us. As you are aware we are asking the federal government for some temporary relief. I need your continued help in talking to Congress. There are three things you need to ask your congressional delegation for:

· First, ask the government officials to approve a new $25 billion loan package to help us deal with our current liquidity crisis.

· Second, while the rules for the distinctly separate and already approved $25 billion loan package for investments in technology and enhanced fuel efficiency have been issued, we'd like to see that program move as fast as possible, so we need to encourage the government to minimize red tape and act on loan applications as quickly as they can.

· Third, the automotive industry needs some additional government support to stimulate retail sales, like making interest on car loans tax deductible, etc.

We've set up a website that will assist you in making your voice heard in Congress and to help spread the message. Please visit www.gmfactsandfiction.com. If you have not already done so, please call and e-mail your congressional representative.

This is a critical time for our industry, your dealership, and General Motors. Please continue to do what you do best, selling vehicles one customer at a time. Please make every effort to integrate your promotions with the recently announced Red Tag sales event.

Together we can work through this crisis. As always, thank you for all of your hard work and effort.

Good Selling.

Mark R. LaNeve

source:http://www.autonews.com/apps/pbcs.dll/article?AID=/20081117/ANA02/811170253/1142

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