Trucks – September 2009

|  September 29, 2009 |

Parts and service support takes shape as company exits medium-duty market.

In essence, GM is still in the medium-duty truck business. That’s the message Mark Karney, marketing director for General Motors’ medium-duty trucks, wants to relay. Although GM ceased production of its medium-duty Kodiak and TopKick models in July as a response to the company’s recession-spurred bankruptcy proceedings and subsequent restructuring efforts, Karney stresses that both GMC Truck and Chevrolet will remain dedicated to servicing and supporting its medium-duty products for the foreseeable future.

“We have a strong dealer network that has been selling and servicing medium-duty trucks for years, and that network is still intact,” Karney notes. “Our customers should know those dealers are there through our wind-down period that goes through mid-October 2010, and we are in the early stages of developing a service agreement that will provide further peace of mind for our customers beyond that date. And even though we’re not currently manufacturing medium-duty vehicles, we still have more than 6,000 trucks in stock that are fully backed by General Motors and our warranty provisions and supported by our strong dealer network. Our customers need to understand that they have our assurance that they will be able to get parts, service and support for the trucks they purchase for the life of that vehicle.”

Although General Motors won’t offer indefinite parts and service support, Karney says the company typically provides parts availability for up to 10 years, even for models and products exiting a given market. “That’s kind of our unwritten policy,” he adds. “And we’ve communicated that intention to our dealers: We will do our best to secure parts for our trucks as long as we possibly can, while acknowledging that some of those parts come from outside vendors and suppliers. But we are preparing ourselves to stand behind the vehicles and stand behind our dealers who will be needed to service trucks still being sold now and for the next year-and-a-half, through October 2010. And when we sell trucks even in October 2010, they will still be eligible for warranty coverage and we will back those trucks.”

As to wheather the Kodiak and TopKick brands will reappear in the medium-duty market in the future, Karney isn’t sure. “I haven’t been involved in any such negotiations. We have a lot of brand equity built up in those two models and we’re going to try and preserve and protect that to the best of our ability going forward. It all depends on the level of interest from outside stakeholders interested in the assets. Our medium-duty line was a good fit for our business and rounded out our portfolio and gave a broader range of trucks to our customers who wanted to purchase from GM. But unfortunately, because of business conditions and our volumes and upcoming regulations, the business case for staying in the medium-duty market just didn’t hold water for GM anymore. We just couldn’t make it work.”

Asked if a revamped, financially-secure GM might one day return to manufacturing medium-duty vocational trucks, Karney noted that although such a scenario is currently not possible, anything could happen in the future. “There is always the potential that some type of relationship could pop up down the road that leverages GM’s expertise in this market,” he comments.

On a positive note, Karney believes the economy is beginning to rebound. “Not just because of the CARS program – also known as the Cash for Clunkers – program, but we’re starting to see some effects of the stimulus spending and an uptick in sales volumes for pickups and medium-duty trucks,” he notes. “And we’re getting some anecdotal comments from our customers and our dealers that the light at the end of the tunnel is getting stronger and everybody seems to think that we’re through the worst of the downturn. Our sales have been at a fairly constant level for the past couple of months versus the downward trend they had been on. So we’re all optimistic and feeling things are turning around.”

For now, Karney stresses that GM is working with its dealers to ensure the smooth transition of GM from the medium-duty business. “We are working closely with our service and parts operations to ensure the continued availability of parts that will be needed to service our trucks going forward,” he says. “And we are developing a service agreement that will provide a safety net for our customers. They shouldn’t be concerned about any medium-duty truck purchases, either now or when the final vehicle is sold. We’re doing what’s necessary to make sure we stand behind the vehicles we have in marketplace. We are not abandoning our customers who depend on those trucks.”

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