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

Print

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

Print

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

Print

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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{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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27 ft, all metal, complete with gas

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-

Away bed, $10. LA 6-1712.

SMALL GIRL’S BIKE, 14”. Good cond.

but needs painting. $7.50. Kenmore au-

tomatic electr. heater, excel. condition,

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WALLACE STERLING SERVICE for

12. Call before 3:30 p.m. LA 2-4961.

LAWN & Yard maintenance. All power

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

Rd., Stanton. TW 3-89.

CABIN CRUISER—20 ~ “not quite fin-

ished, for sale. 35 h.p. new motor (Ev-

inrude), gas tank, controls, complete

Trailer. Call JAckson 7-3011.

CHILD CARE—Under 2 yrs. 632 N.

_ Geneva St., Anaheim. JA 7-9887.

1956 MOBIL HOME for sale. 35’ long.

8’ wide. Furnished. LE 9-3598 up to 11

_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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DECORATIONS

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Under Tree Blankets

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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

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