Filed under: Car Buying, Etc., GM
GM to accelerate dealer consolidation
GM may have just half the market share it had 30 years ago, but the Detroit-based automaker still seems to have as many dealers as McDonald's has drive-thrus. The General has slashed more than 2,000 dealerships over the past 12 years, but the company will accelerate closings in order to right-size its sales outlets. GM closed 260 stores in 2007 and another 23 in January of this year, but according to Automotive News, the automaker still has a sizable 6,753 member dealer body. That number seems even higher when considering that US number two automaker Toyota makes do with only 1,445 retail locations.Sales VP Mark LeNeve told Automotive News that GM has a lot of work ahead regarding dealer closings, and that the General will speed its efforts. While fewer dealers will likely mean that you'll have to drive a few miles further to get that Chevy or Cadillac you want, the remaining stores will make more money. (Or that's the general idea, at least.) Additional profits should enable dealers to spend more on advertising and facility upgrades to try and attract more customers.
[Source: Auto News (subs. req'd)]
Reader Comments (Page 1 of 1)
ibhiuhui 12:23PM (2/10/2008)
Yawn. Who cares.
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rndmnme 12:48PM (2/10/2008)
Which one?
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Whitie 1:01PM (2/10/2008)
I think GM needs to learn from Toyota. Cut out some brands and cut out the associated dealers at the same time... focus only on brands and models that sell well.
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almost Dr. G.. 1:20PM (2/10/2008)
more money for advertising and less for the employees who are getting the boot out of their dealerships. win win for GM.
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AZMike 1:48PM (2/10/2008)
this is such a crackup, always assuming that Toyota "always does the right thing".
perhaps some who feel this way should look back to Japan. Toyota sells vehicles thru EIGHT different franchises there.
it will be interesting to see how Mr. LeNeve will propose doing this. GM only has two choices, either by buying out the dealer's franchise directly, or suggest (and ONLY suggest) a possible consolidation with another dealer.
Chrysler had done a similar thing in Califorina back in the early 90s. I owned a Dodge dealer, and they felt the area was "overdealered" by three dealers. they made me a very handsome offer, and we closed the point. however, today the offers aren't all that handsome, and a dealer is under no obligation to do anything the factory wants him to. thankfully, very strong franchise laws in every state protect the dealer, and any other business that is threatened by a manufacturer or distributor with strong-arm tactics.
I've said this several times; take away choices, and competition becomes collusion...never beneficial for a buyer.
AZMike
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caddy dave 2:28PM (2/10/2008)
Where's Oby? This is where he normaly posts his hatred of GM, (the company that terminated him). Can't wait to read his rant. Might have to wait, rumor has it he's out trying to get his Camry started.
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Kumar 2:56PM (2/10/2008)
The choices today aren't what they used to be. People tend to forget that online sales grow each year.
You can only go so far depending on the average walk up sucker to buy cars on the lot. At some point, to be successful, dealerships will need to target and take care of the internet buyers.
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Gardiner Westbound 4:29PM (2/10/2008)
As the Detroit-3's sales decrease the excess dealer issue will sort itself out without buyouts or violating state franchising laws.
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cowboy bob 4:53PM (2/10/2008)
What am I missing here? Doesn't the very existance of several dealerships, offering the same product, help the consumer? Does this also not help the manufacturer in the benefit of selling more vehicles from, say three dealerships that reduce their selling price (hence, their profit) to "move" more vehicles? One guy selling things, cars or tomatoes, will always ask more money if there is no competition. I saw this happen here when Ford bought back three area dealerships, and went to a "corporate store". Within a year the new set-up was offering less for trades, and less "dealer markdown". Guess what happened! Within another year, Ford sold the corporate store to a private dealer, and also franchised anothe dealer six miles down the road. Guess the sales figures didn't pan out as expected "eh? Duh!!!!
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Mallory 1:27PM (2/11/2008)
Too many dealers mean they spend scarce resources competing with each other instead of brands from other companies. It also means that the Buick dealer selling 100 cars per year doesn't have the same resources as the Toyota dealer that sells 1600. That includes advertising, marketing , promotions, as well as money for the best mechanics, top salespeople and clean, modern facilities.
For GM to be healthy it's dealer network must be healthy, and right now there are about twice as many dealerships as there should be for GM to be healthy.
Harrison 5:39PM (2/10/2008)
Yeah, but they sell different things.
Honda, for example, has (or had, I know for sure they did this in the '90s) 3 different networks: Verno, Clio, and something I can't remember. Each sells different cars for different purposes. One sold Kei-cars and Civics, while the others sold more upmarket products.
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Rene Curry 9:19PM (2/10/2008)
They need to offer the redundant dealers in heavy populated city regions the opportunity to become "GM World Car" dealers.
A GM World Dealers could be created to sell low volume, high margin GM models from around the world that are not slated for the conventional dealers like Chevrolet, Pontiac, Buick, Saturn, GMC, Saab, & Hummer.
GM could spend money by helping the dealer upgrade for this mission rather than spend money to buy them out. This World Car dealer option has risks & costs, but there is potential for a return and prestige. The other option is just throwing money out the window buying out dealers.
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Rene Curry 9:25PM (2/10/2008)
Forgot to add... The GM World Car dealers would also get specialized vehicles from GM approved suppliers like Rousch, Saleen , etc.
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stratojet 9:30PM (2/10/2008)
GM closes a dealer (along with a hefty$$$ amount). The customers will not necessary go to the other GM dealership. He may very well go to the numerous other franchises around. The best way is to lead the dealers to buy the business of the other and doing so, eliminate excessive cost to the corporation. Or, let the market terminate the unprofitable Dealers.
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SilverAero 10:20PM (2/10/2008)
That picture reminds me of Hannibal Lecter
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rgseidl 9:04AM (2/11/2008)
There are laws in every state that give franchisees a lot of protection against such action by their franchisors. It cost GM a billion dollars to wrap up Oldsmobile, mostly in compensation for the dealerships that had to close.
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David 10:28AM (2/11/2008)
This makes complete sense to anyone in Michigan. You can hardly throw a rock without hitting a Chevy dealership and half of them are going broke anyway. If the car market in Michigan stays the way it is for a few more years GM won't have to urge dealerships to close . . . they will just be out of business.
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alex 4:30PM (2/13/2008)
@whitie
they can't just "cut out" the dealers. ever heard of franchise laws? that's why it is incredibly difficult/expensive to reduce the number of dealers or cut a brand
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Tall Man 2:09PM (5/12/2008)
GM lost over $600 million on their North American car business in the 1st Quarter 2008 while paying their Senior Executives handsomely.
It should not be news to anyone watching the auto industry that GM has too many brands, models and dealers chasing too few customers.
GM is organizing 8 Brands in 4 Divisions. http://www.thetruthaboutcars.com/general-motors-death-watch-173-eight-into-four-does-not-go/comment-page-3/
thetruthaboutcars.com above does a great job explaining the reorganization.
Divisions 4/08 Sales * Models CR **
Recommended
Cadillac, Hummer, Saab 18k 11 4
Buick, Pontiac, GMC 68k 14 1
Chevy 157k 14 4
Saturn 17k 5 2
Total 260k 44 11
Toyota, Lexus, Scion 217k 27 17
*http://www.autoblog.com/2008/05/01/by-the-numbers-april-2008/
**2008 Consumer Reports, Annual Auto Issue, April 2008
Like I said, too many divisions, brands and models chasing too many customers. Toyota sells about the same vehicles as GM with 3 divisions and about 1,700 dealers compared to about 6,500 GM dealers.
WARD'S 10 Best Selling U.S. Cars and Trucks
4 Months 2008
Cars Trucks
1 Camry 147,018 F Series 192,951
2 Accord 122,430 Silverado 160,010
3 Civic 111,695 Ram Pickup 93,068
4 Corolla/Matrix 99,482 CR-V 69,058
5 Altima 99,037 Escape 59,299
6 Impala 98,478 Sierra 57,403
7 Focus 72,920 Tacoma 55,363
8 Cobalt 66,660 Tundra 54,134
9 Prius 64,664 Econoline 49,196
10 Malibu 59,133 Caravan 47,936
Source: Ward's AutoInfoBank
Copyright 2008, Ward's Automotive Group,
a division of Penton Media Inc.
Redistribution prohibited.
http://wardsauto.com/keydata/USSalesSummary0804/
When you look at top Ten best selling model through April 2008, Chevy and GMC are winners, but all GMC models are clones except Acadia.
Summary:
GM should consider going to 3 Divisions, Chevy, Cadillac and Pontiac. Fold GMC into Chevy and eliminate the clones. This the perfect time to eliminate GMC because their entire line of trucks are not desired by buyers . All Buick clones go bye bye. Pontiac is kept because of its sporty reputation. Saturn goes away. Cars that are recommended by Consumer Reports should be keep and folded into one of the three divisions. All clones should be consolidated into one world class car or truck, i.e. Malibu, Impala are the winners and Lucerne etc. is a loser.
Focus on the best sellers and the best quality cars and trucks and eliminate the rest in a hurry. Brutally get all dealers below 2,000 and support the hell out of them.
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