GM targets area man in family discount crackdown...

The Man

Club Member
Got this from the Macomb Daily, GM is suing a guy for giving out his family plan.
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http://www.macombdaily.com/stories/060808/loc_local03.shtml

Ex-employee denies he used discount for anyone but family

By Jameson Cook
Macomb Daily Staff Writer

General Motors is accusing a former employee of taking advantage of the family discount program by letting non-family members buy more than a dozen vehicles at discounted prices.

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GM said its lawsuit against the former workers is part its widespread effort to crack down on alleged policy violators.

Stephen Puchalski, 37, of Macomb Township, responded he has done nothing wrong and argued that 10 of the 16 vehicles were purchased at a dealership without his knowledge.

In a lawsuit filed May 29 in Macomb County Circuit Court, GM claims Puchalski purchased 16 vehicles through the GM Employee Vehicle Purchase Program from 2004 through April 2007. The sales resulted in GM losing $100,000 in profits, the lawsuit claims.

"General Motors has declared these sales fraudulent and has requested the discount be paid," the Detroit automaker says in the lawsuit. "Defendant has failed and refused to repay the discount despite repeated attempts requesting that he do so."

Puchalski's attorney, Robert Sogge, said that six of the vehicles listed by GM were properly purchased by family members, and Puchalski knew nothing about the other 10, all of which were bought at Don Gooley Cadillac on Nine Mile Road in St. Clair Shores.

"The bottom line is they're picking on Steve, they're singling him out," Sogge said.

Puchalski said he believes someone - possibly a salesperson - obtained his employee number and used it without his knowledge.

The Don Gooley general manager could not be reached for comment Friday.

Sogge said he will file a motion to include the Don Gooley dealership as a third party in the lawsuit.

Puchalski said he left GM in 2007 on his own.

GM says the lawsuit is part of a widespread effort to crack down on those who violated program rules that limit the sales to employee's spouse, children, grandchildren, parents, stepparents, grandparents, siblings, stepchildren, step grandchildren, various in-laws, and "same-sex domestic partner."

GM spokeswoman Geri Lama said in an e-mail that the company last year began sending letters to some employees asking them to prove that family members and relatives bought vehicles.

"Improved database technology over the past year has allowed GM to better identify abusers of the system," Lama says. "We won't talk about specific numbers, but obviously the recoveries could be substantial."

David Cole, chairman of the Center for Automotive Research in Ann Arbor, said he has heard about the enforcement effort and believes it is part of automakers reducing all discounts, such as rebates, zero-percent financing and fleet sales.

"They're trying to cut back on incentives in all forms and trying to increase profitability," he said. "The old mentality, 'Get the metal moving,' doesn't have any value if you're losing money. The objective is to be more disciplined. A whole new world is emerging."

Cole said GM isn't alone in the effort as Ford Motor and Chrysler Corp. also are reducing incentives to improve profitability. It also comes at a time the automakers are reducing production of the highly profitable pickup trucks and SUVs.

Sogge pointed out that GM in past years has encouraged the discount program. In fact, GM for a several-month period in 2005 extended the family program to everyone.

Published articles - including one GM endorsed through PR Newswire - say that GM expanded the program. Ford that year matched the program, according to reports.

"I don't see how GM is complaining about selling vehicle," said Sogge, who contends the auto dealerships, not the corporation, suffer the most loss from the discounted sales.

Lama would not reveal how many cases have been filed as part of the effort, but she said most cases have been filed in the tri-county area. She pointed out abusers are a tiny minority, less than 1 percent, of those eligible.

She said the discount program has been in its current form since 1999. About 350,000 to 450,000 vehicles per year have been purchased, she said. About 860,000 employees of GM and GM-affiliated companies are eligible, including those at Delphi and Hughes.

GM says in the lawsuit that it sent two letters to offenders warning them they have been flagged as a potential abuser. A May 8 letter from the law firm Hardy, Lewis & Page, representing GM, to Puchalski warns him to pay $100,140.29 by Monday, June 9, or face a lawsuit.

According to GM, 11 of the vehicles were purchased at Don Gooley and five at other dealerships. The average discount was $6,259, based on GM records provided in the lawsuit.

The vehicles ranged at the high end from a vehicle listed at $65,460 purchased at Don Gooley for $58,200 for a "sibling" in March 2006, to a $21,975 vehicle purchased at Hamilton Chevrolet for $19,594 for a "parent" in December 2004, according to the records.

The biggest discount was about $16,000 on a $56,500 vehicle bought at Somerset Pontiac-GMC Truck in January 2006 for "self."

Rogge said only one of the six vehicles purchased legitimately was bought at Don Gooley and the rest of legitimate vehicles were bought at Hamilton, Somerset, Jim Causley (two purchases), and Ed Rinke Chevrolet.

GM in the lawsuit accuses Puchalski of fraud and misrepresentation, conversion and breach of contract.
 
In a lawsuit filed May 29 in Macomb County Circuit Court, GM claims Puchalski purchased 16 vehicles through the GM Employee Vehicle Purchase Program from 2004 through April 2007. The sales resulted in GM losing $100,000 in profits, the lawsuit claims.



well that is kinda abusing it i'd say
 
In a lawsuit filed May 29 in Macomb County Circuit Court, GM claims Puchalski purchased 16 vehicles through the GM Employee Vehicle Purchase Program from 2004 through April 2007. The sales resulted in GM losing $100,000 in profits, the lawsuit claims.



well that is kinda abusing it i'd say

This drives me nuts. Sooooo because he gave someone his discount he is wrong? That's 16 more vehicles that they SOLD!!!!
 
if it wasnt for the discounts they would have purchased something else, or not purchased at all... drives me nuts too Trunk. :D
 
Well then return the vehicles and GM should return EVERYTHING the people paid for them.

Seriously, How do you think a jury in MICHIGAN is going to handle this? Does anyone in this stte NOT known someone who works for an auto maker or supplier?
 
I was looking for this thread. Please..... without those damn discounts, they probably would have bought a foreign vehicle.
 
sounds to me like the salesman at that dealership got the guys discount# on the first sale and started using it for all his buddys or something. if he were trying to misuse the system i seriously doubt he would keep going to the same dealership.
 
Know your numbers..Get a good deal.....

My brother sold new GM cars back in the 1980's.
The "discount" is only a number. The other sales
guys wouldn't sell them that cheap (the same
discount amount that GM folks got) because the
sales guys normally got about $650 on a regular
deal and if they offered the non-GM buyer the same
price, sales guy only made about $150.

My brother thought $150 was better than nothing,
and would "eat" the discount to sell a car. He ended
up selling a LOT more cars and in the end was one of
the best paid sales reps. :2000-pont
 
The only reason that my dad ended up with a tahoe was the discount. He was looking at the X5, Range Rover Sport, Cayenne, Jeep SRT8, and the big Infinity. But he figured the Escalade would offer better incentives with the GM discount. After driving the Escalade, and feeling exactly like the '04 Denali, he tested the Tahoe LTZ (essentially the same truck for $20k less). Without the discount he would have never looked at GM trucks.

Nick
 
In a lawsuit filed May 29 in Macomb County Circuit Court, GM claims Puchalski purchased 16 vehicles through the GM Employee Vehicle Purchase Program from 2004 through April 2007. The sales resulted in GM losing $100,000 in profits, the lawsuit claims.


well that is kinda abusing it i'd say

OK, lets get something very clear here...Lets divide $100,000 by 16 (vehicles)..That equals $6250 Profit LOST PER vehicle...

Let me say that again...$6250 LOST profit per vehicle! Lets base this on an average selling price of $25,000 and I come up with a 40% margin, or profit, on each vehicle. How can GM be making 40% profit on each vehicle sold and be whining about not making money? You can play any numbers game you want, but those are the numbers GM is supplying. Most companies try their very hardest to make a 5% margin on their products.....

Who has gone into a dealership and can get a car, ANY GM car for $6250 less than you could buy it for by just walking in? Last time I bought a brand new GM Truck, I think it was about $1,200 less than the general public could buy it for, with my GM discount.

Trunk would probably know this better than anyone, since he sells cars both with and without the discount.

To top it off, who really thinks GM is selling their vehicles to their employees at a break even point? This is even after they pay the dealers the 5% handling fee...

I think GM is really shooting themselves in the foot with this lawsuit. They will have a really hard time convincing anyone they lost $100,000 on 16 vehicles, while at the same time they are crying the blues because they are losing money hand over fist.

Just my .02
Gary
 
OK, lets get something very clear here...Lets divide $100,000 by 16 (vehicles)..That equals $6250 Profit LOST PER vehicle...

Let me say that again...$6250 LOST profit per vehicle! Lets base this on an average selling price of $25,000 and I come up with a 40% margin, or profit, on each vehicle. How can GM be making 40% profit on each vehicle sold and be whining about not making money? You can play any numbers game you want, but those are the numbers GM is supplying. Most companies try their very hardest to make a 5% margin on their products.....

Who has gone into a dealership and can get a car, ANY GM car for $6250 less than you could buy it for by just walking in? Last time I bought a brand new GM Truck, I think it was about $1,200 less than the general public could buy it for, with my GM discount.

Trunk would probably know this better than anyone, since he sells cars both with and without the discount.

To top it off, who really thinks GM is selling their vehicles to their employees at a break even point? This is even after they pay the dealers the 5% handling fee...

I think GM is really shooting themselves in the foot with this lawsuit. They will have a really hard time convincing anyone they lost $100,000 on 16 vehicles, while at the same time they are crying the blues because they are losing money hand over fist.

Just my .02
Gary

I agree
 
OK, lets get something very clear here...Lets divide $100,000 by 16 (vehicles)..That equals $6250 Profit LOST PER vehicle...

Let me say that again...$6250 LOST profit per vehicle! Lets base this on an average selling price of $25,000 and I come up with a 40% margin, or profit, on each vehicle. How can GM be making 40% profit on each vehicle sold and be whining about not making money? You can play any numbers game you want, but those are the numbers GM is supplying. Most companies try their very hardest to make a 5% margin on their products.....

Who has gone into a dealership and can get a car, ANY GM car for $6250 less than you could buy it for by just walking in? Last time I bought a brand new GM Truck, I think it was about $1,200 less than the general public could buy it for, with my GM discount.

Trunk would probably know this better than anyone, since he sells cars both with and without the discount.

To top it off, who really thinks GM is selling their vehicles to their employees at a break even point? This is even after they pay the dealers the 5% handling fee...

I think GM is really shooting themselves in the foot with this lawsuit. They will have a really hard time convincing anyone they lost $100,000 on 16 vehicles, while at the same time they are crying the blues because they are losing money hand over fist.

Just my .02
Gary

If it was all SUV's, then that is a good number. Probably low for an Escalade or Yukon Denali.

-Geoff
 
I think I went to high school with this guy. At least I knew a guy named that from way back when and he's my age....

I agree with that statement that they're shooting themselves in the foot. No one ever believes that GM is giving the car away for free through GMS or GMO and I have seen other manufacturers offer it to non-family folks. Nice move, GM.
 
If it was all SUV's, then that is a good number. Probably low for an Escalade or Yukon Denali.

-Geoff

NO, that is NOT a good number, by any stretch of the imagination.

I just checked the list price of a 2008 Escalade and it is $58,490.
http://www.suburbancadillacbuick.co...008&make=Cadillac&model=Escalade&style=289485

Remember, we are talking profit lost between me walking in a Cadillac dealer buying the Escalade against someone without the GM discount and not total profit on the vehicle. This means I would be able to purchase the SUV for $6250 less than you would be able to buy it off the street, and that just isn't true.

Lets just throw (1) Chevrolet Aveo into the mix, which starts at $10,800. I can't be convinced that that you'd be able to purchase that car for $4500...

So, like I said, they can throw all of the B.S. money numbers around all they want and they aren't fooling anyone with a lick of common sense.

Gary
 
NO, that is NOT a good number, by any stretch of the imagination.

I just checked the list price of a 2008 Escalade and it is $58,490.
http://www.suburbancadillacbuick.co...008&make=Cadillac&model=Escalade&style=289485

Remember, we are talking profit lost between me walking in a Cadillac dealer buying the Escalade against someone without the GM discount and not total profit on the vehicle. This means I would be able to purchase the SUV for $6250 less than you would be able to buy it off the street, and that just isn't true.

Lets just throw (1) Chevrolet Aveo into the mix, which starts at $10,800. I can't be convinced that that you'd be able to purchase that car for $4500...

So, like I said, they can throw all of the B.S. money numbers around all they want and they aren't fooling anyone with a lick of common sense.

Gary

It is an average. There is an escalade on here for $10,000. If you figure a malibu for $2000, then you get $6000. I still think it is a reasonable number. Plus, a lot of times they offer employee bonus cash - an extra $1000 that only employees can get. I am sure there is some of that in there too.

The flaw I see, which I think you are saying too Gary, is that nobody pays sticker. Most dealers that sell without employee pricing will do it for $100 under invoice. Which is about half an employee discount.

-Geoff
 

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