Appendix — United States v. General Motors Corp.
Supreme Court brief1966
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Text
e Ocroser Term, 1965
No. 46
UNITED STATES, APPELLANT,
vs.
GENERAL MOTORS CORPORATION ET AL.
- APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF CALIFORNIA
Volume II
INDEX
Record from the United States District Court for the
Southern District of California, Central Division—
Continued
Plaintiff's Exhibits—Continued Original Print
No. 17—Inter-Organization Letter to R. M.
O’Connor from Fred M. Thompson, Chevrolet
City Manager, Los Angeles, dated November 17,
1960, with attachments...................... 1220 641
No. 18—Memorandum to File (Chevrolet-Central
Office) from L. H. Averill, dated November 18,
ME SoS SS pulley LeU ER ypy ees 1223 644
No. 19—Letter to Edward Cole, General Motors,
from Stanley O. Drake, dated November 18,
ee) GE FOE re RET tate cee Re CaS 1224 645
No. 20—Handwritten letter to Mr. Cole from Jack
Stuh of Eddie Hopper Chevrolet, dated No-
OS 5s TCG cae eee bee eee e dese 1225 646
No. 21—Letter to Edward Cole from Dick Pru-
szynski, Salesman at Don Steves Chevrolet... 1227 647
fe No. 22—Inter-Organization letter to L. N. Mays,
Bese Chevrolet Central Office, from R. M. O’Connor,
Los Angeles Zone Office, dated November 22,
i SACRA SSR SE IRR Sent oe ale ce Se 1228 649
No. 23—Letter to Edward Cole, General Man-
ager, Chevrolet Motor Division, from Art Tay-
lor, dated November 22, 1960................ 1231 652
ii INDEX
Record from the United States District Court for the
Southern District of California, Central Division—
Continued
Plaintiff’s Exhibits—Continued
Nos. 25 & 26—Memo to K.E.S. (Kenneth E.
Staley, General Sales Manager, Chevrolet Motor
Division) from M.W, dated November 28, 1960,
with Plaintiff's Exhibit 26 attached—Letter to
Ed Cole from Don Steves of Don Steves Chev-
rolet dated November 22, 1960
No, 27—Telegram to Jack Gordon, President,
General Motors, from Kenneth R. Field, Chev-
rolet Salesman with Cone Bros. Chevrolet, dated
No. 28—Telegram to Jack Gordon from W. K.
Banks, Salesman, dated November 22, 1960
No. 29—Telegram to Jack Gordon from Ray Ber-
ney, Salesman, dated November 22, 1960 .....
No. 30—Telegram to Jack Gordon from Leo
Kluthe, dated November 22, 1960
No. 31—Telegram to Jack Gordon from R. W.
Hughes, Cone Bros. Chevrolet, dated November
960
to Jack Gordon from Hal
Beebe dated November 22, 1960.......
No, 33—Telegram to Jack Gordon from Al Phil-
lips, Chevrolet Salesman with Cone Bros. Chev-
rolet, dated November 22, 1960
No. 34—Telegram to John F. Gordon from Harsel
Snyder, Cone Bros. Chevrolet, dated November
No. 35—Letter to John Gordon, from C. D. Cone,
President, Cone Chevrolet Company, dated No-
No. 36—Letter to E. N. Cole from C. D. Cone,
President, Cone Chevrolet Company, dated No-
No. 37—Letter to Gene Staley from C. D. Cone,
President, Cone Chevrolet Company, dated No-
WEE UN AI xis Os die ha vvwneeie west
No. 38—Letter to R. M. O’Connor from C. D.
Cone, President, Cone Chevrolet Company,
dated November 23, 1960
No, 39—Letter to E. N. Cole, from E. M. Cone,
Cone Brothers Chevro’ct, dated November 23,
OEP | wien.
No. 40—Telegram to Jack Gordon from Charles
P. Robinson, datd November 23, 1960. ._..
No. 41—Telegre:a to Jack Gordon from Carroll
Cone, Jr., Salesman, dated November 23, 1960
Original
INDEX iii
Record from the United States District Court for the
Southern District of California, Central Division—
Continued
Plaintiff's Exhibits—Continued Original Print
No, 42—Inter-Organization Letter from L. N.
Mays, Assistant General Sales Manager for the
West, Chevrolet Motor Division, to H. E. Craw-
ford, dated November 25, 1960............... 1250 669
No, 43—Letter to J. F. Gordon from E. L. Linde-
mann, Salesman, Harbor Chevrolet, dated No-
Se itiad « «cunine dae o> oe teed ne 1251 670
No. 44—Letter to E. N. Cole from E. L. Linde-
mann, Salesman, Harbor Chevrolet, dated No-
fl en oe 1253 672
No. 46—Handwritten letter to Mr. Cole from Bob
Erskine, Bob Erskine Chevrolet, dated Novem-
ber 25, 1960, with news clipping attached 1255 674
No. 48—Handwritten letter to J. F. Gordon from
James Seidlitz, M , Harbor Chevrolet,
ceived November 1960. Seo lah 1256 676
No. 49—Handwritten ‘letter to E. N. Cole from
James Seidlitz, Manager, Harbor Chevrolet,
dated November 26, 1960................... 4257
No. 50—Letter to E. N. Cole from Blane Peart,
dated November 27, 1960, with carbon copies to ’
J. F. Gordon, and K. E. Staley. 1258
No. 52—Handwritten letter to K E. Staley from
Daniel R. MeGowan, Salesman, Harbor Chev-
rolet, dated November 27, 1960........ 1259
No. 53—Handwritten letter to E. N. Cole from
Daniel R. McGowan, Salesman, Harbor Chev-
rolet, dated November 27, 1960............. 1261
No. 54—Handwritten letter to J. F. Gordon from
Omer L. Bernard, Salesman, Harbor Chevrolet,
dated November 27, 1960.......... 1262
No. 60—Handwritten memo to L. N. Mays from
K. E. Staley, undated ......... 1263
No. 61—Memo to . N. Mays from K. E. ‘Staley,
dated November 28, 1960 ................... 1264
No. 62—Handwritten letter to J. F. Gordon from
Buck Pryor, Harbor Chevrolet, dated November
28, 1960 5 eit athen Ak0s WES 36 OS EEN R A oe 1265
No. 65—Handwritten letter to J. F. Gordon from
W. E. Daley, Harbor Chevrolet, dated Novem-
EP ST Noaae COs aCe ieadakvuctvecstee 1267
No, 68—Handwritten letter to K. E. Staley from
“Corny” Cline, Salesman, Harbor Chevrolet,
dated November 28,1960 ._. 1268 687
No. 69—Handwritten letter to Mr. Cole from Let-
ton H. Lapley, Eddie Hopper Chevrolet, un-
dated with attachment.......-.=-—s—s........... 1272 689
22 8. 8: €3-3- 5
&
Lv INDEX
Record from the United States District Court for the
Southern District of California, Central Division—
Continued
Plaintiff's Exhibits—Continued
No. 70—Handwritten letter to Mr. Cole from G.
No. 73—Handwritten letter to K. E. Staley from
Phil Chauvin, Salesman, Harbor Chevrolet,
dated November 28, 1960
No, 74—Handwritten letter to E. N. Cole from
Ed Lundberg, Salesraan, Harbor Chevrolet,
dated November 28, 1960...
No. 75—Handwritten letter to J. F. Gordon from
R. D. McGowan, Salesman, received November
No. 76—Handwritten letter to E. N. Cole from
R. D. MeGowan, Salesman, dated November 28,
1960 .
No. 77—Handwritten letter to K. E. Staley from
R. D. MeGowan, Salesman, dated Navember 28,
1960
No. 78—Handwritten letter to K. E. Staley from
Bert Beria, Salesman, Harbor Chevrolet, dated
November 28, 1960
No. 79—Handwritten letter to J. F. Gordon from
Norman J. Flynn, Salesman, received December
2, 1960
No. 80—Handwritten letter to E. N. Cole from
Norman J. Flynn, Salesman, received December
2, 1960
No. 83—Letter to J. F. Gordon from C. F. Hen-
son, President, Harbor Chevrolet, dated Novem-
No. 85—Letter to K. E. Staley from C. F. Hen-
son, President, Harbor Chevrolet, dated Novem-
ber 28, 1960 with attachment
No. 86—Letter to Messrs. Gordon, Cole, and Sta-
ley, General Motors, from Glenn Jones, Presi-
dent, Drewer-Jones Chevrolet, dated November
28, 1960, with enclosure
No, 87—Letter to Jack Gordon from F. J. Gled-
hill, President, Fred Gledhill Chevrolet, dated
November 28, 1960
No. 90—Letter to Ed Cole from Bill Barnett, Bill
Barnett Chevrolet, dated November 28, 1960,
with copies of Fedeo and Gemeo ads. ....
No. 91—Inter-organization memo to L. N. Mays
from K. E. Staley, Chevrolet Motor linea
dated November 30, 1960. .
INDEX Vv
Record from the United States District Court for the
Southern District of California, Central Division—
Continued
Plaintiff's Exhibits—Continued Original ~—- Print
No. 92—Inter-organization memo to L. N. Mays
from K. EB. Staley, Chevrolet Motor Division,
dated November 30, 1960, with attachments .. 1209 720
No. 93—Memorandum of meeting held in H. E.
Crawford’s office on November 30, 1960, signed
A SEE EEEEL et ee 1300 721
No, 95—Letter to E. N. Cole from Donald J. Cor-
rigan, President, 8. & J. Chevrolet, dated No-
ORT ah 15 548s Gab biN Peed Be Sy3 1301 723
No. 96—Letter to “Gentlemen” from R. M. Gil-
bert, Sales Representative, Bill Barnett Chev-
rolet, dated December 2, 1960.......... 1302 724
No. 97—Letter to “Gentlemen” from A. P. Hof-
kins, Sales Representative, Bill Barnett Chev-
rolet, dated December 2, 1960............... 1303 724
No. 98—Letter to “Gentlemen” from Don Teague,
Sales Representative, Bill Barnett Chevrolet,
dated December 2, 1960.................... 304 725
No. 99—Letter to “Gentlemen” from Byron J.
Booker, Sales Representative, Bill Barnett
Chevrolet, dated December 2, 1960......... 1305 725
No. 100—Letter to “Gentlemen” from Larry Char-
rey, Sales Representative, Bill Barnett Chev-
rolet, dated December 2, 1960 .......... 1306 726
No. 101—Letter to “Gentlemen” from Stan
Adams, Sales Representative, Bill Barnett Chev-
rolet, dated December 2, 1960 ............... 1307 726
No. 102—Letter to “Gentlemen” from Casey Gal-
vin, Sales Representative, Bill Barnett Chev-
rolet, dated December 2, 1960. . “ve 1308 727
No. 103—Letter to “Gentlemen” from Norm
Christoffersen, Sales Representative, Bill Bar-
nett Chevrolet, dated December 2, 1960 .. 1309 728
No. 106—Letter to Bob O’Connor from C. D.
Cone, President, Cone Chevrolet Co., dated
December 6, 1960 atl 1310 729
No. 107—Letter to John Gordon from Harry M.
Ostrom and Harold Ostrom, Partners, Harry M.
Ostrom and Son Chevrolet, Montebello, Calif.,
dated December 6, 1960 ............ 1311 730
No. 111—Letter to B. N. Cole from Owen Keown,
Owen Keown Chevrolet Company, dated De-
cember 6, 1960 __. 1312 731
No. 112—Letter to E. N. Cole from Frank K.
Swift, Jr., Seaboard ee: dated December 7,
1313 733
vi INDEX
Record from the United States District Court for the
Southern District of California, Central Division—
Continued
Plaintiff’s Exhibits—-Continued Original = Print
No. 114—Memorandum to K. E. Staley from L. N.
Mays, Chevrolet Central Office, in re Discount
House Activities, dated December 12, 1960, with
attached “Resume of Discount House Activi-
ties”, signed by S. G. Gilliatt and dated De-
ert Me ee eee Ok 1314734
No. 115—Letter to “General Sales Managers, U.S.
Car Diyisions’” from H. E. Crawford, dated
Demin 10, Tee A ae 1319 739
No. 116—Duplicate of Exhibit No. 115, with at-
tached letter to C. F. Henson, President, Harbor
Chevrolet, from J. M. Roche, Vice-President,
General Motors, dated December 15, 1960. . 1320 741
No. 117—Inter-Organization letter to R. M.
O’Connor from L. H. Averill, dated December
SO ie re ee a as, 1326 747
No. 118—Memorandum to Mr. Cash from R. D.
Lund, dated December 16, 1960.............. 1328 749
No. 119—Letter to R. M. O’Connor from Martin
Pollard, dated December 17, 1960............ 1329 750
No. 120—Memorandum to R. M. Cash, Chevrolet
Regional Manager, Pacific Coast, from L. H.
Averill, Executive Assistant to General Sales
Manager, Chevrolet, dated December 20, 1960.. 1331 752
No. 121—Memorandum dated December 29, 1960,
to Regional and Zone Managers, subject, “Dis-
count House Operations”, with attachment:
Letter “To All Chevrolet Dealers” from K. FE.
Staley, General Sales Manager, Chevrolet Motor
Division, dated December 29, 1960............ 1332 753
No. 122—Letter to K. E. Staley from Jack Coyle,
Jack Coyle Chevrolet, dated January 4, 1961.. 1337 758
No. 123—Letter to K. E. Staley from D. C. Stach-
ler, Stack Chevrolet, dated January 5,1961.... 1339 760
No. 125—Letter to Jack L. Coyle, Jack Coyle
Chevrolet, from K. E. Staley, dated January
By at Os ae Nee S 5 Oe DE Ne WRT 1340 761
No. 126—Letter to Gene Staley from Harry A.
Mann, Harry Mann Chevrolet, dated January
Wis Bs i ERS rea eee eas SN oa 1341 763
No. 127—Inter-Organization letter to L. H. Ave-
rill, Central Office, Detroit, from R,. M. O’Con-
nor, Los Angeles, subject: “Sales to discount
houses, referrals, ete.”, dated January 17, 1961,
with copies to Mays and Cash............... 1342 764
INDEX
Record from the United States District Court for the
Southern District of California, Central Division—
Continued
Plaintiffs Exhibits—Continued
No. 128—Letter to R. M. O’Connor from C. D.
Cone, Cone Chevrolet Co., dated January 18,
1961, with handwritten note January 24, ini-
tialed MAY, with attachment................
No. 129—Letter to K. E. Staley from Allen
Gwynn, Allen Gwynn Chevrolet, dated January
DR AOR K's Geeah Ube Eee eee ea ER OTL as
No. 130—Letter to K. E. Staley from Bill Bar-
nett, Bill Barnett Chevrolet, dated January 25,
Be Crk eee Pins ee ee na Lee ee ete 6
No. 131—Letter to Gene Staley from C. D. Cone,
President, Cone Chevrolet Co., dated January
No. 132—Letter to K. E. Staley from Frank K.
Swift, Jr., Seaboard Motors, dated January 26,
WR eis a ee oye ep he eee ey grin
No. 133—Letter to Jere C. Faust from E. N.
Hopper, President, Eddie Hopper Chevrolet,
Gate JRRUATY. 20, LOG ok ks eda >
No. 134—Letter to Bob O’Connor from C. D.
Cone, Cone Chevrolet Co., dated January 26,
j IRR RR abet Ry a anata a ee
No. 135—Letter to Jim Roche, Vice-President,
General Motors, from Don Steves, Don Steves
Chevrolet, dated February 1, 1961............
No. 136—Letter to R. M. O’Connor from Marty
Lockney, President, Guaranty Chevrolet Motors,
fate@ Penawy 4, TRS . Esse.
No. 138—Memo on letterhead of Losor Chevrolet
Dealers Association, signed by Evelyn G. Davis,
With mbieetinie 6 ep OR eek’
No. 139—Extract from Minutes of 16th Presi-
dent’s Dealer Advisory Council, February 14,
15, and 16, 1961—Remarks by William G.
Nugent, A. E. Nugent Chevrolet, Los Angeles
No. 140—Letter to Gene Staley from E. H. Col-
liau, Colliau Chevrolet, dated February 15, 1961
No. 141—Handwritten memo “To Whom It May
Concern” signed by Inez Oelwein, dated Feb-
ruary 25, 1961, with attachments............
No. 142—Letter to Bob O’Connor from Bob Ers-
kine, Bob Erskine Chevrolet, dated March 3,
ees a Pes ENO ERNE uae ee obs es oO
No. 143—Letter to Gene Staley from E. H. Col-
liau, Colliau Chevrolet, dated March 17, 1961. .
Original
1343
1346
1347
1348
1349
1350
1352
1353
1354
1355
1362
1363
1364
1374
1375
Vii
768
769
770
771
772
774
775
795
796
INDEX
Record from the United States District Court for the
Southern District of California, Central Division—
Continued
Plaintiff’s Exhibits—Continued Original Print
No. 144—Memo to File, from L. N. Mays, Assist-
ant General Sales Manager for the West, Chev-
rolet Motor Division, dated March 27, 1961.... 1377 798
No. 146—Letter to Dealers Diversified Services,
Ine. (FEDCO) from Warren Biggs, Warren
Biggs Chevrolet, dated September 30, 1959... 1379 801
No. 147—Letter to Dealers Diversified Services,
Ine. (EFEDCO) from Warren Biggs, Warren
Biggs Chevrolet, dated October 13, 1960...... 1380 802
No. 149—-Letter to Autoresco (Dealers Diversified
Services, Inc.—also referred to as FEDCO),
from Paul O’Sullivan, Bruder Chevrolet, dated
ey IE bo 5 ROARS v Adie ts Os orn hc 1381 803
No. 151—Letter to Dealers Diversified Services,
Ine. (FEDCO) from M. Harvey, Bruder Chev-
rolet, dated September 29, 1959.............. 1382 804
No. 152—Letter to Dealers Diversified Services,
Ine. (FEDCO) from Cecil R. Glover, Bruder
Chevrolet, dated October 1, 1960 ........... 1383 805
Wo, 153—-Letter to Dealers Diversified Services,
Ine. from Cecil R. Glover, General Manager,
Bruder Chevrolet, dated January 3, 1961..... 1384 806
No. 158—Letter to Jim Deupie, Dealers Diversi-
fied Services, Inc., from James M. Snow, Sales
Manager, Parkwood Chevrolet, dated May 25,
BOE go iS oa Ca ee OL: Bees 1385 807
No. 162—Letter to Dealers Diversified Services,
Ine., from G. V. Jones, Glenn Jones Chevrolet,
dated January 13, 1960, with attachments ... 1386 809
No. 163—Letter to Joan Miller, Dealers Diversi-
fied Services, Inc. (FEDCO), from W. S. New-
man and Bill Spoo, Citizens Chevrolet, dated
Bapbenivey DR Bie se ts ie. 1388 813
No. 170—Letter to R. M. O’Connor from J. N.
Armour, Business Manager, Eddie Hopper
Chevrolet, dated June 9, 1960, with postseript
by F. N. Hopper, President, and attachment.. 1389 815
No. 171—Minutes of Meeting of Losor Chevrolet
Dealers Association, held June 28, 1960...... 1392 818
No. 172—Minutes of Meeting of Losor Chevrolet
Dealers Association, held July 26, 1960...... 1394 820
No. 173—Minutes 0f Meeting of Losor Chevrolet
Dealers Association, held September 27, 1960.. 1395 821
No. 174—Minutes of Meeting of Losor Chevrolet
Dealers Association, held October 27, 1960.... 1397 823
No. 175—Minutes of Meeting of Losor Chevrolet
Dealers Association, held November 10, 1960.. 1398 824
INDEX ix
Record from the United States District Court for the
Southern District of California, Central Division—
Continued
Plaintiff's Exhibits—Continued Original Print
No. 176—Letter to Losor Dealer Members from
Board of Directors, Losor Chevrolet Dealer’s
° Association, dated January 26, 1961......... 1399 825
No. 177—Minutes of Meeting of Losor Chevrolet
Dealers Association, held April 6, 1961....... 1400 826
No. 178—Minutes of Directors’ Meeting of
Dealers’ Service Inc., held December 21, 1960 1401 827
No. 184—Letter to Jerry Faust from C. D. Cone,
Cone Brothers Chevrolet, dated June 22, 1960,
Se een RE CIEEIIRING om etn Tera ees ates 1403 829
No. 185—Presentation of Discount House Activi-
ties, Distribution Policy Group Meeting, Wed-
nesday, December 21, 1960.................. 1405 833
No. 186—Shopping Report for Month of April
MS sh hrun wie rs Aap wes Mae eel eed. 1426 841
No. 187—List of discount houses found to be
selling, or not to be selling, 1961 Chevrolets.. 1431 848
No. 189—Shopping Reports of April 6 and 7,
BE a aan £4 eee eo ee ba eee 1432 849
No. 190—Statement of Russ De Orto, May 23,
eh See Ok es ee 1433 850
No. 191—Report re various discount houses, ete. 1435 852
No. 192—Report re Union Store, Montelair..... 1440 857
No. 193—Report re Brockway Plan plus business
eard and handwritten notes................. 1443 859
No. 195—Letter to Glenn S. Roberts, Los Angeles,
from E. H. Colliau, dated March 4, 1961...... 1447 862
No. 196—Letter to Glenn Roberts, Los Angeles,
from Bob Erskine, Bob Erskine Chevrolet,
Caheg, Tis GR ss Se CBA 1448 863
No. 197—Letter to Glenn S. Roberts, Los Angeles,
from Robert Sorensen, Community Chevrolet,
SOUT EG Ty I oe ds oe eee Gee 1449 864
No. 198—-Letter to Owen Keown, President, Owen
Keown Chevrolet, from K. E. Staley, dated
TOO Fe Fs ke wise be es Sedans 1450 865
No. 200—Letter to All Chevrolet Dealers from
K. E. Staley, General Sales Manager, Chevrolet
Motors Division, dated August 1, 1960, with
attached letter of instructions addressed to All
Chevrolet Wholesale Personnel from K. E. Sta-
Wy; dated: Jaly Ze. 2908). 2. 1455 870
x INDEX
Record from the United States District Court for the
Southern District of California, Central Division—
Continued
Plaintiff's Exhibits—Continued Original Print
No. 201—Inter-Organization letter to H. E. Craw-
ford from L. N. Mays, Assistant General Sales
Manager for the West, Chevrolet Motor Divi-
sion, re Discount House Activity Pacific Coast
Region, dated January 18,1961.............. 1458 873
No. 212—Looseleaf booklet entitled, “Prepared by
Statistical Tabulating Corporation”—contains
“print out” listing all 1960 sales of Chevrolets
by seven dealers who sold through discount
houses and referral services................. 1460 876
Volume III
No. 287—Chart showing 1960 Chevrolet Dealer
Volume in Los Angeles metropolitan area.... 1810 1229
No. 290—Letter to Robert O’Connor from Phil
Johnston, College Chevrolet, Inc., dated March
ARR S Ca aR ie te ai ig Satan ine oe 1812 1231
DEFENDANTS’ EXHIBITS:
A—Map of Chevrolet-Los Angeles Metropolitan
Area (expanded) showing Chevrolet dealer and
discount house locations (Stipulation of Facts
Number Three) (See Clerk’s note.).......... 1813 = 1232
B—Map of Chevrolet-Los Angeles Metropolitan
Area (expanded) showing Chevrolet dealer,
Ford (Ford, Mercury, Comet) dealer, Chrysler
(Plymouth, Dodge) dealer, Rambler dealer,
Studebaker dealer, and Volkswagen dealer loca-
tions (Stipulation of Facts Number Three)
8 Re ek ee er ee 1813 =: 1232
C—Listing of Chevrolet dealers and identifying
numbers for Defendants’ Exhibits A and B
(Stipulation of Facts Number Three) (Blue
WN ice oe op hnn a es aN erg SW ca ters. ia 1814 1233
D—Listing of discount houses and referral serv-
ices and identifying numbers for Defendants’
Exhibit A (Stipulation of Facts Number Three)
gE SR gaan OO nen nee = te aE 1821 1238
J—Tabulation from Defendants’ Exhibit B by
identifying number showing each Chevrolet
dealer, Ford dealer, Chrysler dealer, Rambler
dealer, Studebaker dealer and Volkswagen
dealer located within a five mile radii of each
Chevrolet dealer indexed in Defendants’ Ex-
INDEX xi
Record from the United States District Court for the
Southern District of California, Central Division—
Continued
Defendants’ Exhibits—Continuned Original Print
AA—Stipulation of Facts Number Two, dated
May 20, 1964, with attachments—Gemco Auto
Show—Discount house ads (excerpts)........ 1846 1261
AP—Dealers Diversified Services, Inc. letter of
instructions to cooperating dealers—undated.. 1879 1293
AQ—Letter to J. H. Connell from L. N. Mays,
dated November 23, 1960................... 1880 1295
a, AR—Letter to K. E. Staley from Frank Green,
dated December 2, 1960, with attached copy of
Auto Dealers Business Letter dated December
SW Nae eee ete be 1881 1296
AS—Letter to Frank Green from J. M. Roche,
dated December 15, 1960................... 1885 1301
AV—lInter-Organization letter to All Car Divi-
sions from J. M. Roche, dated December 28,
1960, with attached letters “To All (Cadillac,
Buick, Chevrolet, Oldsmobile and Pontiac)
Dealers”, dated December 30, 1960... 1887 1303
AW—Inter-Organization letter to J. M. Roche
from K, E. Staley, dated December 29, 1960.. 1905 1324
AX—Letter to John S. Gordon from James Fahy
and Virgil Dunn, dated February 15, 1961.... 1906 1325
AY—Inter-Organization letter to Lawrence Ave-
rill from A. H. Belfie, dated March 23, 1961,
with attached copy of letter to James Fahy and
Virgil Dunn, Fleet Sales Company, from A. H.
Belfie, dated March 23, 1961............. 1907 1326
AZ—Stipulation of Facts Number Three, dated
May 20, 1964, re Defendants’ Exhibits A
NE iis oe Vie ves ER Fae ne beds 1911 1329
BA—P-W Exhibit—Summary of Profitability in
the Service and Parts Departments in 1960 for
the 76 Los Angeles Metropolitan Area Chev-
|| CU Bie eager. ay Vinee etn aera 1917 1333
BB—P-W Exhibit—Estimated Reduction in New
Car Volume to Eliminate all Profit for Volume
Classes of Los Angeles Metropolitan Area
Cheviclek: Dhenlene a. 4.56 ks heck ieee 1918 1333
BC—P-W Exhibit—Estimated Reduction in New
Car Selling Price to Eliminate all Profit for
Volume Classes of Los saaond rere
Area Chevrolet Dealers. . pon Hees 1919 1334
xii INDEX
Record from the United States District Court for the
Southern District of California, Central Division—
Continued
Defendants’ Exhibits—Continued Original Print
BD—P-W Exhibit—Median Gross Profit per New
Chevrolet Passenger Car Sold in 1960 by Los
Angeles Metropolitan Area Chevrolet Dealers
Who Sold Through Discount Houses or Referral
See ce ee 1 Be an 1920-1334
BE—P-W Exhibit—Reprint from Collier’s—taken
from Hirscu, Introduction to Modern Statis-
OR DIE. 60s as 1921 1335
BF—P-W Exhibit—Graph: 1960 Combined Gross
Profit for New and Used Car Departments
(Based on 1960 Financial Statements of the
73 Los Angeles Metropolitan Area Chevrolet
Deaetes = oe 1922 1337
BG—P-W Exhibit—Qraph : 1960 Combined Gross
Profit for Service and Parts Departments
(Based on 1960 Financial Statements ete.) 1923 1338
BH—P-W Exhibit—Graph: 1960 Net Miscel-
laneous Income of the Entire Dealership (Based
on 1960 Financial Statements ete.) 1924 1339
BI—P-W Exhibit—Graph: 1960 Combined Vari-
able Selling Expenses for the New and Used
Car Departments (Based on 1960 Financial
Statements ete.) . 1925-1340
BJ—P-W Exhibit—Graph: 1960 Combined Semi-
fixed Expenses of the New and Used Car De-
partments (Based on 1960 Financial Statements
ete.) . 1926 1341
BK—P-W Exhibit—Graph: 1960 Combined Semi-
fixed Expenses of the Service and Parts Depart-
ments (Based on 1960 Financial Statements
ete.) 192 = «1342
BL—P-W Exhibit—Graph: 1960 Fixed Expenses
of the Dealership (Based on 1960 Financial
Statements ete.) 1928s 143
BM—P-W Exhibit—Effect of a Loss in Sales Vol-
ume upon a Los Angeles Metropolitan Area
Chevrolet Dealer of the 300 New Car Volume
Class 1929 1345
BN—P-W Exhibit---Effect of a Loss in Sales Vol-
ume upon a Los Angeles Metropolitan Area
Chevrolet Dealer of the 400 New Car Volume
Class 1930 1346
BO—P-W Exhibit—Effect of a Loss in Sales Vol-
ume upon a Les Angeles Metropolitan Area
Chevrolet Dealer of the 500 New Car Volume
WE). <5 cn eke gt 1931 1347
INDEX xiii
Record from the United States District Court for the
_ Southern District of California, Central Division—
Continued
Defendants’ Exhibits—Continued Original = Print
BP—P-W Exhibit—Effect of a Loss in Sales Vol-
ume upon a Los Angeles Metropolitan Area
Chevrolet Dealer of the 600 New Car Volume
Class... 1932 1348
BQ—P-W Exhibit—Effect of a Loss i in Sales Vol-
ume upon a Los Angeles Metropolitan Area
Chevrolet Dealer of the 700 New Car Volume
Class Pees : 1933 1349
BR—P-W Exhibit—Graph: 1960 New Retail
Passenger Car Sales Receipts (Based on 1960
Financial Statements of the 73 Los Angeles
Metropolitan Area Chevrolet Dealers) . 1934 1351
BS—P-W Exhibit—Graph: 1960 Sales Commis-
sions on the New Cars (Based on 1960 Financial
Statements ete.).... 1935 1352
BT—P-W Exhibit—Effect of Reductions in ‘Sell-
ing Prices of New Chevrolets upon Los Angeles
Metropolitan Area Chevrolet Dealers of Various
Volume Classes {ve 1936 1353
BU—Chevrolet Dealers in Los Angeles Metropoli-
tan Area Within 5 Miles of Each of the Dis-
count Houses and Referral Services Shown on
Defendants’ Exhibit A 1937 1354
BW—Distribution of Franchised Chevrolet Dealers
by New Passenger Car and Truck, Volume
Groups 1960, Chevrolet Los Angeles Metropoli-
tan Area 1938 1354
BX—Distribution of Franchised Chevrolet Dealers
by New Passenger Car and Truck Volume
Groups, 1960, Chevrolet Los Angeles Zone 1939 1355
BZ—Distribution of 85 Franchised Chevrolet
Dealers in the Chevrolet Los Angeles Metro-
politan Area by Number of Other Franchised
New Car Dealers Located Within a Radius of
5 Miles from Their Places of Business . 1940 1355
CA—Chart dated March 7, 1962, prepared by
Dealer Organization & Analysis Dept. showing
National Price Class Performance of Chevrolet
and Other Makes for the Years 1922 through
ies SE 1941 1357
CD—Letter to Owen Keown from K. KE ‘Staley,
dated December 16, 1960 1942 1359
xiv INDEX
Record from the United States District
Sourt for the
Southern District of California, Central Division—
Continued
Original
Reporter’s transcript of proceedings, August 24, 1964 1946a
Opinion, Carr, J...
Findings of fact and conclusions of law, ‘September
14, 1964...
Judgment ...
Notice of entry of judgment.
Notice of appeal to the Supreme Court of the United
UNO. 5 Picea Aes Fen VaRN AeA Ss
Order noting probable jurisdiction
1946b
1364
1364
1373
1400
1401
1402
1403
641
{fol. 1220] Ix tae Unrrep Srares District Court
Puaintirr’s Exuisrt No. 17
InTER-OrGanizaTION Letrers ONLY
Received November 18, 1960
Chevrolet-Oakland
Division of General Motors Corporation, Oakland
To: Mr. R. M. O’Connor, Los Angeles
From: Fred M. Thompson, Los Angeles
Dear Mr. O’Connor: © November 17, 1960.
Mr. Mays talked to me this morning in your absence on
the subject of the discount house operations in our area.
He mentioned specifically that John Connell had written
Mr. Staley on this subject and that just this morning Mr.
Cole received the attached wire from the salesmen of Sel-
man Chevrolet, Orange, California.
Mr. Mays requested that someone in top Zone manage-
ment meet with the dealer and the salesmen at Orange,
either today or tomorrow and review our position with
respect to this type of operation with them and also to see
if they could furnish any additional information about the
discount houses that we do not already have.
He further requested that you immediately send him a
detailed report of the discount house operations in this
area and specifically requested information as to the dealers
who are furnishing merchandise to the discount houses, as
well as what action we in the Zone are taking to curb such
sales.
He stated that this matter had apparently reached such
proportions that Central Office wished to review the entire
matter possibly with the legal department to see if they
could be of some assistance to us in this connection.
I discussed this matter with Mr. Cash so that he would
be informed and sent the attached teletype to Mr. Mays.
Very truly yours, Fred M. Thompson, City Manager
ec: Mr. R. M. Cash, Attachments
(fol. 1221] WESTERN UNIO}.
Senpinc Bank
Call Letters: FKQ—PD
Charge to: Chevrolet Motor Divn.
Fax Los Angeles Calif.
Edward J. Cole
Detroit
November 17, 1960.
We the undersigned salesmen of Selman Chevrolet,
Orange, California, wish to register a protest against the
practice of retailing new automobiles through discount
houses. This practice is widespread in Orange County
and is detrimental to us individually as professional sales-
men, paralyzing to the local dealers and in the long run
not in the best interests of either the customer or General
Motors.
(Signed) Howard Goodwin, Ira Armstrong Ralph
Carnes
Send the above message, subject to the terms on back
hereof, which are hereby agreed to.
Please Type or Write Plainly Within Border—Do Not
Fold.
643
(fol. 1222] WESTERN UNION
Senpinc BLank
Call Letters FKQ—PD
Charge To: Chevrolet Motor Divn.
Fax Los Angeles, Calif.
page 2
Edward J. Cole
November 17, 1960.
Ross Bension, Paul Sems, Floyd Carriker, Clint
Goforth, George Lane, Glen Riley, Charlies Mul-
very, James Ellis, Palmer Hines.
Send the above message, subject to the terms on back
hereof, which are hereby agreed te.
Please Type or Write Plainly Within Border—Do Not
Fold.
1269—(R 4-55)
644
(fol. 1223] In tae Unrrep Srares District Court
Puarntirr’s Exuisit No. 18
CHEVROLET-CENTRAL OFFICE
Division of General Motors Corporation
General Motors Building
Detroit 2, Michigan
. November 18, 1960.
Memorandum To File
Subject: Discount Houses
Discount Houses—Orange and Laguna Beach
1. Letter and ad from Miller Chevrolet Co., 11/11/60.
2. Mr. Cole received wire signed by 12 salesmen—Sel-
man Chevrolet, Orange—wire dated 11/16/60.
Mr. Mays telephoned Fred Thompson, City Manager.
Bob O’Connor, Los Angeles Zone Manager, holding meet-
ing with Dealer and salesmen at Selman Chevrolet, Orange,
California, today 11/18/60.
Complete investigation of Discount House activities in
area is being made. Report of same will be mailed to
Central Office Monday.
Mr. Mays calling O’Connor this morning advising him of
wires received by Mr. Gordon, to further assist Zone in-
vestigation.
Laguna Beach—Lawrence Boone, Harrison Jameson, Jr.,
Jack Trescott.
Discount Houses—reported to be checked
Fleet Sales, Gem Co., C & A.
Schreitmueller has file on Gem Co. covering operations
in St. Louis, Mo., and Washington, D.C. area. We have
asked for guidance.
L. H. Averill.
645
[fol. 1224] In tHe Unrrep States District Court
Puarntirr’s Exuisit No. 19
La Habra, California
November 18, 1960
Mr. Edward Cole,
c/o General Motors, Chevrolet Div.
Detroit, Mich.
Dear Mr. Cole:
I am a Sales Manager in this Chevrolet Dealership and
thought I would write you a letter to tell you the effect of
Discount House selling of Chevrolet Products is having on
my position in this Dealership.
It is becoming increasingly hard to’hire good salesmen to
devote their entire time to the business of selling Cheyro-
lets because above mentioned discount houses are making
it very hard to hold sufficient gross profit per unit to allow
a proper commission to be paid so that good Salesmen can
make as much money as they can in other fields.
Thanking you for your consideration. I Remain,
Yours Very Truly, Stanley O. Drake, Sales Manager.
646
[fol. 1225] Iw tHe Unrrep Srates Districr Court
Puarntirr’s Exuisit No. 20
November 18-60.
Dear Mr. Cole:
I am writing this letter at the request of my family be-
cause they are depending on me to make a living as a Chey-
rolet salesman. Although I am still employed(?) as a
salesman at Eddie Hopper’s Chevrolet in Orange County
my sales and income has been cut in half. The majority of
people that come in that are interested in a new Chevrolet
just want to prove to themselves that they can make a bet-
ter deal by buying through a local discount house. As you
can imagine the seven discount houses in this area are sell-
ing new cars cheaper than an authorized Chevrolet agency.
{fol. 1226] I feel certain unless something is done about
the discount houses immediately myself and many other new
car salesmen like me will have to go to work (in some other
field). Lets not let this happen. Lets stop the supply of new
Chevrolets to these discount houses. Most important Lets
do it now.
Thanking you in advance for your consideration in this
matter.
Thanx, Jack Steele, Eddie Hopper Chevrolet, Orange
County, California.
647
{fol.1227] In rae Unrrep States District Courr
Puarintirr’s Exutsit No. 21
Mr. Edward Cole
¢/o General Motors Chevrolet Div.
Detroit, Michigan.
Dear Sir,
I am a Chevrolet salesman at Don Steves Chevrolet in
La Haba, Calif. My living depends on Chevrolet auto-
mobiles and their sales. We have a fine lineup and it should
be a good year for all connected with Chevrolet.
Until just recently I was under the impression that Chev-
rolet franchise was very exclusive and something to be real
proud of. We, Chevrolet sales force have made the Chev-
rolet the number one seller in the country. Sound business
practices and a good product kept the resale value up and
we were out ahead of all competition. Average commis-
sion on a new Chevrolet at $80.00 is fine. However, I have
had people come in and tell me that they have my deal beat
by amile. At first I could not believe it because no legiti-
mate Chevrolet dealer would sell or could afford to sell the
ear for any less profit and still be able to service the car
after sale. That’s when the word Discount House came
into the conversation.
This isa shame. Discount Houses are selling Chevrolets.
It must be stopped at once. The Discount Houses will not
only take our bread and butter away from the Cevrolet
sales force, but they will also ruin the reputation of Chev-
rolet itself. It is unfair and it must be brought to a halt.
In the first place Discount Houses have no service facili-
ties to carry out the much advertised 12,000 mile warranty
and after sales service. Secondly they are known for in-
ferior quality merchandise ‘‘bargains’’ and we don’t want
the number one car in the nation to be included in that
category.
We have put a lot of effort to keep Chevrolet’s name
clean and we don’t want to have it smeared by a bunch of
shaysters connected with Discount House operations.
648
Please look into it and clean up this undermining situation,
Our lives depend on Chevrolet’s name and sales. Your end
of the business depends on Chevrolet’s reputation and re.
peat sales as well.
Very truly yours, Dick Pruszynski.
649
{fol. 1228] In tHe Unrrep States District Court
Puarntirr’s Exuisit No. 22
Inter-Organization Letters Only
Received 11-25-60
To: Mr. L. N. Mays, Central Office
From: R. M. O’Connor, Los Angeles Zone
November 22, 1960.
This is with reference to your telephone request regard-
ing the discount house operation in Southern California.
This business is commonly known among dealers as refer-
rals and has existed in the Los Angeles Zone for the past
eight years and the sales on the part of the discount houses
are not confined exclusively to Chevrolet products, but
rather on an industry basis. The majority of these opera-
tions are confined presently to Los Angeles and Orange
Counties, however, they in recent months are developing in
more and more areas as well as expanding their operations
in Orange County.
Among the more prominent are:
Fedco, 14920 Raymer, Van Nuys
Fedmart, 500 North Mueller, Anaheim
Leonards, 12891 Harbor Boulevard, Garden Grove
C.M.A., 1440 South Los Angeles, Anaheim
Gemco, 9700 Lincoln, Anaheim
A.B.C., 3328 Balsa, Santa Ana
White Front, 2222 South Harbor, Anaheim
In Ontario there is the Union Store, San Bernardino—
F.0.R.E. and a newly opened outlet in Bakersfield known
as Martin’s Discount; Fedco also has stores in Lakewood
and Los Angeles; Leonards also in Culver City (600 No.
Sepulveda Blvd.), El Segundo, Inglewood and Westwood.
This type of business, on a strictly referral basis, is fre-
quently quite profitable for the dealer who has only one
account and retains control of all deals.
This, however, is in contrast with the consignment type
of operation where the discount house itself handles the
650
transaction. Reference to the attachments will indicate the
gross profit differential.
We find that the discount houses and their salesmen have
no difficulty obtaining a new car or used car sales license
once they establish their Automotive Department and
usually they can easily obtain a new car franchise on a
foreign import, regardless of the limitations of their facili-
ties.
The main source of supply on Chevrolets has been from
the following dealers :
{fol. 1229] Howell Chevrolet Glendale, California
Allen Gwynn Glendale, California
Cormier Chevrolet Company Long Beach, California
Citizens’ Chevrolet Co. Eagle Rock, California
Ernie Porter Chevrolet, Inc. Pasadena, California
~Robert Hall Chevrolet, Inc. Tujunga, California
Bruder Chevrolet Hollywood, California
Warren Biggs Chevrolet Los Angeles, California
In every case where Chevrolet dealer activity in connec-
tion with discount house sales has been brought to our atten-
tion, Zone Management, including myself, the three City
Managers and the Assistant Zone Manager, as the case may
be, have discussed and counseled this matter with all of the
dealers engaged in referral or discount house business, in
an attempt to have them desist.
We have approached the situation from the standpoint
of good business practice and ethical principles, pointing
out the seriousness of the threat that exists in this matter
to the franchise system of distribution. Our Dealer Asso-
ciations have formed a committee to call on the supplying
dealers and have asked them and have attempted to per-
suade them to discontinue this practice. Associations have
also appointed a legislative committee to seek legislative
action which could prohibit this type of merchandising.
Our experience in shopping at the discount houses, from
the standpoint of policy and warranty work. indicates that
our regular Policy and Warranty Booklet is furnished with
each purchase and the customer is told that any Chevrolet
dealer will honor the warranty and correct any defects.
Further, that if a Chevrolet dealer refuses to do so, a call to
the factory will force them to do the work. Many dealers,
however, will not service new cars purchased through dis-
651
count houses, resulting in unhappy owners. This does not
take the form of a direct refusal, but usually is an indica-
tion to the owner that the shop is just too busy to accom-
modate him.
During the past year the volume of business handled by
these discount outlets has reached rather serious propor-
tions. We have reliable information to the fact that Gemco,
in particular, averages over one hundred units of all makes
per month.
However, we believe many dealers will cease this type of
business if they had any assurance that the account would
not be picked up by some other dealer, immediately upon
relinquishment.
We feel that most of the attachments enclosed are self-
explanatory, but one comment is in order on the letter from
Mr. Warren Biggs. We do not have the dealer’s permis-
sion to forward this letter, but we feel it is important for
your considerations in the light of the seriousness of this
situation. We also refer you to our letter and attachments
of November 16, to Mr. Greig regarding an apparent patent
infringement on the part of F.O.R.E.
[fol. 1230] We are in process of securing the transcript of
the case of the Union Store as an example of the failure of
the California Department of Motor Vehicles to take either
punitive or constructive action with regard to the discount
house merchandising of new automobiles. This will be for-
warded later.
For your information, I reviewed our position with res-
pect to this type of operation with the entire sales organi-
zation at Selman Chevrolet, Orange, California on Novem-
ber 18. Our Assistant Zone Manager will discuss this mat-
ter with the salesmen at Tommy Ayres Chevrolet, Laguna
Beach on November 23.
The above outline and attachments furnishes you with
all the information we have available at this time and we,
have also described what action we have taken to curb or
restrict such sales.
Please advise if there is any further information you re-
quire.
Very truly yours, R. M. O’Connor, Zone Manager.
RMO’C :dg
Attach.
652
{fol. 1231} Is rar Unrrep Srates Disruer Courr
Puarntire'’s Exurmrr No, 23
November 22, 1960,
Mr, Edward Cole, General Manager
Chevrolet Motor Division
General Motors Building
Detroit 2, Michigan
Dear Mr, Cole:
Here is only one of many letters you have probably
already received in the protest of the discount houses,
So you know what it is doing to the motor car business,
and my own income,
You are the only one that can stop this sort of bad busi-
ness, The discount houses are only making us Chevrolet
Salesmen a laughing stock of this business that you and |
both are in,
T am sure that you and your cohorts will take the neces:
sary steps to stamp out this sort of bad business ethics,
Yours truly, Art Taylor,
AT mm
{fol. 1282] Is rue Unresp States Distriecr Court
Puarntire’s Exurmrr No, 25
Mon,, 11/28/60,
K.B.S.
Your copy of Mr. Steves letter went to Mr, Mays this
morning with a note from you asking him to give you a re-
port on the ‘‘discount house’ activities,
MW,
653
{fol, 1233) Ls rae Unvren States District Court
Puarntire'’s Exurarr No. 26
Don Sraeves Cuevrorar
401 West Whittier Blvd OWen 7-6705
La Habra, California
1960, Nev, 25, A.M., 11:04, Office of General Manager
November 22, 1960.
Mr, Ed Cole, General Manager
Chevrolet Motor Division
General Motors Building
Detroit 2, Michigan
Dear Mr. Cole:
The subject of discount houses selling new Chevrolets was
discussed at some length at our recent Losor Chevrolet Con-
vention, The condition in Orange County, particularly, is
so deplorable that it was finally decided that each dealer
would write to you for help in cleaning up this condition,
Surely you can realize that a discount house selling new
Chevrolets, with no service facilities, certainly can't iead to
anything but a lot of unhappy Chevrolet customers and dis-
gruntled dealers.
I have diseussed this with my Sales Manager and my
salesmen. Their feelings are so strong on this subject that
they wanted to voice their opinions individually to you,
fecling that this would emphasize the importance for some
immediate action.
As this appears to be a mutual problem, you certainly
ean count on our cooperation, and anything you can do will
certainly be appreciated.
Very truly yours, Don Steves Chevrolet, Don Steves,
(Donald T.)
DS sam
ee: Mr, John Gordon, Mr. K. EK. Staley, Mr. R. M. O'Connor,
Lee Mays:
Por the folder you have. Have discussed with Cole, ad-
vising, will have letter of resume for him.
K.E.S.
{fol. 1234] In roe Unrrep Srates Districr Court
Puarntirr’s Exuisir No. 27
WESTERN UNION
TELEGRAM
W. P. Marshall, President
The filing time shown in the date line on domestic telegrams
is Standard Time at point of origin. Time of receipt is
Standard Time at point of destination
11072 KST NOV 22 60 DEA880 OA707
38M532 O ANA257 NL PD ANAHEIM CALIF 22
JACK GORDON PRESIDENT
GEN MOTORS CORPN GEN MTRS BLDG DET
DEAR MR GORDON
I HAVE BEEN A CHEVROLET SALESMAN FOR 10 YEARS AND
ASSOCIATED WITH CONE BROS ANAHEIM SINCE MARCH 1 1967.
I HAVE LOST SEVERAL NEW CAR SALES TO THESE DISCOUNT
HOUSES IN THE PAST FEW MONTHS BECAUSE THEY GAVE AWAY
LARGER DISCOUNTS PLUS NO SERVICE DEPARTMENTS NO
DEMONSTRATIONS, AND NO REPUTATION TO UPHOLD. LETS
DO SOMETHING ABOUT THIS
KENNETH R FIELD
[fo.. 1235] Is tHe Unirep States Districr Court
Piaintirr’s Exuisit No. 28
WESTERN UNION
TELEGRAM
W. P. Marshall, President
The filing time shown in the date line on domestic telegrams
is Standard Time at point of origin. Time of receipt is
Standard Time at point of destination
s9P EST NOV 22 60 DEA480 OB647
0 ANA244 NL PD ANAHEIM CALIF 22
JACK GORDON
GENERAL MOTORS CORP GENERAL MOTORS BUILDING DET
MR GORDON: I HAVE BEEN AFFILIATED WITH CONE BROS
CHEVROLET FOR TWENTY YEARS AND AM A LICENSED SALES-
MAN IN THE STATE OF CALIFORNIA. WE HAVE BEEN SUR-
ROUNDED BY DISCOUNT HOUSES WHO OBTAIN AND SELL
CHEVROLETS. OUR DEALER CANNOT MEET THESE DISCOUNTS
AND STAY IN BUSINESS NOR CAN I PLEASE DO SOMETHING
VERY RESPECTFULLY YOURS
W K BANKS 316 NO WEST ST SALESMAN ANAHEIM CALIF
656
{fol. 1236] In tae Unrrep States District Court
Puarntirr’s Exurit No. 29
WESTERN UNION
TELEGRAM
" 'W. P. Marshall, President
The filing time shown in the date line on domestic telegrams
is Standard Time at point of origin. Time of receipt is
Standard Time at point of destination
1021P EST NOV 22 60 DEA5S46 OB726
O-FNA218 NL PD FULLERTON CALIF 22
JACK GORDON PRES GM CORP
GM BLDG DET
I HAVE BEEN ASSOCIATED WITH THE SAME CHEVROLET
DEALERSHIP FOR TWENTY YEARS. THE SEVEN DISCOUNT
HOUSES IN OUR TERRITORY HAVE HURT MY DEALERS BUSI-
NESS, MY INCOME, AND MANY OF MY ASSOCIATIONS WITH
FORMER OWNERS. CAN YOU ADVISE ME WHAT CAN BE DONE,
MY CALIF SALESMAN LICENSE IS VSL 9044
RAY BERNEY 536 PRINCETON CIRCLE WEST FULLERTON CALIF
VSL 9944 536.
(fol. 1237] In tHe Unrrep States District Court
Puaintirr’s Exuisit No. 30
WESTERN UNION
TELEGRAM
W. P. Marshall, President
The filing time shown in the date line on domestic telegrams
is Standard Time at point of origin. Time of receipt is
Standard Time at point of destination
1000P EST NOV 22 60 DEA529 OB703
0 FNA212 NL PD FULLERTON CALIF 22
JACK GORDON PRES GM CORP
GM BLDG DET
HAVING BEEN ASSOCIATED WITH CHEVROLET SALES AND
DEALER QUALITY PROGRAM FOR OVER 28 YEARS I BELIEVE
THE DISCOUNT HOUSE PROBLEM IN OUR AREA SHOULD BE
BROUGHT TO YOUR DIRECT ATTENTION, IN OUR AREA WE
HAVE SEVEN DISCOUNT HOUSES WITHIN SEVEN MILES FROM
OUR DEALERSHIP. THEY ARE BEING SUPPLIED FROM SOME.
WHERE AND THEIR SELLING METHODS SERIOUSLY ARE DETRI-
MENTAL TO THE QUALITY DEALER PROGRAM YOU AND WE
HAVE STRIVED SO HARD TO MAINTAIN. THEY HANDLE ALL
MAKES OF GM CARS. THEIR PROGRAM MATERIALLY AFFECTS
PROFITS AND REPUTATION THAT WE HAVE TRIED SO HARD
TO MAINTAIN THESE MANY YEARS
LEO H KLUTHE 873 EL DORADO FULLERTON CALIF
{fol. 1238] In rae Unrrep Srates District Courr
Puarntirr’s Exuisit No. 31
WESTERN UNION
TELEGRAM
W. P. Marshall, President
The filing time shown in the date line on domestic telegrams
is Standard Time at point of origin. Time of receipt is
Standard Time at point of destination
906P EST NOV 22 60 DEA491 OA643
O ANA241 NL PD
ANAHEIM CALIF 22
JACK GORDON
PRESIDENT GENERAL MOTORS CORP GENERAL MOTORS
BUILDING DET
DEAR MR GORDON: NEVER IN MY FIFTEEN YEARS OF AUTO.
MOBILE SELLING HAVE I EXPERIENCED SUCH ONE SIDED
COMPETITION AS WE HAVE TODAY, NAMELY FROM THE DIs-
COUNT STORES THAT HAVE POPPED UP THROUGHOUT SOUTH-
ERN CALIF ARE THEY HERE TO STAY OR IS THERE ANYTHING
THAT YOU, AS PRES OF GENERAL MOTORS CORP CAN DO TO
CONTROL THEIR SOURCE OF SUPPLY. THANK YOU
R W HUGHES CONE BROS CHEV 215 N LOS ANGELES SsT
ANAHEIM CALIF.
659
[fol. 1239] In tHe Unrrep States Districr Court
Puarntirr’s Exuipit No. 32
WESTERN UNION
TELEGRAM
W. P. Marshall, President
The filing time shown in the date line on domestic telegrams
is Standard Time at point of origin. Time of receipt is
Standard Time at point of destination
908 EST NOV 22 60 DEA492 OA644
0 ANA243 NL PD ANAHEIM CALIF 22
MR JACK GORDON
PRESIDENT GENERAL MOTORS CORP GENERAL MOTORS
BUILDING DET
DEAR MR. GORDON: MANY DISCOUNT HOUSES ARE SELLING
NEW CHEVROLETS IN ORANGE COUNTY, CALIF AT PRICES
BELOW OUR DEALERS SURVIVAL POINT. ‘AS A SALESMAN IN
THIS AREA 20 YEARS AND WITH THE CONE ORGANIZATION 3
YEARS, I FEEL THAT SOMETHING SHOULD BE DONE ABOUT
THIS AT THE FACTORY LEVEL
HAL BEEBE 12942 9TH ST GARDEN GROVE CALIF.
{fol. 1240] In tae Unrrep States District Court
Puaintirr’s Exursit No. 33
WESTERN UNION
TELEGRAM
W. P. Marshall, President
The filing time shown in the date line on domestic telegrams
is Standard Time at point of origin. Time of receipt is
Standard Time ‘at point of destination
916P EST NOV 22 60 DEA497 OA649
O ANA248 NL PD ANAHEIM CALIF 22
JACK GORDON PRESIDENT
GENERAL MOTORS CORP GENERAL MOTORS BUILDING DET
DEAR SIR
I AM A CHEVROLET SALESMAN WITH CONE BROS CHEV IN.
ANAHEIM THERE HAS BEEN AN INFLUX OF DISCOUNT HOUSES
IN OUR AREA LATELY. THESE PEOPLE ARE ABLE TO GET NEW
CHEVROLETS AND OTHER MAKES OF CARS AND ARE OFFERING
PRICES BELOW OUR DEALERS ABILITY TO MEET. IF WE COULD
DRY UP THE DISCOUNT HOUSES SOURCE OF SUPPLY IT WOULD
BENEFIT ALL CONCERNED. CAN YOU HELP? YOURS
AL PHILLIPS 13871 LAURINDA WAY SANTA ANA CALIF.
661
(fol. 1241] In rae Unrrep Srates District Court
Puarntirr’s Exuisit No, 34
WESTERN UNION
TELEGRAM
W. P. Marshall, President
The filing time shown in the date line on domestic telegrams
is Standard Time at point of origin. Time of receipt is
Standard Time at point of destination
g11P EST NOV 22 60 DEA493 OA646
0 ANA245 NL PD ANAHEIM CALIF 22
JOHN F GORDON
PRESIDENT
GENERAL MOTORS CORP GENERAL MOTORS BLDG DET
DEAR MR GORDON:
FOR 23 YEARS I HAVE SOLD CHEVROLET CARS AND TRUCKS
AT CONE BROS CHEV., ANAHEIM. NOW I HAVE ONE BIG COM-
PLAINT, NAMELY DISCOUNT HOUSES DISTRIBUTING NEW
CHEVROLETS. THIS VICIOUS METHOD OF NEW CARS BEING
MERCHANDISED THIS WAY IS QUICKLY RUINING “CREATIVE
SELLING” AMONG LEGITIMATE CHEVROLET SALESMEN AND
DEALERS IN CALIF
ae HARSEL V SNYDER 215 NORTH LOS ANGELES ANAHEIM
662
[fol. 1243] In rHE Unirep Srates Distric: Court
Puarntirr’s Exureir No. 35
November 23, 1960.
Mr. John Gordon, President
General Motors Corporation
General Motors Building
Detroit 2, Michigan
Dear Mr. Gordon,
I am writing this letter to acquaint you with a condition
which I consider to be the greatest threat to the franchise
system of operation that I have experienced in my thirty-
one years as a Chevrolet Dealer.
There are many ‘‘discount houses’’ in our area retailing
Chevrolets that are being furnished by a few dealers in the
Metropolitan area. These dealers can be easily identified.
The cars are sold for a few dollars over cost and are not
properly preconditioned which as far as our public relations
are concerned puts the whole Chevrolet family in a bad
light.
This has a very deteriorating effect on the morale as well
as the earnings of our career sales people. If some way is
not found to correct this situation we are likely to lose many
of them.
I sincerely request that an all out effort be made to pre-
serve the franchise system.
Yours very truly, Cone Chevrolet Company, C. D.
Cone, President.
CDC/j
Copies to: E. N. Cole, Gene Staley, R. M. O’Connor.
Received Nov. 28, 1960, Sales Section.
663
{fol. 1244] Iw tHe Untrep Srares District Court
Puiatntirr’s Exursit No. 36
Cong CHEVROLET Co.
320 South Harbor Boulevard—LAmbert 5-2311
Fullerton, California
1960, Nov. 25, p.m., 3.50, Office of General Manager
November 23, 1960.
Mr. E. N. Cole, General Manager
Chevrolet Motor Division
General Motors Building
Detroit 2, Micigan
Dear Mr. Cole,
I am writing this letter to acquaint you with a condition
which I consider to be the greatest threat to the franchise
system of operation that I have experienced in my thirty-
one years as a Chevrolet Dealer.
There are many ‘‘discount houses”’ in our area retailing
Chevrolets that are being furnished by a few dealers in the
Metropolitan area. These dealers can be easily identified.
The cars are sold for a few dollars over cost and are not
properly preconditioned which as far as our public relations
are concerned puts the whole Chevrolet family in a bad
light.
This has a very deteriorating effect on the morale as well
as the earnings of our career sales people. If some way is
not found to correct this situation we are likely to lose many
of them.
I sincerely request that an all out effort be made to pre-
serve the franchise system.
Yours very truly, Cone Chevrolet Company, C. D.
CDC/j
Copies to: John Gordon, Gene Staley, R. M. O’Connor.
Cone, President.
664
[fol. 1245] In tHe Unrrep States Districr Court
Puamntirr’s Exxisit No. 37
Cong CHEvRo.et Co.
320 South Harbor Boulevard—LAmbert 5-2311
Fullerton, California
November 23, 1960,
Mr. Gene Staley, General Sales Manager
Chevrolet Motor Division
General Motor Building
Detroit 2, Michigan
Dear Mr. Staley,
I am writing this letter to acquaint you with a condition
which I consider to be the greatest threat to the franchise
system of operation that I have experienced in my thirty-
one years as a Chevrolet Dealer.
There are many ‘‘discount houses’’ in our area retailing
Chevrolets that are being furnished by a few dealers in the
Metropolitan area. These dealers can be easily identified.
The cars are sold for a few dollars over cost and are not
properly preconditioned which as far as our public rela-
tions are concerned puts the whole Chevrolet family in a
bad light.
This has a very deteriorating effect on the morale as well
as the earnings of our career sales people. If some way is
not found to correct this situation we are likely to lose many
of them.
I sincerely request that an all out effort be made to pre-
serve the franchise system.
Yours very truly, Cone Chevrolet Company, C. D.
Cone, President.
CDC/j
Copies to: John Gordon, E. N. Cole, R. M. O’Connor.
Same letter, not copy, sent to Mr. Gordon.
{fol. 1246] In tHe Unirep States District Court
PuarInTIFF’s Exuisit No. 38
Received November 25, 1960
Congr CHEVROLET Co.
320 South Harbor Boulevard—LAmbert 5-2311
Fullerton, California
November 23, 1960.
Mr. R. M. O’Connor, Zone Manager
Chevrolet Motor Division
3325 Wilshire Blvd.
Los Angeles, California
Dear Mr. O’Connor,
I am writing this letter to acquaint you with a condition
which I consider to be the greatest threat to the franchise
system of operation that I have experienced in my thirty-
one years as a Chevrolet Dealer.
There are many ‘‘discount houses’’ in our area retailing
Chevrolets that are being furnished by a few dealers in the
Metropolitan area. These dealers can be easily identified.
The cars are sold for a few dollars over cost and are not
properly preconditioned which as far as our public relations
are concerned puts the whole Chevrolet family in a bad
light.
This is a very deteriorating effect on the morale as well
as the earnings our our career sales people. If some way is
not found to correct this situation we are likely to lose many
of them.
I sincerely request that an all out effort be made to
preserve the franchise system.
Yours very truly, Cone Chevrolet Company, C. D.
Cone, President.
CDC/j
Copies to: John Gordon, E. N. Cole, Gene Staley.
666
{fol. 1247] In roe Unirep States District Courr
PuiaintirF’s Exurisit No. 39
Cone BrotHsers CHEVROLET
Service after the Sale
Telephone Keystone 5-1143—215 North Los Angeles Street
Anaheim, California
Nov. 23, 1960.
Mr. E. N. Cole,
Chevrolet Motor Division,
General Motors Building,
Detroit, Mich.
Dear Sir:
In the last few months a great number of discount houses
have sprung up in this area. They have been supplied with
cars at wholesale by dealers out of this area. Needless to
say, if our franchise plan is to work, we cannot have this.
We have tried for many years to run a quality Dealer.
ship, with Quality Salesmen representing Chevrolet as well
as ourselves in this community. With this unfair competi-
tion of discount houses, the earnings of our salesmen has
been seriously threatened, and their morals lowered con-
siderably.
Also, many buyers from these discount houses have come
to this dealership for free work, due to lack of pre-delivery
service, thereby placing Chevrolet Motor Division and
Cone Bros. in a very difficult position.
Hoping that you will be able to control this before we
lose our salesmen, and before the public loses confidence in
our Chevrolet Warranty, we are
Yours very truly, by E. M. Cone
EMC/cem
ec: Mr. O’Connor
667
[fol. 1248] In roe Unitep States District Court
PuarintiFF’s Exursit No. 40
WESTERN UNION TELEGRAM
1245A Est Nov 23 60 Dec011 OB006
0 FNA 631 NL PD Fullerton Calif 22
Jack Gordon, Pres G i Corp
G M Bldg Det
Subject discount houses. As a new car legion of leader
salesman license VSL 99359 something must be done on
fair practice in our business. We work long hours to make
a fair living in a respectable new car agency and then have
deals taken away from us by discount houses selling cars
just over cost with no facilities to take care of customers.
If this continues top salesmen in the automotive business
will be changing to another type of business. R S V P
Charles P Robinson 17835 Anna Marie Road,
Yorba Linda Calif.
[fol. 1249] Is tHe Unirep States District Courr
PuLaIntiFrr’s Exursit No, 41
WESTERN UNION TELEGRAM
1239A EST Nov 23 60 DEA032 OB005
O FNA230 NL ND Fullerton Calif 22
Jack Gordon, Pres G M Corp G M Bldg Det
The combined interests of the General Motors Corp
Chevrolet Motor Division, the franchised Chevrolet dealer,
the buying public, and myself as a licensed Chevrolet sales-
man are being seriously undermined by the bootlegging
practices of a few dealers through discount houses into our
area, the seriousness of this bootlegging situation has
reached such critical proportion that I felt that you would
appreciate it being brought to your attention. The solution
to this problem will have a direct bearing on my ability to
survive as a Chevrolet salesmen. Any encouragement you
might feel free to offer would certainly be appreciated.
Carroll Cone, name of operator Cone Chev Co.
Carroll D. Cone, Jr licensed Chev salesman
1213 E Central Avenue Fullerton Calif
669
(fol. 1250) Ly rae Ustrep States Districr Court
PiaintirF’s Exurisit No, 42
Inter-Organization Letters Only
Received November 25, 1960 Sales Section
To: Mr. H. E. Crawford, 13-142
From: L. N. Mays, A-266
Subject: Operation of Discount Houses—Los Angeles Zone
November 25, 1960.
Dear Mr. Crawford:
Attached you will find the complete file received this
morning from Mr. O’Connor of Los Angeles in connection
with the activities of discount houses in the Los Angeles
area in the selling of new cars. I think you will find this to
be quite a complete report on the situation.
It will be noted on the 3rd page of Mr. O’Connor’s letter
that they are endeavoring to secure a transcript of the case
brought by the California Department of Motor Vehicles
against the Union Store, a discount house. We understand
that it was ruled, there was no purpose in this case ever
going to trial.
Mr. O’Connor advised me by telephone that he is also
hopeful of getting a tape recording of an actual transaction
being worked out with a customer on a new car purchase
in one of these discount houses. He said if he is able to
obtain this tape he will forward it immediately.
We shall promptly forward any additional information
we are able to secure on the subject and are most anxious
to learn the Corporation’s opinion as to what position Chev-
rolet might take to meet this new dangerous competitive
development.
Yours very truly, L. N. Mays, Assistant Sales
Manager
LNM/be
Attachments
610
{fol. 1251) Is var Unrrep States Distrior Courr
Piarntirr’s Exursit No, 48
Received November 30, 1960, J. M. Rooney
November 25, 1960,
Mr. J. F. Gordon, President
General Motors Corporation
General Motors Building
Detroit, Michigan
Dear Sir:
The undersigned has been employed as a salesman for
authorized Chevrolet dealers for the past five years, and in
each of those years achieved membership in the 100 Car
Club.
During the last year my income was disproportionately
reduced although my efforts and number of contacts with
potential consumers did not appear to vary from previous
years. It has been brought to my attention and an investiga-
tion has revealed that several discount or wholesale houses
in this area are making available for their memberships new
General Motors automobiles at prices much below those
which an authorized and franchised General Motors auto-
mobile dealer may retail to consumers when taking into con-
sideration the large capital investment a franchised dealer
must make, the service he must render to purchasers and
reasonable compensation allowed for the efforts of a sales-
man.
It should be noted that the membership in wholesale and
discount houses is generally limited to union members, city,
state and federal employees and members of the Armed —
Forces.
It would seem readily apparent that the greatest incident
of increased costs of automobile manufacturing is the labor
factor, brought about by large industry wide unions. Con-
tinued wage increases cause a normal upward spiral which
reflects itself throughout our economy.
Elementary economics would indicate that automobile
manufacturers, along with other retail manufacturers,
apparently are only aware of the short term consequences
of making their products available to membership discount
671
and wholesale houses. Simply, it boils down to the fact that
you are cheating the American public by giving in to union
demands for increased wages and then cutting your throat
and my throat by giving these same union members better
‘‘deals’’ for the consumption of your product. This method
of doing business will, over an extended period, severely
reduce your authorized franchises due to curtailment or re-
duction of profit-investment ratios. Your direct contact
with the consumer, and a prime factor in consum r satis-
faction, is your authorized dealer.
{fol. 1252] If this is to be your continued attitude, I
shall in the near future, along with other salesmen, be
forced to obtain other employment.
Your immediate consideration to this grave problem
facing your salesmen and dealership will be greatly appre-
ciated.
Very truly yours, EK. L. Lindemann, Salesman, Har-
bor Chevrolet, Long Beach, California.
672
(fol. 1253] Is roe Unrrep Staves District Court
PuarntirF’s Exutsir No. 44
November 25, 1960,
Mr. E. N. Cole, General Manager
Chevrolet Motor Division
General Motors Building
Detroit, Michigan
Dear Sir:
The undersigned has been employed as a salesman for
: authorized Chevrolet dealers for the past five years, and in
each of those years achieved membership in the 100 Car
Club.
During the last year my income was disproportionately
reduced although my efforts and number of contacts with
potential consumers did not appear to vary from previous
years. It has been brought to my attention and an investiga-
tion has revealed that several discount or wholesale houses
in this area are making available for their membership new
General Motors automobiles at prices much below those
which an authorized and franchised General Motors auto-
mobile dealer may retail to consumers when taking into
consideration the large capital investment a franchised
dealer must make, the service he must render to purchasers
and reasonable compensation allowed for the efforts of a
salosman.
It should be noted that the membership in wholesale and
discount houses is generally limited to union members, city,
state and federal employees and members of the Armed
Forces.
It would seem readily apparent that the greatest incident
of increased costs of automobile manufacturing is the labor
factor, brought about by large industry wide unions. Con-
tinued wage increases cause a normal upward spiral which
reflects itself throughout our economy.
Elementary economics would indicate that automobile
manufacturers, along with other retail manufacturers, ap-
parently are only aware of the short term consequences of
making their products available to membership discount
and wholesale houses. Simply, it boils down to the fact that
you are cheating the American public by giving in to union
673
demands for increased wages and then cutting your throat
and my throat by giving these same union members better
‘deals’? for the consumption of your product. This
method of doing business will, over an extended period,
severely reduce your authorized franchises due to curtail-
ment or reduction of profit-investment ratios. Your direct
contact with the consumer, and a prime factor in eonsumer
satisfaction, is your authorized dealer.
{fol. 1254] If this is to be your continued attitude, I shall
in the near future, along with other salesmen, be forced to
obtain other employment.
Your immediate consideration to this grave problem
facing your salesmen and dealerships will be greatly appre-
ciated.
Very truly yours, E. L. Lindemann, Salesman, Har-
bor Chevrolet, Long Beach, California
674
[fol. 1255] In THE Unirep States Districr Courr
PuarntirF’s Exuisir No. 46
Rosert A, Erskine
CHEVROLET
363 East Holt Avenue, Pomona, California NA. 2-1136
Mr. K. E. Staley
Some more discount house letters
E. N. Cole
11/25/60.
Dear Mr. Cole:
We respectfully beseech you to help us eliminate this
cancer.
Sincerely, Bob Erskin..
Sincerely, Bob Erskine.
Autos in Discount Houses Irk Calif. Dealer Official
Los Angel.s—A warning about discount stores which
offer new cars at ‘‘the lowest price anywhere’’ was sounded
last week by N. L. McLaughlin, executive secretary, Long
Beach Motor Car Dealers Assn.
He said the discount stores are prevalent in Southern
California and added: ‘‘If this idea of merchandising
spreads, it may well destroy the present franchise system.”
According to McLaughlin, ‘‘the so-called volume dealers
are supplying these cars for a few dollars above invoice
cost. They figure this is plus business, since they place the
cars outside their own territory.’’
An example of the discount-house approach is an ad from
the Los Angeles Times which announced ‘‘Gemco’s Ist
Annual Auto Show.”’’
The ad continued: ‘‘ First time anywhere! See all the new
’61s at Gemco and have the exclusive advantage of selecting
your ’61 at the lowest price anywhere.’’
Among the cars pictured in the advertisement was a ’6l
Lincoln Continental four-door sedan. The ad was dated
Nov. 10. The dealer introduction of the Lincoln Continenm?
was Nov. 17.
675
The public was invited to the auto show, but the ad speci-
fied that ‘‘you must be a member of Gemco’’ to be able to
purchase any of the cars on display.
Gemco memberships were available for $1. A member-
ship coupon was included in the ad.
Other inducements mentioned in the ad were ‘‘514 per-
cent financing available on 36-month contracts,’’ ‘‘we
guarantee servicing on any new car purchased on Gemeo’”’
and ‘‘tradeins appraised immediately on the spot.’’
The ad also advised : ‘‘ Remember . . . Gemco is in the new-
car business. Any new car may be purchased during the
show or any other time during the year . . . always at the
same low price.’’
676
[fol. 1256] In rae Unrrep States District Count
PuiaintirF’s Exutsit No, 48
Received November 30, 1960 J. M. Rocue
Mr. J. F. Gordon
President
General Motors Corp.
Dear Mr. Gordon:
You no doubt have heard from this area regarding the
discount house that sells new Chevrolets. —
There are now, in this locality, more of these houses than
authorized Chevrolet dealers. This communication is to
add my urgent appeal for some immediate action.
How can I pay a salesman a decent commission when two
blocks away new Chevrolet cars and trucks are being ad-
vertised and delivered at 5% over invoice.
These buyers are coming into our service department
in’ an ever increasing flood—asking for paint touch up—
engine idle adjustments, etc. They have been told that re-
gardless of where they buy their car it will be taken care of
by any dealer. The number of these cars makes it impos-
sible for us to do the policy adjustment work necessary to
keep these people happy. I think you are aware that the
average dealer goes to great lengths and expense for his
own Owners on non warrenty work.
We do not like the factories ‘‘hands tied’’ policy. If
Ford and Chrysler are willing to take steps to contain this
thing, why does General Motors not take its rightful place
as leader to protect this valuable market.
With Kiplinger and others educating the public to buy
‘‘wholesale’’ and publishing dealer costs, advertising will
not answer. We need the source dried up.
Hoping for some immediate action I remain
Yours, James Seidlitz (Harbor Chevrolet).
677
{fol. 1257] In tHe Unrrep States Districr Court
PuarntirF’s Exursitr No. 49
11/26/60.
Mr. E. N. Cole
General Manager
Chevrolet Motor Division
General Motors Corporation
Dear Mr. Cole:
Southern California has a situation that is causing great
concern among Chevrolet retail salesmen, management and
dealers, and should be given immediate attention by the
factory.
We now have, in this area, more unfranchised discount
houses selling new Chevrolet’s than dealers. To thumbnail
it, a used car dealer rents a booth in a discount house,
makes a volume deal for new cars from an out of the area
dealer, telling that dealer he will never see the cars again,
and advertizes new cars of any make at 5% over invoice.
A report of sale and warrenty book is supplied by the
original dealer. With only a $200 per month booth rental
overhead, this person is rough competition.
This is hurting the value of a Chevrolet franchise. Who
wants a dealership in an area where legitimate profit is cut
up by nonsubstantial shade tree operators.
We do not wish to become a distributor. We wish to stay
retailing. We do not Jike the factorie’s ‘‘Hands Tied’’
policy.
We are faced with an ever increasing flood of discount
house buyers in our service department, asking for paint
touch up, engine idle adjustments, ete. You must be aware
that the time and paper work make minor warranty jobs
costly to the dealer. We are willing to go to great lengths
of policy adjustment for our own buyers but cannot afford
the time or money for these others. They are too many.
With Kiplinger and others educating the public that it is
smart to buy ‘‘wholesale’’ and publishing dealer costs, we
do not feel that advertising will answer. We think you will
have to take an interest in drying up the source of supply.
Ford and Chrysler have indicated they will do what they
678
can to contain this thing but my feeling is that Chevrolet
should take it’s rightful place as leader to protect this most
valuable market.
Last but not least I must admit I am being personally
hurt right smack in the hip pocket.
Hoping for some action I remain
Yours, James Seidlitz (Harbor Chevrolet).
679
(fol. 1258] In tHe Unrrep Srares District Court
Piarntirr’s Exursit No. 50
November 27, 1960.
Mr. E. N. Cole
General Manager
Chevrolet Division, General Motors Corp.
Detroit, Mich.
Dear Mr. Cole:
As a ‘£100 Car Club’’ Chevrolet salesman for the past five
years, may I respectfully protest the present mushrooming
practice of so-called discount houses in this area being
privileged to sell new automobiles in competition with legit-
imate franchised new car dealerships.
Regrettably, as I see it, if this situation is allowed to
continue, the result may well entail the loss of many top
salesmen to the automobile business as well as a very
serious threat to the stability of the sound dealer who must
oppose this unethical and unfair type of competition and
selling.
Obviously, the franchised automobile dealer is soley de-
pendent on the sale of automobiles for his profit, while
“discount houses,’’ (huge department stores, actually),
sell and carry thousands of items from which a profit is
derived from all, and therefore can sell an automobile at a
much lesser price than can the legitimate franchised dealer,
since these outlets have no investment whatsoever in their
setup to sell cars.
If automobile dealers also sold lawn mowers, furniture,
clothing, ete., there could be no objections to these ‘‘dis-
count’? department stores selling automobiles, but since
they do not, it seems only just and proper that steps be
taken to eliminate the sale of new automobiles through any
source other than the franchised automobile dealer.
Please accept my sincere thanks for any consideration
you deem this plea warrants.
Sincerely, Blane Peart.
ec: Mr. J. F. Gordon; Mr. K. E. Staley.
{fol. 1259] In rae Unrrep States District Court
PuarntirF’s Exuisit No. 52
11-27-60,
Mr. K. E. Staley
General Sales Manager
Chevrolet Motor Division
General Motors Corporation
Dear Sir:
I’m writing to you in hopes that you will find time to take
my problem into consideration. I am a Chevrolet salesman
in Long Beach, California. I am 24 years old, and have
decided to make the car industry my profession.
Sir, my problem is this: ‘‘ Local Discount Houses.’’ These
establishments are selling new Chevrolets, sold to them by
certain Chevrolet (Dealers? ?) at tremendous discounts. If
this is allowed to continue, it will surely jeopardize my job
and future. It seems that to compete with these ‘‘ Discount
Stores,’’ we have to give all the gross profit away, and
therefore can’t make a just profit for the dealer or sales-
man. I wish that you would, if it’s at all possible, take some
means of stopping this crisis. Chrysler and Ford Motor
Companies are busy working on this problem at the time. I
and think that being the leaders the the automobile industry
that we should, you and I, get busy and put a stop to the
certain Dealers furnishing those so called ‘‘Stores’’ with
new Chevrolets to sell.
If anything can be done on this matter, I would sincerely
appreciate your immediate attention to this problem.
With best regards, Daniel R. McGowan, Salesman,
Harbor Chevrolet Corp., Long Beach, California.
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682
{fol. 1261] In tHe Unrrep States District Court
Puarntirr’s Exuisir No. 53
11-27-60.
Mr. E. N. Cole
General Manager
Chevrolet Motor Division
Dear Sir:
I’m writing to you in hopes that you will find time to take
my problem into consideration. I am a Chevrolet salesman
in Long Beach, California. I am 24 years old and decided
to choose the car business as my profession.
Sir, my problem is this: ‘‘ Local Discount Stores.’’ These
establishments are selling new Chevrolets, sold to them by
certain Chevrolet (Dealers?), at tremendous discounts. If
this is allowed to continue it will surely jeopardize my job
and future. It seems that to compete with these ‘‘ Discount
Stores’’ you have to give all the gross profit away, and
therefore can’t make a just profit for the dealer or sales-
man. I wish that you would, if it’s at all possible, take
some means of stopping this crisis. Chrysler and Ford
Motor Companies are busy working on this problem. And
I think being the leaders in the automobile indvstry that we
should you and I, get busy and put a stop tv the certain
Dealers furnishing these so called * Stcves’’ with new
Chevrolets to sell.
If anything can be done on this matter I would sincerely
appreciate your immediate attention to this matter!
With best regards, Daniel R. McGowan, Salesman,
Harbor Chevrolet Corp., Long Beach, California.
[fol. 1262] In tas Unrrep States District Court
PuaintirF’s Exutsrr No, 54
505 E. Broadway
Long Beach 2, Calif.
Received November 30, 1960, J. M. Roche
Nov. 27, 1960.
Mr. J. F. Gordon, Pres.
General Motors Corp.
General Motors Bldg.
Detroit. Mich.
Dear Sir:
As I am a Chevrolet salesman and work for an authorized
Chevrolet dealer with a large investment and an agency for
many years.
I am writing you in regard to discount houses that are
delivering new Chevrolets at fabulous discount prices, cars
that are coming from authorized Chevrolet dealers through-
out Southern California.
I am appealing to you to have this discontinued as it is
cutting down my compensation and that is what I depend
on for a living. So will you please look into this matter and
put an end to it, and stop it for good.
T remain
Yours very truly, Omer L. Bernard [Salesman, Har-
bor Chevrolet]
[fol. 1263] In rue Unrrep Stares District Courr
Puarntirr’s Exuisir No. 60
From the Office of
K. E. Staley
Mr. L. N. Mays
‘‘Can we move the legal Dept. along faster on our re-
quest for appropriate letter (& positive) stand.
K E 8.”
{fol. 1264] In rue Unirep States Districr Court
PuaintiFF’s Exuisit No. 61
From the Office of
K. E. Staley
11/28/60.
Mr. L. N. Mays:
As soon as you are in a position to give me something in
regard to your check on the ‘‘discount house’’ activity,
would appreciate it because probably this will be coming
down from Gordon’s Office.
K.ES.
KES mw
[fol.1265) In rue Untrep Srarzs Disrricr Court
PuaintirF’s Exuisir No. 62
Long Beach, Calif.
Received N »vember 30, 1960, J. M. Roche
Nov. 28, 1960.
J. F. Gordon
Pres., General Motors
Dear Mr. Gordon,
Southern Calif. has a serious problem in the automobile
industry. It concerns the discount houses. They are now
selling new Chevrolets at $125.00 over cost any model, any
color and any options. Now, they are advertising after sales
service. : )
People are coming in our dealership with tape figures
wanting us to beat the discount house deal. Now, they are
getting their cars from some of the Chevrolet dealers.
Zone average selling expense is around $188.00. How can
a dealer compete with this? How are we going to hold our
salesmen when the discount house has a small floor space,
no overhead, other than probably four salesmen and people
lined up to buy new Chevrolets. They also give the custom-
ers new car warrantys.
There are more discount houses in our area than dealers.
[fol. 1266] What is this going to do to the Chevrolet fran-
chise dealer?
Why not stop the dealers who are supplying the discount
houses ?
I have been employed with Chevrolet since 1933 and have
been proud of the fact. I am very concerned over this prob-
lem.
I am quite certain it will be rectified.
Yours truly, Buck Pryor, Harbor Chevrolet.
{fol. 1267] In tHe Unrrep States District Court
PuatntiFF’s Exuisir No. 65
Received December 2, 1960, Sales Section
Received December 2, 1960, J. M. Roche
Nov. 28, 1960,
Mr. Crawford
J. F. Gordon
President, General Motors Corp.
Dear Sir:
May I impose upon you for a few minutes to bring to
your attention a situation that is adversely affecting the
automobile business in So. Calif., namely, the ‘‘discount
house.’’ These ‘‘houses’’ with no overhead and no service
dept. are undercutting your legitimate dealers. If this situ.
ation continr~« *+ will lead to the loss of many good sales-
men and also fect the financial stability of many deal-
ers.
The dealers themselves are unable to control this situa-
tion. I ask you, if there is any way possible, to control this
situation from the factory. You have spent millions to build
up your dealer organization and now because of the greed
of a few they are gradually being destroyed.
Sincerely, W. E. Daley.
{fol. 1268] Lx tHe Unrrep States District Court
PuarntiFr’s Exureir No. 68
Long Beach, Calif.
Nov. 28th, 1960.
1708 Redondo, Apt. A
Mr. K. E. Staley
Gen. Sales Mgr.
Chev. Mtrs. Div.
Gen. Mtrs. Div.
Detroit, Mich.
Sir:
I wish to direct your personal attention to a grave loss to
my own ‘‘pocketbook’’ as weil as my dealer, Mr. Chet Hin-
son, Harbor Chev. Corp. as well as any other man in retail
sales of new Chev. as well as other new cars.
I respectfully submit Mr. Hinson has a lifetime invest-
ment in Harbor Chev. and holds an exclusive (1?) franchise
to sell new Chev. cars and trucks. Yet within 5 city blocks
a ‘Discount House’’ sells our cars cheaper than we can
possibly sell them.
{fol. 1269] Sir, why should an organization without a
franchise be able to cut our throats? We spend real money
to get people in our place of business and the ups are far
between now they stand in line at the discount house. Why?
Price and price alone.
They cannot properly represent Chev. or give the same
service to the customer of Chevrolet that you as Gen. Mgr.
should demand.
Resp., Corny Cline, Chev. Salesman.
P.S. Sir: Were I you I would pull the franchise of any
dealer caught selling cars to these discount houses.
CSC.
[fol. 1270] In tHe Unirep States District Court
PuaintirF’s Exuisir No. 69
Epprz Hopper CHEVROLET
10511 Garden Grove Boulevard
JEfferson 4-2700—HEmlock 2-6411—M Adison 5-2963
Garden Grove, California
Dear Mr. Cole:
As my livelyhood depends on new car sales I find it
necessary to write this letter to you. I have been in the
automobile business 3 yrs. I had planned on making a
career of it, but I am being seriously discouraged by these
discount houses (we have 7 in our area).
It is cutting into the number of sales I make per month
(by at least half).
It. is impossible to compete with these people on a price
basis.
There is a way these stores can be put out of the auto-
[fol. 1271] mobile business, and that is by cutting their
supply of cars off at the source, namely other dealers across
town who sell to them. There must be a way to prohibite
this sort of thing.
It has reached serious proportions, and I am sure if you
will look into the matter now, you will help us in this
matter.
Thank you for your help.
Lillin H. Tapley, Eddie Hopper Chevrolet, Garden
Grove, Calif.
689
{fol.1272] International—Airport Village—Crenshaw—
Inglewood—Pico— Westwood
LEONARDS
Main Store International
12891 Harbor Blvd.
Garden Grove, Calif.
JEfferson 7-5000
4 Dr. Impala
Dear Customer:
The management recommends that you visit our auto-
mobile department. You can now make arrangements to pur-
chase the car of your choice, at any time of the year at a
substantial savings to you. Our one and only low price to
you eliminates the many loop-holes, gimmicks, and pitfalls
normally associated with buying a new car.
This plan provides:
. . Lowest rate bank financing. . .
. All cars obtained locally .. .
. Complete factory warranty and servicing .. .
. Trade-ins accepted .. .
. . Low insurance rates .. .
. 100% honest dealings...
. Guidance of unbiased automobile men to assist
you in your selection of a new car...
The following procedure is reeommended:
1. Decide on make, model, equipment & color.
2. Complete your shopping for the automobile, so that
you have established the best price you can purchase a
car on your own.
. Be prepared to place an order.
. Sorry, no prices by telephone.
3
+
Customers who have used this plan have effected con-
siderable savings in money and time.
[fol. 1273] In roe Unrrep States District Court
Puaintirr’s Exuisit No, 70
Dear Mr. Cole:
I’ve been selling Chevrolets for six years, and before that
I sold Pontiacs. I’ve belonged to the ‘‘100 Car Club”’ for —
years and have several diamond pins from Pontiac. In other
words, I’ve made a good living for years selling with the
General Motors organization. My income is now threatened
by the ability of the discount houses to obtain Chevrolets
from fly-by-night and near bankrupt agencies. Customers
who have bought their Chevrolets from me for years are
now sheepishly explaining that they ‘‘got a better deal”
from a discount house. These are unserviced cars they are
buying, without a dealer who wants their repeat business
to give them the service they require. They are promised
‘*service by any Jocal Chevrolet agency’’ by the discount
houses. The dealer and his sales force bear the brunt of the
[fol. 1274] lost sales and goodwill, and General Motors is
blamed because these people believe that General Motors is
issuing these cars to the discount houses. That impression
is given to the customer.
My income is dropping at a time when I should be earn-
ing progressively more because of my repeat sales. I lose
my customers because I cannot compete in the price field on
the automobile I’m offering.
Thank you, G. Spates.
{fol. 1275] In rHe Unirep States District Court
PuaIntiFrF’s Exutsit No. 73
K. E. Staley, General
Sales Manager.
November 28, 1960.
Dear Sir,
Just a note to let you know that the So. Calif. salesmen
are getting a little sick of these discount houses around here.
The factory men around here don’t seem to care one way
or the other so maybe a note to you might create a little
interest in the matter.
It is real unfair to a dealer who has a million dollar plant
plus a franchise, and watch those boys tear the grosses in
a new as well as used car all to hell; and then have them
come to us and say Chevrolet service is rotten and their
product no good.
I’ve been here for years and the promises that your fac-
tory men make seem to never come true. We would appre-
ciate a little interest in the matter.
Sincerely, Phil Chauvin, Harbor Chevrolet, Long
Beach, Calif.
{fol. 1276] In rae Unitep States District Court
PuarntiFF’s Exursir No. 74
Chevrolet Div., G.M. Corp., December 2, 1960 AM 11:15
Office of General Manager
Mr. E. N. Cole
General Manager
Chevrolet Div.
11-28-60,
Dear Sir:
I am a salesman in the Long Beach area and I would ap-
preciate any effort on your part in stopping your Dealers
from supplying ‘‘Discount Houses’’ with new Chev. cars.
I work on a gross profit basis and having to compete with
their small margin of profit takes money out of my pocket
which is of great concern to me.
I am compelled by the State of Calif. to buy a License to
sell cars and feel that this type of operation is unfair to
myself and dealers who do not sell to them. Hoping you
will put forth every effort to stop this operation I am
Very truly yours, Ed Lundberg, Salesman, Harbor
Chevrolet, Long Beach, Calif.
[fol. 1277] Is rae Unrrep States Districr Courr
Piaintirr’s Exureir No, 75
Received November 30, 1960, J. M. Roche
Mr. J. F. Gordon
Pres., G.M. Corp.
G.M. Bldg.
Detroit, Michigan
Dear Sir:
I am writing you as a Chevrolet salesman about the
discount houses that are selling cars at huge discounts in
my area of selling. The prices they quote on cars leaves so
little in the deal, that I even hate to work people that have
shopped their.
- Many of my old customers go there first to get their
price then come to me to meet the price or beat it. The
commission left in these deals are real small and does not
give me a chance to make a living wage for my Family.
If something is not done to stop this -type of business,
many salesmen like myself with seven years of Chevrolet
selling will be forced to look for other selling jobs.
Yours Truly, R. D. MeGowan, 2861 Tucker Lane,
Los Alamitos, Calif.
{fol. 1278] Iw rae Unrrep Sratss District Court
Puarntirr’s Exuisit No. 76
11/28/60,
Mr. E. M. Cole
General Manager
Chevrolet Motor Division
Detroit, Mich.
Dear Sir:
I am writing to you as a Chevrolet salesman about the
discount houses that are selling cars at huge discounts in my
area of selling. The prices they quote on cars leaves so
little in the deal, that I even hate to work people that have
shopped there.
, Many of my old customers go their first to get the price
then come to me to beat it. The commission left in these
deals are real small and do not give me a chance to make a
living wage for my family.
If something is not done to stop this type of business,
many salesman like myself with seven years of Chevrolet
selling will be forced to go to other selling jobs.
Yours truly, R. D. McGowan, 2861 Tucker Lane,
Los Alamitos, Calif.
(fol. 1279] In THe Unrrep States Disrricr Courr
PiaintirF’s Exursir No. 77
: 11/28/60.
Mr. K. E. Staley
Gen. Sales Mgr.
Chev. Motor Div.
Detroit, Mich.
Dear Sir:
I am writing you as a Chevrolet salesman about the dis-
count houses that are selling cars at huge discounts in my
area of selling. The prices they quote on cars leaves so
little in the deal, that I even hate to work people that have
shopped there.
Many of my old customers go there first to get the price
then come to me to beat it. The commission left in these
deals are real small and do not give me a chance to make a
decent living for my family.
If something is not done to stop this type of business,
many salesmen like myself with seven years of Chevrolet
selling will be forced to look for other selling jobs.
Yours truly, R. D. McGowan, 2861 Tucker Lane, Los
Alamitos, Cal.
[fol. 1280] In tHe Unrrep States District Court
PuarntirF’s Exuisir No. 78
Harsor CHEVROLET
Sales and Service
3770 Cherry Avenue—GA. 6-3341
Long Beach 7, California
11/28/60,
Mr. K. E. Staley
Chev. Motor Div.
Gen. Motors Corp.
Dear Sir:
I am a Chevrolet salesman who is very much concerned
about the discount houses. They are hurting our sales at
Harbor Chev. as well as hurting my pocket book.
I would like to know if there is some thing that could be
done to stop this. I have had many people stop in and ask
for prices on a new Chev. & then say that they can beat my
price at the discount house. This is very discouraging.
I would appreciate any action you might take toward
stopping this practice.
Respectfully, Bert Beria.
697
(fol. 1281] In THe Unirep States District Courr
PuiarntirF’s Exuisrr No. 79
Received December 2, 1960, J. M. Rocue
N. J. Fiynn
4428 E. 6 St., Long Beach 14, Calif.
Mr. Crawford
Mr. J. F. Gordon
General Motors Corp.
Detroit, Mich.
Dear Sir:
As a Chevrolet salesman I have found the growing trend
of new Chevrolet sales, through the so called discount
houses to be increasing to the point where the legitimate
dealer with a big investment in sales & service facilities is
having considerable difficulty in competing with the con-
fusion tactics used by these outlets. Chevrolet salesmen, in
my opinion, are the highest calibre group of sales specialists
in the country and when we have difficulty making a living
on account of these cut price order takers I think it is time
for people in authority to investigate and attempt to limit
Chevrolet sales to franchised dealers. Please help to cor-
rect this situation.
Thanking you for your attention to this matter, I remain
Very truly yours, Norman J. Flynn.
{fol. 1282] In rue Unrrep States District Court
Puiarntirr’s Exuisit No. 80
Chevrolet Div., G. M. Corp., 1960, December 2, A.M. 11:15
Office of General Manager
N. J. Fiynn
4428 E 6 St., Long Beach 14, Calif.
Mr. E. N. Cole
General Motors Corp.
Detroit, Mich.
Dear Sir:
As a Chevrolet salesman I have found the growing trend
of new Chevrolet sales through the so called discount
houses to be increasing to the point where the legitimate
dealer with a big investment in sales & service facilities is
having considerable difficulty in competing with the con-
fusion tactics used by these outlets. Chevrolet salesmen,
in my opinion, are the highest calibre group of sales spe-
cialists in the country and when we have difficulty making
a living on account of these cut price order takers I think
it is time for people in authority to investigate and attempt
to limit Chevrolet sales to franchised dealers. Please help
to correct this situation.
Thanking you for your attention to this matter, I remain
Very truly yours, Norman J. Flynn.
699
{fol. 1283] In THe Unrrep States District Court
Piaintirr’s Exutit No. 83
Harsor CHEVROLET
Sales and Service
3770 Cherry Avenue—GA. 6-3341
Long Beach 7, California
Received December 1, 1960, J. M. Rocuz
November 28, 1960.
Mr. Crawford
Mr. J. F. Gordon, President
General Motors Corporation
General Motors Bldg.
Detroit, Michigan
Re.: Sale of new Chevrolets by Non-franchised
‘*Discount Stores’’
Dear Mr. Gordon:
You will find enclosed an advertisment from the Los
Angeles Times (November 10, 1960) announcing ‘‘Gemco’s
ist Annual Auto Show’’ and a copy of a related article in
the Automotive News (November 21, 1960).
Gemco is just one of many non-franchised discount stores
which are selling new Chevrolets in this area. (One such
discount store is located just a few blocks from this dealer-
ship and delivers new Chevrolets at the store premises.)
New Chevrolets are being supplied in large volume by a few
franchised dealers in the Los Angeles Zone for distribution
outside of the supplying dealers’ zones of influence.
These non-franchised discount stores are using unfair
and underhanded sales tactics in their dealings with the
, public and, if allowed to continue, will destroy the franchise
system of selling new Chevrolets. Representations are
being made to prospective customers that franchised deal-
ers make an exorbitant profit on the sale of new cars. Cus-
tomers are also informed that any franchised dealer will
perform free warranty work on any new Chevrolet pur-
chased from a discount store. In short, the discount stores
are reaping most of the benefits of the franchise system
700
without incurring any of the responsibilities or obligation:
of same.
This matter was brought to the attention of Mr. R. M,
O’Connor, Los Angeles Zone Manager, several months ago
together with supporting evidence regarding the offending
dealers and the discount stores involved. Although Mr,
O’Connor was very courteous and promised to talk to the
offending dealers, he had indicated that he is complete
powerless and without authority to do anything about it.
[fol. 1284] I therefore request that you take immediate
action to carry out a complete investigation and restore the
franchise to the dignity which made the Chevrolet selling
organization the greatest in the history of automobile mer-
chandising.
Very truly yours, Harbor Chevrolet Corporation,
. F. Henson, President.
CFH/sh
enc.
{fol. 1286] In rae Unrrep States District Court
Puaintirr’s Exursit No. 85
Harsor CHEVROLET
Sales and Service
3770 Cherry Avenue—GA. 6-3341
Long Beach 7, California
November 28, 1960.
Mr. K. E. Staley, General Sales Manager
Chevrolet Motor Division
General Motors Corporation
General Motors Bldg.
Detroit, Michigan
Re.: Sale of new Chevrolets by Non-franchised
‘Discount Stores’’
Dear Mr. Staley:
You will find enclosed an advertisement from the Los
Angeles Times (November 10, 1960) announcing ‘‘Gemco’s
ist Annual Auto Show”’ and a copy of a related article in
the Automotive News (November 21, 1960).
Gemco is just one of many non-franchised discount
stores which are selling new Chevrolets in this area. (One
such discount store is located just a few blocks from this
dealership and delivers new Chevrolets at the store prem-
ises.) New Chevrolets are being supplied in large volume
by a few franchised dealers in the Los Angeles Zone for
distribution outside of the supplying dealers’ zones of
influence. |
These non-franchised discount stores are using unfair
and underhanded sales tactics in their dealings with the
public and, if allowed to continue, will destroy the franchise
system of selling new Chevrolets. Representations are
being made to prospective customers that franchised deal-
ers make an exorbitant profit on the sale of new cars. Cus-
tomers are also informed that any franchised dealer will
perform free warranty work on any new Chevrolet pur-
chased from a discount store. In short, the discount stores
are reaping most of the benefits of the franchise system
704
without incurring any of the responsibilities or obligations
of same. a
This matter was brought to the attention of Mr. R,
O’Connor, Los Angeles Zone Manager, several months ag
together with supporting evidence regarding the offending
dealers and the discount stores involved. Although Mr,
O’Connor was very courteous and promised to talk to the}
offending dealers, he has indicated he is completely power.
less and without authority to do anything about it.
[fols. 1287-1288] I therefore request that you take i imme.
diate action to carry out a complete investigation and re
store the franchise to the dignity which made the Chevrolet
selling organization the greatest in the history of auto
mobile merchandising.
Very truly yours, Harbor Chevrolet, C. F. Hensog
President.
CFII/sh
ene,
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———
(fol. 1290] In rHe Unrrep States Distrior Court
Puarntirr’s Exursitr No. 86
Drewer-JoNES CHEVROLET
14925 Paramount Blvd.—Paramount, California
MEtcalf 0-5861 — NEvada 6-3700
November 28, 1960.
Mr. K, E. Staley
Mr. Gordon
Mr. Cole
Mr. Staley
Chevrolet Motor Division
General Motors Bldg.
Detroit 2, Michigan
Gentlemen :
As authorized Chevrolet Dealers, the present practice of
a few fellow Dealers selling Cars and Trucks to Discount
Houses and Referal Companies at a ridiculously low mark
up is a matter of grave concern to us.
We have always endorsed most enthusiastically General
Motors program of franchising dealers and your demands
made upon us as business men has established tke sale and
servicing of your products on the extremely high plateau
that you and we have endorsed, and strive to attain and
maintain through the years, but now, because of the greed,
or some other equally low base desires, of a few so-called
quality dealers they are jeopardizing the entire General
Motors Authorized Dealer Franchising system by selling
Cars and Trucks to these Discount houses and referal Com-
panies,
Here in Southern California the Discount Houses and
referal Companies are boldly advertising by TV, radio and
Newspapers, (ad enclosed), that they ean and will give the
public big discounts on the purchase of any New Car, with
complete Factory Warranty and Service and even take
trades at top market value. Needless to say we and every
other Dealer, with large or medium investments, as the
case may be, are loosing sales to these discount houses and
referal Companies, some with very low if any investments,
and none with Service Departments nor Parts Inventory to
708
back up General Motors owner protection plan and General
Motors Guardian Maintenance program.
Auto Salesmen are finding is hard to maintain high stand-
ards of morale and the enthusiasm for the authorized fran-
chise system that they have known for so long and in some
cases feel no desire to attempt to advance to the status of
Dealer because of this situation.
[fol.1291] Is there a ready solution? We feel there
is! We feel that if all General Motors Dealers were in-
structed by the Corporation that selling Cars and Trucks
to or through Discount Houses and referal Companies was
against the wishes and policy of General Motors and that
you wanted it stopped now, and that all angles and loop-
holes and devious matters of selling Cars and Trucks to or
through these Companies to the buying public be stopped
at once, Jt would be done!
We feel sure that the General Motors ‘‘Franchising
Dealer Program’’ would be strengthened and saved by your
immediate action.
Respectfully, Drewer-Jones Chevrolet, Glenn V.
Jones, President; Bob Drewer, Partner.
GVJ/BD :ms
encl/1
e/e to: Mr. Roy M. Cash, Regional Manager; R. M. O’Con-
nor, Zone Manager.
P.S.—One of our top producers resigned today, to accept a
Sales job with one of the large referal Companies
known as the 4-A Auto Sales on Olympic Ave. in Los
Angeles.
709
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711
{fol. 1293] In tHe Unrrep States District Court
Puiawtirr’s Exursir No. 87
Received December 2, 1960, J. M. Rocusz
[Copy Illegible]
November 28, 1960.
John F.
Mr. Jack Gordon, President
Chevrolet Motor Division
General Motors Corporation
Detroit 2, Michigan
Dear Sir:
This firm would like to go on record in protesting the sale
of new Chevrolets by a few dealers, to Discount Houses in
the Los Angeles area.
This practice is seriously jeopardizing the ability of
Dealerships to operate on a sound profitable basis.
It is my firm conviction that, unless this practice is
stopped immediately, Chevrolet Dealerships will suffer
serious losses of profit, as well as competent Sales Per-
sonnel.
Very truly yours, Fred Gledhill Chevrolet, F. J.
Gledhill, President.
FJG:ai, ec: BE. Cole, K. E. Staley.
[fol. 1294] Iw roe Unirep States Disrricr Court
Plaintiff’s Exhibit No. 90
Brut Barnetr CHEVROLET
November 28, 1960.
Atte: Mr. K. E. Staley
Mr. Ed Cole
Chevrolet Central Office
General Motors Building
Detroit, Micii.gan
Dear Mr. Cole:
May I call to your attention, or possibly you have already
heard, of a very serious condition that exists in the Los
Angeles and Orange County area here in California. I
refer to the selling of New Chevrolets by ‘discount houses’
at retail in our area. The ‘‘discount houses,’’ of course,
buy there new cars and trucks from a few (approximately
eight) Chevrolet dealers in this area. It is common knowl-
edge and can be verified who these dealers are, but they
continue to sell to these ‘‘discount houses.’’ It seems to
me and most of the other Chevrolet dealers in this area
that if a dealer has so m*ny new cars that he must dispose
of them in this way, about $50.00 over invoice, that he is
being shipped too many automobiles and should be shut
off by the factory. Especially when other dealers, including
myself, are crying for 1961 models in this area and retail
them on a legitimate basis, guaranteeing after delivery
service to the customer, selling him a M.I.C. Insurance
policy aad a GMAC contract.
If this problem is not faced squarely by Chevrolet and
corrected I and other dealers feel the entire Franchise
system Quality Dealer Program, and Owner Relations Pro-
gram are on the skids without much time remaining before
a very untimely end.
May I also mention that it is very discouraging to a sales.
force to lose a deal to a ‘‘discount house’’ because we
must wait three to four weeks for delivery from the factory
and the customer takes immediate delivery from ‘‘discount
house A’’. Please find enclosed some comments of our
713
salesmen regarding this mattcr. Also enclosed are some
copies of ‘‘discount house’’ ads.
- I would be happy to cooperate in every way with Chev-
rolet in cleaning this very harmful situation up, but I firmly
believe the only real cure must come thru the factory. As
I write this letter I am looking at a sign on my desk mai ed
to me by you, reading ‘‘What have you done today to
improve Owner Relations?’’ I sincerely hope this letter
is a step in that direction.
Thank you, Hill Barnett
ec: Mr. K. E. Staley
715
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DACHSHUND PUPPIES, standard, red,
a A.K.C. — $45. Phone JAckson
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ELEC. RANGE ie ‘sale
Tenor sax. $100. Phone TA 8-6314
ATTENTION — Travel-
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mec ti ache: we ise ¥,-ton Chevy truck in
condition. 11652 Nearing Dr.
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Excellent com refrigerator & furniture.
y $450. Mon.-Fri.
after 6 Sat.-Sun. anytime. Call
PR 2 . 2351 Coronet Ave. West
Anaheim.
AMERICAN FLYER on 6 x 8 layout;
many extras. For sale $35. 30” Roll-
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SMALL GIRL’S BIKE, 14”. Good cond.
but needs painting. $7.50. Kenmore au-
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$10. Call LA 2-4993.
WALLACE STERLING SERVICE for
12. Call before 3:30 p.m. LA 2-4961.
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equipmt. Free estimate. Call LA 1-0848
LOST Grey wallet, at Gemco, Nov. 6.
Please return to Gemco desk.
LADY’S HAND-KNIT DRESS—Rose;
size 18; blue, size 16. Like new. $25 ea.
Dress shoes, new, size 814AA. $5 pair.
RELA LAXICTSOR. Good condition. Phone
A 7-7078.
CITROEN ‘57 DS-19, beautiful condit..
32,000 mi.; also Norge auto. washer
1953, $30. PR 4-0277.
BLONDE DINING ROOM table with 3
extensions & 4 chairs. Good condition.
$40.00 or make offer! KE 3-3016.
97 PC. FUKAGAWA ‘DINNERWARE
Imported “black rose” pattern. $48.
Underwood standard typewriter, $40.
Kenmore upright vacuum & bags. $15.
GI LOAN BAL. $10,980 on 3 bdrm. 2-
bath home for sale. Near Westminster
shoppg. bank, P.O. schools. TW 3-9868
GAS RANGE — Apartment size white
yg for sale. Cost $25.00 Teleph.
STOVE—$25. Light yellow, clean. Phone
JA 7-4759. cea aeeae CEN tas Oa
IMPALA Convert. 1960. Power brakes &
steering. Other extras. Sacrifice. Priv.
party. JE 4-2672.
BICYCLE BARGAINS—Two 26” boys
racer bikes. One 24” boys balloon tire
with basket. Each a 7861 Hopi
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CABIN CRUISER—20 ~ “not quite fin-
ished, for sale. 35 h.p. new motor (Ev-
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Trailer. Call JAckson 7-3011.
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1956 MOBIL HOME for sale. 35’ long.
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_am.andafter4pm.
G.I. RESALE 414%. 3 bdrm. home, 244
baths, forced air heat, built-in kitchen,
w. to w. carpet., ae. fenced yard.
Anaheim. KE 3-4265
ELECTRIC AUTOETTE | for sale. First
class condition. Phone LA 5-3392.
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719
[fol.1298] In tHe Unrrep States Districr Court
Puarntirr’s Exureir No. 91
InTER-ORGANIZATION Letrers ONLY
November 30, 1960.
Mr. L. N. Mays:
Here are some ‘‘discount house’’ letters which came up
from Mr. Cole.
I sincerely believe that we must accelerate our action in
this regard, with full support of the Corporation and Legal
Department.
Will try to get time today to listen to the recording
which you told me about last evening—and am anxious to
have your letter of resume, so that I might advise Mr. Cole
as to the situation.
Very truly yours, KES
KES mw
Attachs.
720
{fol. 1299] Is rae Unrrep States District Court
Piarntirr’s Exureir No. 92
Inter-OrGanizaTIOn Letrers ONLY
Chevrolet
‘November 30, 1960
Mr. L. N. Mays:
As per our discussion, we must be in a position to answer
letters such as the attached concerning the ‘‘discount
house’’ problem.
While you are attempting to get authorized letter from
me to dealers, we should also draft a letter (approved by
Legal) which can be in answer to specific communications
such as the attached.
It is disconcerting to see that Mr. Henson states (hat
Mr. O’Connor seems to be powerless, and without authority
to do much about it, when you and I know that he has
talked to dealers in this regard.
In other words, Lee, I’m talking about two letters. One
to specifically answer Harbor Chevrolet and others—and
two, a general letter to dealers stating our position in the
matter.
This applies to all of the attached. We cannot wait much
longer for the proper reply, and we need the full support
of the Corporation and the Legal Department.
This threat to the franchise-system of distribution in this
industry, in my opinion, is far more serious than the ‘‘boot-
legging’’ situation we faced some few years ago. Moral
suasion can only go so far. We need strong and immediate
backing. We can secure that only from the Corporation,
with proper guidance from the Legal Department. I’m
willing to take any necessary busiicss risks to step up to
this deplorable situation, and would be remiss in my respon-
sibility if I did not positively state that we must take such
necessary business risks now.
Very truly yours, F.. E. Staley
KES mw
Attachs.
721
{fol. 1300] Is tHe Unrrep States Disrricr Court
Puiaintirr’s Exutsit No. 93
Meetine Hevp in Mr. H. E. Crawrorp’s Orrice on
Novemser 30, 1960
Attended by: Messrs. H. E. Crawford, Lee. Mays, R. F.
Schreitmueller, G. A. Greig, S. G. Gilliatt, E. D. Foley.
Meeting held to discuss the matter of car sales through
large discount stores.
Mr. Mays pointed out that CMA (Consumers Mart of
America) has 3 stores in Orange County, California, and
is planning to put automobile desks in their ? stores in
Chicago and the 1 store in San Francisco.
Listened to part of a regording of conversation» between
a dealer, Mr. Chocran, and the Sales Manager of the auto-
mobile phase of CMA, a Mr. Myer, in which he outlines in
quite some detail the method of operation. They buy the
car from the dealer ; register it in the name of an individual,
generally a salesman of the discount house; remove the
label and place the car on display either in a showroom
or a suitable lot. Cars are sold at $275 over dealer cost,
with $125 going to the dealer, $25 to the automobile desk
as rent and the balance is the salesman’s commission and
automobile desk profit.
Chevrolet is receiving many complaints from both dealers
and salesmen by letter and telegrams, wanting to know
what General Motors is going to do about this practice as
it is costing them business.
Mr. Crawford requested that we obtain Dun & Brad-
street reports on all of these companies and ask them to
have the information up to date—special reports if neces-
sary—specifying that we are particularly interested in
their activities with respect to the sale and offering for
sale of automobiles.
Chevrolet is to select the best letters and wires as ex-
amples and with the assistance if Mr. Schreitmueller and
Mr. Bridenstine, Mr, Mays will work to develop a satis-
factory letter of reply explaining General Motors position.
It is felt that possibly copies of that letter could then be
722
sent to all dealers as a matter of information since al]
dezlers would be interested in a statement of General
Motors position. It is proposed that such a letter would
deal with the reasons why we are opposed to this program.
E. D. Foley
x
723
{fol. 1301] Ins tHe Unrrep Srates Disrricr Court
Puarntirr’s Exursit No. 95
S & J CHEVROLET
Sales—Service—Parts
11900 East South Street—Artesia, California
Telephone : UNderhill 5-1276
November 30, 1960.
Mr. E. N. Cole
General Manager
Chevrolet Motor Division
Detroit, Michigan
Dear Mr. Cole:
I am writing this letter to discuss a matter of the utmost
importance to me, and to my brother dealer.
The problem that has arisen in Southern California is
the trend towards Discount Houses. These places of busi-
ness are delivering new Chevrolets and other makes of
cars at $100.00 over invoice; they have become very brazen
with their advertising, and even have new cars on display.
This type of competition is becoming increasingly more
difficult to compete against because of their phenominal
growth. These Discount Houses have no selling expense
or after-sale expense as their customers are told to take
their car to their local Chevrolet Dealer.
There are only a few dealers in my immediate area who
are delivering new Chevrolets to these Discount Houses;
I am hoping that something can be done to stop these
unscrupulous sales. My salesmen are encountering these
deals more and more frequenily, it is very discouraging
to a salesman who is trying to make a profitable deal to
be told by a customer that he can buy elsewhere for $100.00
over invoice. At the rate Discount Houses are being built
the situation will soon become critical.
I know that after you have reviewed the situation some-
thing will be done to alleviate this problem if it is at all
possible.
Yours very truly, Donald J. Corrigan, President,
S. & J. Chevrolet.
724
{fol. 1302] In tae Unirep States District Court
Puarntirr’s Exursit No. 96
December 2, 1960.
Gentlemen:
I have had people in to look at new cars, and that had
intentions of buying. While in the process of making a
deal the people would ask if we could match a deal the
same way a discount house would.
After trying to make them understand about service
ete. they still went to a discount house. Customer also said
they could get just as good of service anywhere they bought
the car, and beat the price. Every customer Ive had, that
said anything about discount houses said they could beat
our deal by quite a margin, even a minimum deal.
R. M. Gilbert, Sales Rep., Bill Barnett Chevrolet.
{fol. 1303] In tare Unrrep States District Court
Puaintirr’s Exureir No. 97
December 2, 1960.
Gentlemen:
In the past few years discount houses have become an
absolute disgrace to the Automobile Industry, especially
the men who are depending on automobile sales as their
livelihood.
I, as an automobile salesman have lost sale after sale to
these discount houses. It is true that the low prices that
are charged by these companys are almost impossible to
meet at a legitimate dealership.
I believe in everyone making a substantial living, but I
also believe that people should buy from a department
store what a department store sells and leave the auto-
mobile sales to the automobile dealership and to the sales-
man.
A. P. Hofkins, Sales Rep., Bill Barnett Chevrolet.
725
(fol. 1304) In tue Unrrep States District Court
Puatwntirr’s Exuisit No. 98
December 2, 1960.
Gentlemen :
The other day some people named Sautter were in to look
at a new parkwood wagon. They told me they were just
looking at it here to make sure of what they were going
to get through a discount house. The price they had was
$600.00 off of the retail list.
When I tried to explain our policy of service ete., they
told me that the discount house had told them that what-
ever dealer they got their car from would service it as
well as any other. As a result they felt they had everything
to gain and nothing to lose by buying from the discount
house.
Don Teague, Sales Rep., Bill Barnett Chevrolet.
[fol. 1805] Is tHe Untirep States District Court
PuLatntirr’s Exutstr No, 99
December 2, 1960.
Gentlemen:
On announcement evening C.M.A. discount house dis-
counted a 1961 Chevrolet to Mr. & Mrs. Willowby 17% off
of a window price. They also promised delivery within 30
days. We could not meet the price or promise delivery
within that period.
Within the past week we lost another new Chevrolet for
the exact same reason. This time to Fed-Co.
Byron J. Booker, Sales Rep., Bill Barnett Chevrolet.
126
(fol. 1306] In tHe Unirep States District Court
PuarntirF’s Exuisit No. 100
December 2, 1960,
Gentlemen:
Cal Stores forced us to take a $100.00 gross profit deal
on a new 1961 Chevrolet—C 2534.
This truck had lots of optional equipment on it and
should have shown at least $350.00 profit.
Mr. Maddox is an old customer of our firm and in order
to protect our business we had to take the deal on this basis,
Larry Charrey, Sales Rep., Bill Barnett Chevrolet,
[fol. 1307] I~ 1Hz Untrep States District Court
PuarntiFF’s Exursir No. 101
December 2, 1960
Gentlemen:
I’ve lost three prospective customers to discount houses
that I know of. I feel that many of the people coming in
have solid prices from these places and use them to com-
pare our prices. To go below $200.00 gross is not a com-
mon practice so I feel many car buyers leave our front
door with a price of $150.00 over. They do this rather than
tell the salesman the price they have received from the dis-
count house.
The Dealers must stop this supply of cars, a salesman
can only hope for it. The Dealers are doing it so the Dealers
must stop it, not salesman.
Stan Adams, Sales Rep., Bill Barnett Chevrolet.
727
(fol. 1308] In tHe Untrep States District Court
PuaintirF’s Exursir No. 102
December 2, 1960.
Gentlemen :
I have had severai people recently that would not come
to terms on a car because of Fed-Co or Cal Stores and we
lost the deals because they were selling at much less than
I could make the deals for.
I tried to convince them that they would not receive
proper service or care on their car buying in this manner,
but they were assured they would get good service.
I have called back on these people and they had bought
the car at the figure quoted to them.
Casey Galvin, Sales Rep., Bill Barnett Chevrolet.
[fol. 1309] Is rar Unrirep States District Courr
Puaintirr’s Exurerr No, 103
" December 2, 1960,
Gentlemen:
I have lost three sales to discount houses that I know of
and I believe there was about seven others that I could have
put into a new car if they hadn’t gone to a discount house,
I have delivered one Corvair to prospects after they had
been to Fed-Co. The only reason we did put them into the
car was the fact that we had the car they wanted.
Most of these people have come on the showroom floor
and were definite buyers. I’ve given them demo rides and
presented the features of the 1960 & 1961 Chevys, we got
together in the closing booth and worked out a good offer
or deal and they seemed to like it, but they wanted to go
to the discount houses before they bought.
When I next contacted them they were in a new Chevy.
Their deal was anywhere from $50.00 to $200.00 less than
ours.
These people express their gratitude for the time I spent
with them and I have been told that it was through my
efforts that they decided to get a Chevy.
I believe that these discount houses are harmful to the
New Car Sales because:
1. They don’t sell the product.
2. There only advantage is cheap price, and when they
sell cheap the customer is treated cheap.
Norm Christoffersen, Sales Rep., Bill Barnett Chev-
rolet.
~)
be
e
{fol.1310] Is rue Unrrep Srares District Court
Puaintirr’s Exursit No. 106
6 December 1960.
Mr. Bob Q’Connor
Chevrolet Motor Division
3325 Wilshire Blvd.
Los Angeles, 5, California
Dear Bob,
As a result of our phone conversation, | had a set of pic-
‘ures made as documentary evidence as to the Automobile
Show, held by Gemeo, November 11, 12, and 13th. A copy
of their add from the Los Angeles Times is also enclosed
which you no doubt already have.
If you find these pictures of any value to you, go ahead
and use them. If they duplicate evidence vou already have,
please return them.
Yours very truly, Cone Chevrolet Co., C. D. Cone, Pres.
ede/ewk
enel
730
{fol. 1311] In tHe Unrrep Stares Disrricr Courr
PLAINTIFF’s Exxurpit No. 107
Received December 12, 1960
December 6, 1960.
Mr. John Gordon, President
General Motors Corporation
General Motors Building
Detroit 2, Michigan
Dear Sir:
We are very much concerned over the establishing of dis-
count houses in our area and are protesting the sale of
Chevrolets by a few dealers to these discount houses.
After having served this area for over 32 years until we
now have an investment of approximately three quarters
of a million dollars, we now find our business threatened
by such discount houses and unethical advertising.
We therefore ask your help in curbing such sales by these
Chevrolet Dealers.
Sincerely yours, Harry M. Ostrom and Son, Harry
M. Ostrom, Partner, Harold L. Ostrom, Partner.
HMO:bb
c/o: Mr. F. M. Cole, General Manager, Chevrolet Division,
Mr. Gene Staley, General Sales Manager, Chevrolet Divi-
sion, Mr. R. M. O’Connor, Zone Manager, Chevrolet Divi-
sion.
731
[fol. 1312] Is roe Unirep States District Court
PuatntirF’s Exuisir No. 111
Owen Keown CHEVROLET CoMPANY
Lincoln & Washington Blvds., Venice
Phone EX 8-6243
December 6, 1960.
Discount House File
Mr. E. N. Cole, General Manager
Chevrolet Motor Division
General Motors Building
Detroit, Michigan
Dear Mr. Cole:
I have been informed that you have been advised by
various dealers and your Los Angeles Zone office personnel
of the serious problem created by many discount houses
in this Los Angeles area.
As I see it one of the most serious results of this can-
cerous growth in our industry is that so many of the cus-
tomers who are buying from discount houses are very
unhappy with their cars because of the lack of service. The
dealer who sells to a discount house retains very little gross
and therefore does little or no pre-delivery service on the
ear.
You are aware of the caliber of the Los Angeles labor
market and that our cars do not reach us in such condition
that they can be delivered without pre-delivery service.
The customer is always told he can take his car to any
dealer for service which may be required. When the cus-
tomer reaches our service department he has a long list of
items that should have been corrected before the car was
delivered. We do our best to explain that we would be
willing to do any work on his car that would be necessary
provided it was covered by Factory Warranty, but that he
should take the ear back to the selling dealer for free service
work which is not covered by warranty. Almost always
the customer is indignant because he had been told ‘‘to
just take his car to any dealer and they had to give him
the service.’’
732
We have had this problem of handling such customers
diplomatically and not offending them for some time, but
with the recent advent of so many new discount houses, all
advertising new cars for sale, our difficulties have multi.
plied ten fold.
Your advice on how to proceed with this kind of cus.
tomer will be most welcome.
Very truly yours, Owen Keown.
ce: Mr. R, J. O’Connor
{fol. 1313] Ly rar Unirep Starrs District Court
Pian tirr’s Exuusrr No, 112
Srasoarp Motors
Frank K. Swift—Frank K. Swift, Jr.
TErminal 2-0316
1831 South Pacifie Ave——San Pedro, California
December 7, 1960.
Mr. EK. N. Cole
General Manager
Chevrolet Motor Division
General Motors Building
Detroit 2, Michigan
Dear Mr. Cole:
I realize that during the recent weeks you have received
many messages from Southern California Chevrolet Deal-
ers and Salesmen regarding the sale of new cars through
“Discount Houses.’’ However, we feel that this situation
is so degrading and vicious that we would like to add our
voice in a plea to help us stamp out this cancerous practice.
A discount house is a jeopardy to all facetes of the auto-
mobile industry for the following reasons:
1. Demoralizes Salesmen and Dealers alike.
2. Creates confusion among buyers.
3. Provides a product distaste of the area surrounding
‘Service Responsibility’’.
4. They have no loyalty, investment, inventories and
can never create customer goodwill.
We all belong to a great industry and no franchise is
more sought after than Chevrolet. That is why we should
not permit a few short sighted dealers to prostitute our
great product which will eventually ruin our franchise
system,
Mr. Cole, I am enclosing an independent publication
which will show you the pulse in Southern California.
Thank you, we remain,
Respectfully yours, Frank K. Swift, Jr.
Enclosure:
FKS :mr
734
{fol. 1314] In tHe Unirep States District : JurtT
Puarntirr’s Exursit No. 114
CHEVROLET-CENTRAL OFFICE
Division of General Motors Corporation
General Motors Building
Detroit 2, Michigan
Mr. E. E. Staley
L. N. Mays
Discount House Activities
December 12, 1960.
Dear Mr. Staley:
Per your request, attached is a brief resume of discount
house activities in the sale of new Chevrolet products since
this subject was first brought to our attention in St. Louis
in August of 1958. You had indicated that you might want
to forward this resume to Mr. Cole.
Approximately a week ago you received a letter dated
December 2nd from a Mr. Frank Green, to which he at-
tached a so-called ‘‘ Auto Dealer Business Letter,’’ bearing
the same date, apparently published by someone in Cali-
fornia for distribution among dealers. The latter dealt
entirely with the discount house activities on the West
Coast and gave perhaps the most complete story on this
subject that we had seen. We, therefore, forwarded a copy
of it immediately to Mr. Crawford’s office, requesting a
reply for your signature to this Mr. Green and, at the
same time, feeling that the contents of this so-called ‘‘busi-
ness letter’’ would be helpful in the statement of General
Motors’ position on this subject currently being drafted
by the Sales Section and the Legal Department. Just in
ease you did not have the opportunity to read it, I am
attaching a copy of this Auto Dealer Business Letter which,
too, you might desire to send to Mr. Cole. Mr. Crawford
advised me by telephone last Friday that they are hoping
to have their statement on General Motors’ position on dis-
count house activities sometime this week.
Mr. Gilliatt just called me this morning to state that he
had just had a call from Willmark Service System, Ine,
stating that their New York office had not approved their
735
accepting our proposed assignment that they shop discount
houses for us as had been proposed. They said that they
normally preferred to deal only in contract business ex-
tending over a period of time rather than jobs of such short
duration. This was quite surprising as the local Willmark
manager last week had given us every assurance that they
could and would like to have the job and he would be in
contact with us today. It now appears that if we want to
go ahead with this idea that we will have to make arrange-
ments through either the Pinkerton or Burns agencies. We
are checking now as to which of these two companies would
be more apt to handle this type of assignment.
[fol. 1315] Almost daily we have been insisting on Legal
Department assistance on some kind of reply letter, even
if it had to be some sort of a stalling letter, to acknowledge
the many letters from dealers and wires from salesmen on
this subject. As late as last Friday, we were again told
they believed such replies should not be made until General
Motors’ statement on this subject could be approved.
Obviously, this is causing quite a delay in getting these
replies on their way.
We will keep you advised of further developments.
Yours very truly, L. N. Mays
LNM/ee
Att.
ee: Mr. L. H. Averill, Mr. H. P. Sattler
736
{fol. 1316] Resume or Discounr House Activities
As Tuey AppLy To CHEVROLET
This matter was first brought to Chevrolet’s attention as
a problem area in the St. Louis Zone as early as August
1958 when the St. Louis metropolitan dealers were com-
plaining about the activities of G.E.M. (Government Em-
ployes Mart). At that time it was disclosed that Mr. Robert
L. Wolfson, who was named in Paragraph Third and owned
25% of Feld Chevrolet Company, Maplewood, Missouri, has
a sizable investment and is active in the management of
G.E.M.
At that time this matter was brought to Central Office
attention and Mr. Wolfson was advised that Chevrolet in
no way would consider making product available for dis-
tribution through G.E.M. and that in the event he had auto-
mobiles on display and personnel located at this location,
we would consider that he had established a branch loca-
tion which would be in violation of his Selling Agreement.
The activities of this discount house have been observed
continuously by the St. Louis Zone.
The matter was again reopened by the Sales Section of
the General Motors Corporation and the General Motors
Legal Staff in December 1958 at which time they reviewed
Chevrolet’s Central Office and Field files on this matter.
The activities of G.E.M. disclosed that basically the meth-
od of operation was a well organized and planned referral
system for all makes of cars. G.E.M. works with a selected
dealer with whom they have reached an agreement. The
actual transaction takes place between the customer and
the selected dealer with G.E.M. receiving a flat fee, part of
which goes to the company and part of which goes to the
operator of the automotive desk.
The G.E.M. stores are operated ostensibly for the benefit
of members only. Such members qualifying on the basis
that they work for some branch of the Federal, State or
Local Governments or School Systems, with a membership |
fee normally in the amount in the area of $2.00 to $3.00.
It would appear that one of the real hazards of condon-
ing this type of operation is that discounted prices are
freely quoted to a large portion of the public.
The G.E.M. operation has expanded and now has branches
737
operating, to our knowledge, in Denver, Kansas City, Los
les and the Washington Metropolitan Area. These
{fol. 1317] merchandising tactics have been more active in
the Los Angeles Metropolitan Area. In addition to G.E.M.,
we are aware of six other discount houses operating with
similar types of setups.
Since these merchandising methods have been expanding,
it has been a disturbing influence to the normal retail activi-
ties of Chevrolet dealers and salesmen in the Los Angeles
Metropolitan Area so that they have organized an activity
of wires and letters to executives of Chevrolet and the
General Motors Corporation.
The Chevrolet Los Angeles Zone has been making a con-
tinuing investigation of the activities of discount houses.
Their investigation so far as disclosed in addition to refer-
ral type of operation that one discount house, C.M.A., is
actually purchasing cars from dealers which they resell.
This discount house plans to expand in the Los Angeles
Area, as well as San Francisco, Phoenix and Chicago.
The activities of these discount houses have been the sub-
ject of review by Chevrolet, as well as the Sales Section
and Legal Staff of the General Motors Corporation and is
avery delicate matter inasmuch as it would appear at the
outset there is very little legally that Chevrolet or the Cor-
poration can do relative to referral agreements which deal-
ers may have with certain individuals. |
The C.M.A. method of operation is very comparable to
the usual bootleg activities. The difficulty in coping with
both of these situations is ascertaining how many cars a
particular dealer is channelling through these outlets since
on the referral basis the ultimate deal is made between the
customer and the dealer and on the direct purchases and
resale by the discount houses, the cars are apparently sold
and registered to an employe or an associate of people
connected with the discount house operation.
Chevrolet’s current plans on this matter because of the
seriousness of it in the Los Angeles Zone which prompted
the many letters from dealers and salesmen is to formulate
a reply to the dealers and salesmen that we have the matter
under consideration, giving very serious thought to the mat-
ter and hope to be able to furnish them with more definite
_ information at a future date.
738
It should be noted this activity is a national problem and
we are concerned because of the expansion of the activity,
So that Chevrolet will have more definite facts on which
to base any opinions or policies, it is proposed and arrange:
[fol. 1318] ments are being made that the services of an
outside investigating agency be engaged to make a shop-
ping survey of some of the typical discount houses, carry-
ing through if necessary to the purchase of an automobile
from them.
S. G. Gilliatt.
SGG :bjm
12/7/60
739
{fol.1319] Is tae Unitep States Disrricr Court
PiarntirF’s Exutsir No. 115
GENERAL Motors CorPoraTION
Detroit 2, Michigan
December 15, 1960.
Handwritten Note
Discussed with Averill 12/19 who is handling with field.
K.E.S.
U.S. Car Division
General Sales Managers
This has reference to the activities of discount houses in
Southern California who engage in the sale of new cars.
You are also familiar with the letters and telegrams which
have been received from GM dealers and salesmen regard-
ing this activity, addressed to Mr. Gordon as well as to
Divisional executives.
Attached is a copy of reply over Mr. Roche’s signature
that is going forward today to each of the dealers who
has written to Mr. Gordon.
A large number of retail salesmen have also sent letters
or wires to Mr. Gordon. We are attaching a list of all of
the senders of the letters and telegrams received from your
dealers or retail salesmen, where such individuals can be
identified from their wire or letter.
We would like especially to call your attention to the
following paragraph from Mr. Roche’s letter:
‘‘The wholesale organization of each of our Divisions
will give special attention to these problems. They
propose to personally discuss this matter with each
of their dealers and ask them to review their operations
in the light of the critical nature of the problem as
it affects the good will of the product they sell, the
entire franchise system of distribution, and the validity
of any arrangement they may have with a discount
house under the provisions of their General Motors
Dealer Selling Agreement.’’
740
In accordance with this paragraph, will you please ar-
range to have the Zone Manager of your Los Angeles Zone
contact each of his dealers in the Los Angeles area to
discuss the subject matter of this paragraph. We feel that
these contacts will also serve as a reply, to the salesmen
of those dealers who have not written Mr. Gordon.
I shall discuss this matter in greater detail with you after
you have had an opportunity to review the attached.
H. E. Crawford.
g
Attach.
(fol. 1320] In rae Unrrep States District Court
PuiarntiFF’s Exursit No. 116
GENERAL Motors CorPoraTION
Detroit 2, Michigan
December 15, 1960.
U.S. Car Division
Discussed with Murray, Averill, Kennard Hudgins, Feely.
{Handwritten in Right-Hand Corner.]
General Sales Managers
This has reference to the activities of discount houses in
Southern California who engage in the sale of new cars.
You are also familiar with the letters and telegrams which
have been received from GM dealers and salesmen regard-
ing this activity, addressed to Mr. Gordon as well as to
Divisional executives.
Attached is a copy of reply over Mr. Roche’s signature
that is going forward today to each of the dealers who has
written to Mr. Gordon.
A large number of retail salesmen have also sent letters
or wires to Mr. Gordon. We are attaching a list of all of
the senders of the letters and telegrams received from vour
dealers or retail salesmen, where such individuals can be
identified from their wire or letter.
We would like especially to call your attention to the
following paragraph from Mr. Roche’s letter:
The wholesale organization of each of our Divisions
will give special attention to these problems. They
propose to personally discuss this matter with each
of their dealers and ask them to review their operations
in the light of the critical nature of the problem as it
affects the good will of the product they sell, the entire
franchise system of distribution, and the validity of
any arrangement they may have with a discount house
742
under the provisions of their General Motors Dealer
Selling Agreement.
In accordance with this paragraph, will you please ar.
range to have the Zone Manager of your Los Angeles Zone
contact each of his dealers in the Los Angeles area to dis-
cuss the subject matter of this paragraph. We feel that
these contacts will also serve as a reply, to the salesmen
of those dealers who have not written Mr. Gordon.
I shall discuss this matter in greater detail with you
after you have had an opportunity to review the attached.
H. EF. Crawford.
g
Attach.
743
[fol. 1321]
Mr. C. F. Henson, President
Harbor Chevrolet Corporation
3770 Cherry Avenue
Long Beach 7, California
Dear Mr. Henson:
December 15, 1960.
This will acknowledge receipt of your letter of Novem-
ber 28, 1960, addressed to Mr. John F. Gordon, President,
General Motors Corporation, referring to the increasing
number of membership discount outlets in your area of
sales and service responsibility offering new General
Motors cars for sale to members and their friends. As you
are no doubt aware, the Car Divisions of the Corporation
have received similar letters and telegrams from a number
of their dealers and employes of such dealership in dif-
ferent sections of the country.
The substance of these communications while varying in
content, implies that General Motors Corporation as a
manufacturer is either not aware of these practices or, that
knowing about the situation refuses to recognize such prac-
tices as ‘Sur fair competition’’ to enfranchised dealers, as
well as an unsound method for potential customers to
invest in new General Motors products. Some have even
suggested that General Motors condones these practices as
a means of obtaining additional sales.
All these implications are entirely unwarranted, and
reflect a lack of understanding by some of the General
Motors Quality Dealer Program and the continuity of our
efforts to implement the Program.
General Motors Corporation does not and has not sold
its new passenger cars and trucks for resale to any outlets
other than authorized General Motors dealers. Frankly,
I believe every General Motors dealer knows this, but it
appears that some of their employes may not be quite as
well informed.
The reported recent expansion of the activities of so-
called membership discount houses into the field of motor
vehicle retail sales has been brought to our attention by
members of our wholesale organizations of the Car and
Truck Divisions.
(fol. 1322] Inquiries have been made, and we are advised
v44
that these discount outlets either (1) purchase their Gen.
eral Motors motor vehicles from General Motors dealers
for resale to members and their friends, or (2) by pre.
arrangement with some General Motors dealers, they are
in a position to make a deal with a customer for a price
and then refer the customer to the General Motors dealer
for delivery of the vehicle at the price established by the
discount house. In the latter event, the delivering General
Motors dealer reportedly pays a substantial portion of the
gross profit realized on the deal to the discount establish-
ment for division among the operator of the discount house,
the operator of the automobile concession, and the auto-
mobile salesman.
Where the motor vehicles are purchased from a General
Motors dealer and resold as new-used cars, the transaction
is nothing more than what has generally become to be ree-
ognized in the trade as a ‘‘bootleg’’ sale. On numerous
occasions during the past several years, the management
of General Motors Corporation has gone on record with the
General Motors dealer organization expressing our deep
concern with respect to this practice, which is recognized
as being most detrimental to the good will which has been
established over the years for, and identified with, the
dealer, the manufacturer and the product.
When a customer purchases a new-used General Motors
car from one of the so-called discount houses, he reportedly
does not receive a General Motors Dealer New Car War-
ranty as would the original purchaser of the vehicle. Fur-
thermore, the discount house normally provides no service
facilities for the after-purchase needs of the customer. In
attempting to trade upon the capital facilities of authorized
dealers, the discount house seller reportedly tells the cus-
tomer to take his car to any authorized General Motors
dealer for his service requirements. If the purchaser is not
satisfied with the service he receives from the authorized
dealer, he then blames General Motors because, as an owner
of a General Motors product, he expects the same high
degree of service which owners of General Motors vehicles
have learned to enjoy over the years from the General
Motors dealer organzation.
[{fol. 1323] While the management of General Motors Cor-
poration has repeatedly pointed out the pitfalls of the
‘‘quick-profit’’ bootleg sale to its dealer organization, We,
ESE SS
ee ee eS a ied
no os
745
have at the same time recognized the right of every dealer
to lawfully resell his merchandise to anyone.
On May 3, 1957, the President of General Motors Cor-
poration sent all General Motors dealers a copy of his
letter-reply to a protest against bootlegging from the Auto-
mobile Dealers Association of Indiana. The following quo-
tation is from that letter:
‘‘For several years it has been quite clear to those who
have kept informed as to the interpretation of the anti-
trust laws that the Department of Justice has taken a
firm position, both in statements and opinions, that any
restriction upon the right of a dealer having title to
motor vehicles to sell such motor vehicles to anyone,
anywhere at any price, was a violation of the antitrust
laws. Judicial opinions handed down over these years
tended to confirm this interpretation.
‘‘This ‘right of the dealer to sell the motor vehicles to
which he has title’ as he pleases, is the key to these
problems. It is the exercise of this right which first
moves the motor vehicles into the bootleg channel. Eve
if there were extenuating circumstances which moti-
vated the movement of cars into the bootleg channel,
unquestionably there are many such sales by authorized
dealers made solely for the purpose of obtaining a
quick profit.’’
The procedure whereby some discount outlets, which offer
new cars for sale, make a deal with a customer, and then,
as prearranged with an authorized dealer, turn the trans-
action over to that dealer for closing and delivery of the
vehicle, is being improperly characterized by some selling
dealers as a ‘‘referral.’’ Such arrangements, however, are
far different from the casual practice in the industry where-
by salesmen encourage referrals from friends and others
(fol. 1824] who chance upon a prospective new car cus-
tomer. The reports we have received indicate that these
discount outlets are advertising new cars for sale at estab-
lished business locations, frequently far removed from the
location of the selling dealer. In effect, they in some in-
stances represent the establishment of a second and unau-
thorized sales outlet or location contrary to the provisions
of the General Motors Dealer Selling Agreements.
746
More importantly, arrangements of this type tend to
down-grade the enfranchised dealer as a new car merchant
in the eyes of the public. It is difficult to understand how
any dealer who has invested thousands of dollars in capital
equipment to merchandise new cars can be a party to an
arrangement which permits a discount outlet to discredit
his merchandising ability by offering new cars for sale at
purported ‘‘savings’’ to the customer, and then not only
assume the obligation for the sale but also share his gross
profit on the transaction with the discount house.
General Motors Corporation recognizes the problems
raised by the discount house new car merchandising activi-
ties in your area, They are critical problems for the pub-
lic, the franchised dealers, and the manufacturers. New
car sales by these outlets do not represent one iota of addi-
tional business for the dealer organization or the factories,
They represent no savings to the public but only result in
a dilution of the gross profit on each transaction which
would otherwise be made by the franchised dealers who
have the service facilities and trained mechanics to insure
the customer’s enjoyment of his investment in a new car.
Most importantly, they threaten the good will of the dealer
organization, the manufacturer, and the product.
The wholesale organization of each of our Divisions will
give special attention to these problems. They propose to
personally discuss this matter with each of their dealers
and ask them to review their operations in the light of the
critical nature of the problem as it affects the good will
of the product they sell, the entire franchise system of
[fol. 1325] distribution, and the validity of any arrange-
ment they may have with a discount house under the pro-
visions of their General Motors Dealer Selling Agreement.
Let me assure you that we will continue our efforts to
protect the good will of our products by every available
legal means.
I would appreciate your reviewing this letter with vour
salesmen, so that they will more fully understand the posi-
tion of General Motors with respect to the matters outlined
herein. If any of your salesmen have written or wired us
on this matter, this would serve as a means of acknowl
edging their letters.
Very truly yours, J. M. Roche.
M
747
[fol. 1326] In tHe Unrrep Srares District Courr
PuatntirF’s Exuisit No. 117
InTER-ORGANIZATION LETTERS ONLY
Received December 21, 1960
December 16, 1960.
To: Mr. R. M. O’Connor, Los Angeles Zone
From: Mr. L. H. Averill, Central Office
This has reference to the activities of discount houses in
Southern California who engage in the sale of new cars.
You are familiar with the letters and telegrams, which have
been received from dealers and salesmen regarding this
activity, addressed to Mr. Cole, Mr. Staley and Mr. Gordon.
Attached is a copy of the reply going to the dealers who
have written Mr. Cole and Mr. Staley, and in the content
of same, you will note we have quoted the reply being sent
over Mr. Roche’s signature to those dealers: who wrote
Mr. Gordon.
We are attaching a list of all the senders of letters and
telegrams received from your dealers and retail salesmen
where such individuals can be identified from their wire
or letter. The dealers who are being answered by Mr. Sta-
ley are so identified. The remaining dealers are being
answered by Mr. Roche.
We would like to especially call your attention to the
following paragraph from Mr. Roche’s letter.
“The wholesale organization of each of our Divisions
will give special attention to these problems. They
propose to personally discuss this matter with each
of the dealers and ask them to review their operations
in the light of the critical nature of the problem as it
affects the good will of the product they sell, the en-
tire franchise system of distribution, and the validity
of any arrangement they may have with a discount
house under the provisions of their General Motors
Dealer Selling Agreement.”’
In accordance with this paragraph, will you please ar-
range, through the medium of yourself, City Managers and
748
Assistant Zone Manager, to personally contact each of the
[fol. 1327] dealers in the Los Angeles area to discuss the
subject matter of the above paragraph. We feel that these
contacts will also serve as a reply to the dealers and their
salesmen who have not written Mr. Cole, Mr. Staley, or
Mr. Gordon.
The above subject was thoroughly discussed at our Re-
gional Managers meeting on Wednesday, December 14th,
hence I am sure Mr. Cash will discuss this subject in greater
detail with you.
After these contacts have been completed by Zone Man-
agement, we would appreciate your advising this office the
results of your conferences.
Very truly yours, L, H. Averill, Executive Asst,
General Sales Manager.
LHA :rm
Att.
ec: Mr. L. N. Mays, Mr. R. M. Cash.
749
{fol. 1328] Ly rae Unirep Srares District Court
PuarntiFF’s Exuisit No, 118
12-16-60.
Mr. Cash:
I was talking to Sid Gilliatt on the telephone today and
he advised me that with respect to the discount house deal
Jim Roach, G.M. Corp., is writing to Cone at Fullerton,
Harbor Chevrolet at Long Beach, Fred Gledhill at Wilming-
ton and Harry Ostrom at Montebello concerning the Cor-
poration’s viewpoints in this regard.
While the letter is quite lengthy, in essence it tells the
dealers that we, too, dislike discount house operations, but
cannot stop it. Any further letters of this nature will be
answered over Mr. Staley’s signature.
With regard to a publication, referred to as the ‘‘green
letter’, which apparently had been forwarded to the cor-
poration by some dealer in Southern California—Mr. Roach
will also reply to this. Sid further advises that the Corpo-
ration’s Distribution Staff will meet next Wednesday at
which time they will decide what will be done regarding
publication of the Corporation’s stand on the matter of
discount houses.
R. D. Lund
750
[fol. 1329] In tHe Unirep Srares District Court
PuarntiFF’s Exuisit No. 119
Casa DE CapILLac
14401 Ventura Boulevard—Sherman Oaks, California
Stanley 3-1430—State 4-9901
December 17, 1960.
Martin Pollard.
Mr. R. M. O’Connor
Chevrolet Motor Division
3325 Wilshire Boulevard
Los Angeles 5, California
Dear Bob:
' Iam sure it is no news to you that the automobile dealers
of Southern California are in a highly inflammable mental
state over the menace that the discount house holds over
their future business existence. Their fears are well-
founded and most everyone is convinced that the discount
house will destroy the franchise dealer, the dealer’s capital,
and the franchise system, if not stopped now. Once this'is
accomplished, the factories will become victims of the
creeping cancerous attrition of the discount house method
of merchandising.
It is believed by many dealers that there is no escape,
unless the discount house is attacked on all fronts and
gradually pushed back until they are out of the automobile
retail business. This is not a pretty picture.
About 90% of the dealers want to have a show-down
fight now as a last ditch effort to preserve themselves and
save the franchise system. They would like to have their
respective factories back them up in this fight. If this is
not possible, they are prepared to go it alone, and go all
the way. This does not apply to GM dealers only. It applies
to all franchised dealers representing all lines of cars sold
in this area.
A meeting was held last Thursday, over which I presided.
The main reason I chairmaned the meeting was because
the Foothill Dealers picked up the tab for the luncheon.
The meeting was attended by representatives of the three
751
Chevrolet dealer associations, and the purpose was to dis-
cuss ways and means by which the dealers could combat
the discount house. Out of this meeting was born a com-
mittee instructed to take certain measures as directed. The
chairman elected was Cap Reade. He intends to see you
at once (I suppose he has by now) and explain the objec-
tives of the committee. His reason for so doing is twofold:
Out of respect for you as a man and as Zone Manager, and
to assure you that the work of the committee will be out
in the open and not behind your back.
It is my opinion that the meeting and the resultant com-
mittee is a good thing for Chevrolet and for Chevrolet
business. I feel that the dealers who have been drawn
together in a common defense of what is dear to them—
[fol. 1330] the financial security of their families—is a
healthy condition. I feel now that the long wait and indeci-
sion is at an end, that the dealers as they go into action
will replace their fears with courage, and you will end up
being the head of the fightingest bunch of Chevrolet senters
anywhere in the U.S.A.
The fight for survival will lead to many good by- jredante.
It will lead to a cohesiveness of a dealer-body that will
erystalize into a better cooperative spirit in all things of |
mutual interest; a more cooperative team of dealers more
determined to succeed over competition and less inclined
to cut each other’s throats, competitively. I feel this will
greatly help in bringing back a respectable profit for their
investment and for their efforts. This, then, will once again
put the Chevrolet franchise back in the premium column.
I am sure that you and everyone at Chevrolet joins with
me in high hope for success.
Sincerely, Martin Pollard.
MP:1
P.S. Please excuse the letterhead temporary. I am out of
Chevrolet stationery.
752
{fol. 1331] Is tus Unrrep Srates District Court
Puiarntirr’s Exuisit No. 120
Chevrolet Dir. Org. & Anal. Dept. December 22 11:17 AM’ 60
Mr. R. M. Cash, Regional Office—Oakland
Mr. L. H. Averill, Central Office
December 20, 1960.
Yesterday we mailed you copy of letter addressed to Bob
O’Connor with reference to the activities of discount houses
in the Southern California area. I am sure you will agree
this letter provides you with an excellent vehicle that can
be effectively used in the selected dealer conferences you
will hold in tune with our discussions at our Regional Man-
agers meeting, Wednesday, December 14th.
In light of our discussions of this subject at the afore-
mentioned meeting, I am sure you will want to lend your
counsel to Mr. O’Connor and the members of his staff in
the handling of their dealer conferences, as well as the im-
portance of their being completed at the earliest possible
date.
If there is anything further we can do to assist you from
this office, please advise.
Very truly yours, Executive Asst. General ‘Sales
Manager.
LHA:rm
753
{fol. 1832] Ivy tae Unrrep States Districr Court
Piantirr’s Exurit No, 121
February 7, 1961
Origin No. SM-63
C.0. No. 60-1079
Subject: Discount House Operations
CHEVROLET—CENTRAL OFFICE
Division of General Motors Corporation
Detroit 2, Michigan
December 29, 1960.
To: Regional and Zone Managers
‘*Have all serv. Reps. read,
initial & return.’’
[Initials [legible]
Attached for your information is a copy of a letter to all
Chevrolet dealers dealing with the subject matter of Dis-
count House operations.
You may recall I discussed this matter at quite some
length at the last Regional Managers’ meeting and I feel
that the attached letter should give the dealers a full under-
standing of Chevrolet’s position with respect to this matter.
Yours very truly, K. E. Staley, General Sales
Manager.
KES:@1
ec: Mr. L. H. Averill
Assistant General Sales Managers
Wholesale Organization
Attach.
| Depomppnsssae
754
[fol. 1333] CHEVROLET—CENTRAL OFFICE
Division of General Motors Corporation
General Motors Building
Detroit 2, Michigan
December 29, 1960,
To all Chevrolet Dealers
We are taking this me
This text is long and has been trimmed here. Open the source document for the complete record.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.