GM working to shrink its dealer network
At the end of World War II, GM "put a dealership in every little hamlet" to keep up with the postwar boom. Sixty years later, in 2005, long after that boom had ended and every domestic maker was losing market share, GM had 15,094 dealerships. By 2007 GM had reduced that to 14,118 dealers. But if GM plans to compete financially with its overseas competition, it will need to shrink that number a great deal further.Chevrolet has 4,000 dealerships. Toyota, to sell the same amount of cars, has just 1,244 dealers. Put another way, the typical Toyota dealer moves 1,766 cars per year. The typical Chevrolet dealer moves 554. And the other domestics fare about the same: the usual Ford dealership rolls 556 vehicles off the lot every year, while a Dodge dealer does 374 per year.
GM is looking at consolidating Pontiac, Buick, and GMC shops into one. However, state franchise laws don't make closing dealerships easy, and it's hard to tell a profitable dealer that he needs to close for the good of the parent company. Dale Willey, head of the National Automobile Dealers Association, said "Dealers make the decision to get into the business, and the manufacturers accepted the dealers getting into the business. It ought to be the dealers' decision to get out of the business." While GM CEO Rick Wagoner realizes that the "payoff is significant" for reducing the number of outlets, he must know that the price will be significant as well.
[Source: Detroit News]
Reader Comments (Page 1 of 1)
Nate Wesley 12:51PM (1/20/2008)
It really shouldn't be THAT hard in some instances.
Some 'hamlets' that really don't need dealerships. I know of a few examples in South Alabama:
Chatom, AL: Has both a Chevy dealer and a Ford dealer with a surrounding population of about maybe 3-4,000 people. It's in a county directly above Mobile.
Atmore, AL: Has Chevy & Ford, but so does Brewton (in the same county, 28 miles east) and Bay Minette (20 miles southwest). And all three towns are connected by the same U.S. Highway!
Part of me wonders if they could sweet talk the smallest and least profitable dealers into just being 'GM Certified' used car outlets with service departments. That what the vast majority of them are anyway, as these small dealers usually can't/don't house many new vehicles in the first place. The real choice and selection are found with the bigger Mobile-area dealers, who IIRC can charge them tax at their home county level (if Mobile taxes are higher).
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Dave Roy 10:11PM (1/20/2008)
If automakers can offer billions to buy-out workers, then why not dealers ? Only difference is that workers are an expense while excess dealerships is a cost.
Changing to 2 tier dealer levels is sensible - one has new cars & the other doesn't - just takes some old-fashioned palm grease.
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