GM Strives to Cut Costs, Delays Dealers Payments

While other car manufacturers around the world prepared major job cuts and lowered productions, General Motors strives to cut costs by delaying payments to dealerships for rebates and other sales incentives, msnbc reported today. John McDonald, General Motors spokesman, confirmed the report but refused to mention how much money GM will save through the new cost-cutting measure. Basically, all payments will be delayed for two weeks, McDonald said, with the ones scheduled for November 28 postponed for December 11 while those arranged for December 4 to be paid on December 18.

This is one of the latest decision took by GM's board and supposed to reduce costs on certain areas that would not affect GM's operation and sales. Experts say delaying payments to dealerships is quite a smart choice in the context of aggressive global recession, with authorized dealers forced to accept the parent company's decision. “If you don’t give the dealer an incentive, what’s he going to do to you?” Van Conway, a mergers and acquisitions expert and partner with Birmingham, Mich.-based Conway & MacKenzie, told msnbc.

On the other hand, General Motors' spokesman expressed his confidence that dealerships will understand that such a measure is extremely important when looking at GM's overall costs.

“Clearly it’s painful for everybody. This is something that you don’t want to do if you don’t have to do it. I think our dealers are keenly aware of what’s going on from our standpoint. It doesn’t help anybody if we go out of business,” McDonald said.

In general, dealerships share the same opinion regarding GM's decision, with most of them willing to accept the delayed payments if it really helps the US-based carmaker. “If that’s a small piece that I can do to keep things going, I’d be OK with that. Two weeks doesn’t bother me,” said Jeff Crippen, owner of Crippen Buick-Pontiac-GMC.