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GM To Give 1,100 Dealers The Axe Today

Agent009 submitted on 5/15/2009 Official Bell & Ross Timestamp: 9:01:38 AM

16 user comments | Category: Misc News | Source: | SOURCE: www.detnews.com

General Motors Corp.

will discuss its dealership consolidation plan at noon today. The update by Mark LaNeve, GM's vice president of vehicle sales, service and marketing, comes as about 1,100 dealers receive letters from the automaker that their franchises are being eliminated or consolidated.

A day after Chrysler LLC told a quarter of its dealers that it won't renew their contracts, owners of General Motors Corp. dealerships are awaiting word on whether they will be next.

GM said it will notify 1,100 U.S. dealers today that their franchise agreements will not be renewed. Dealers expect to hear either by telephone or FedEx letters that will begin arriving this morning.

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GM To Give 1,100 Dealers The Axe Today

About the Author

Agent009

"If everything seems under control, you're just not going fast enough."

— Agent009 (View Profile)


User Comments

BSBB

Hmmmm....That's business, I guess.

— BSBB (View Profile)

Posted on 5/15/2009 10:08:00 AM | reply to this comment | Votes: 1   

NItePhire

Why is it that I thought it would be more like 2500 instead of 1100.

— NItePhire (View Profile)

Posted on 5/15/2009 10:22:09 AM | reply to this comment | Votes: 1   

91z4me

Because you are looking long term, as the management should be. They are doing only what needs to be done right now, instead of looking for what needs to be done for the long haul.

— 91z4me (View Profile)

Posted on 5/15/2009 10:28:35 AM | | Votes: 2   

Joe_Limon

So they should have cut more? seriously, having 3 times as many dealers as even Toyota is a bad thing.

— Joe_Limon (View Profile)

Posted on 5/15/2009 11:41:48 AM | | Votes: 1   

91z4me

Joe, GM may have tons of dealers but that doesn't mean anything to them. Most of those contracts are over 50 years old. And what good does it do GM to have dealers if they aren't moving inventory? GM has to push incentives to dealers to take product, the dealer needs more incentives to sell product to customers. Toyota sells WAY more cars per dealership than GM and the dealerships are more profitable. Toyota spends less money on dealer incentives and has a smoother distribution network due to having less final destinations.

In the end it isn't the number of outlets that matter, it is the product you build and how the consumers react to it.

— 91z4me (View Profile)

Posted on 5/15/2009 2:31:10 PM | | Votes: 1   

Joe_Limon

I wasn't attacking you, I was finishing your idea and requesting clarification. Hell I even boosted your comment before writing.

— Joe_Limon (View Profile)

Posted on 5/15/2009 8:13:28 PM | | Votes: 1   

91z4me

Joe, I didn't deboost you (I only do that to the idiots like the two davids that fight with each other). I simply restated my thesis in a more appropriate and complete manner.

— 91z4me (View Profile)

Posted on 5/15/2009 11:50:36 PM | | Votes: 1   

PlanB

That is a lot of dealerships but still not enough. With the amount of sales they do have, most of them are probably ghost towns anyway.

— PlanB (View Profile)

Posted on 5/15/2009 1:28:13 PM | reply to this comment | Votes: 1   

pepito66

No no no , at the end they are cleaning all GM Dealers in America and then send production to China later they have to import american cars to USA,this is not fear , GM is eliminating jobs from american people for the simple reason to cheaper workers in China. Where is the last intention to improve and develop the American car industry. This is important for USA and for us to have a quality auto industry. I want America be the one in everythig. We need to work for that.
I don't like the way World is moving today and tomorrow could be worse.......if we don't stop that.

— pepito66 (View Profile)

Posted on 5/15/2009 1:44:38 PM | reply to this comment | Votes: 1   

lewishamiltonpimp

I always though dealerships were a 'no cost' element of an automobile manufacturer's business model. CAn one of you learned folks explain to me how cutting dealerships saves money?

— lewishamiltonpimp (View Profile)

Posted on 5/15/2009 2:37:09 PM | reply to this comment | Votes: 1   

Timzilla

Money from Corporate goes in several ways. Insuring and transporting vehicles to the dealership, marketing is a giant expenditure, demo cars, the list goes on. These are tools that the Car companies use to help try and make the store profitable.

They also have dealer incentives, not like the ones based on each specific car, but on volume, certified status, vehicles on the ground... and so on.

Next you have the floor planning model. Not all dealerships own ever car on their lot, they do whats called floor planning, where they pay a percentage of the car to hold it there, and allow them to sell it. Its kind of like the dealership is renting the car, some dealerships that are not selling enough cars are unable to pay that fee.

And finally dealerships make contracts with the corporate entity. The contracts give them a certain number of vehicles a year; that contract also states that they will have X number of each model available to them. This means that they have to have build that many cars, despite the fact that they may not be selling.

So by closing dealerships they dont have to send all the marketing items, they can build less vehicles (Probably the most important), less cars to be moved around etc.

That and it will make the dealerships that stick around that much more profitable. I know i live in Denver, and i think it would be great to have 5 GM dealerships here, all 5 would do well, would be busy, and it would really reduce a lot of the stress on the 15 there are here now.

— Timzilla (View Profile)

Posted on 5/15/2009 3:26:27 PM | reply to this comment | Votes: 1   

lewishamiltonpimp

I don't see it. Transportation is paid by the eventual buyer (destination fee). Floor planning interest is paid to the Floor Planner (not always the manufacturer BTW) by the dealer.

Incentives - if the dealer doesn't move cars, he doesn't get the incentives.

I still don't get it.

— lewishamiltonpimp (View Profile)

Posted on 5/15/2009 3:52:47 PM | reply to this comment | Votes: 1   

Joe_Limon

Incentives in the case of GM isn't a good thing, they may help clear out inventory, but they aren't going to make any money if they sell the vehicles for less then the cost to make them.

— Joe_Limon (View Profile)

Posted on 5/15/2009 8:17:45 PM | | Votes: 1   

doctorproctor

Once they start importing all those crap chinese cars their gonna be closin' a whole lot more than 1100 dealerships! Just watch!..they'll have incentives comin' out their whazoo tryin' to push those babies!!

— doctorproctor (View Profile)

Posted on 5/15/2009 11:51:56 PM | reply to this comment | Votes: 1   

Type707

Goodbye GM...thanks for stealing our hard earned money...Karma is a B***H ain't it?

— Type707 (View Profile)

Posted on 5/16/2009 4:27:18 AM | reply to this comment | Votes: 1   

pageman

How could anyone not see this coming? Every small little hick-town has a GM store, or 2. (lol) OFF WITH THEIR HEADS !!!!
This should have been done a decade ago. This loss is not it. Expect more stores to close after a complete GM analysis has been done next year. GM with be limited to the same amount of Hyundai stores. Now that makes sense.

— pageman (View Profile)

Posted on 5/16/2009 12:23:42 PM | reply to this comment | Votes: 1   

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