GM holding back incentive payments to help cash flow
Filed under: Autos | By: Peter Chubb
Posted on: November 18, 2008 | 1 Comment
GM is holding back on their incentive payments to dealers from November 28 to December 11, this also includes customer and dealer cash. General Motors VP of North American sales, Mark LaNeve said that any delay on a payment like this helps to increase cash flow.
With huge debts mounting up, GM needs to do all they can to try and save money where possible. I wonder if they will start to cut their huge bonuses and pay checks that execs receive. GM say that by stopping this incentive for two weeks will help the automaker save around $300 million.
GM wanted to make sure that what they were doing was the correct thing to do; they took their plan to the National Dealer Council, which they understood. So let me get this right, first GM is not going to give customers cash incentives to purchase their vehicles, then they want to take tax payers money to bail them out. The only ones who are getting a rough deal is the tax payer.
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GM IS STILL GIVING INCENTIVES –THEY ARE NOT REFUNDING THIER DEALERS FOR THE INCENTIVES ON A WEEKLY BASIS AS THEY TRADITIONALLY HAVE . THEY ARE GOING AT LEAST FOR THE PRESENT TIME TO PAYING EVERY TWO WEEKS.
MUCH OF GM’S CASH FLOW COMES FROM INCLUDING INCENTIVES AND REBATES AND OTHER FEES THAT ARE RETURNED TO THE DEALER AT A LATER TIME, OF COURSE THIS HELPS CASH FLOW FOR THE AUTOMAKER BUT LEAVES THE DEALER PAYING INTEREST CHARGES ON THESE FEES.
KEEP IN MIND THAT IN THE AUTOMOBILE BUSINESS DEALERS OWN THE INVENTORY NOT THE AUTOMAKERS UNLIKE OTHER REATIL OUTLETS WHERE THE MANUFACTURE STILL MAY OWN PRODUUCTS.
STAN