• Apr 16, 2009
June 1, 2009 is turning into the equivalent of General Motors' D-Day, and every day seems to bring new events that are being planned in advance of it. GM had more than 6,000 dealerships at the end of last year, and in the initial viability plan it offered to the government, the automaker pledged to close 25% of those over the next five years. As with the rest of the plan, the Auto Task Force said "That isn't enough."
So GM has turned the big guns on its dealership closures, having seen 200 of them shut down this year already. It is not waiting for attrition to rid itself of others, but pin-pointing under-performing locations and "could move to terminate franchise agreements." And GM is doing so with a different payment scale than it had when it closed down the 2,800 Oldsmobile dealerships, which ran up a tab of $1 billion.

Also, it appears, the bell tolls louder for a GM bankruptcy. Tucked in the article was this line: "The issue of how many U.S. dealerships GM can support has been one of the hot-button issues for U.S. officials as they drive GM toward a stepped-up restructuring that many observers have now concluded will include a bankruptcy filing."

[Source: Yahoo!]


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  • 31 Comments
      • 5 Years Ago
      I'm thinking the new GM will be all internet sales and the delivery and warranty work would be set up in abandoned manufacturing facilities across to USA. They could utilize design & plant engineering for problem solving in the facilities instead of golfing 2 days a week. The success will invite the other domestic manufactures to share the facilities and once again the USA will become leaders in the automotive industry. I am dreaming of coarse. . I got this idea from my loathing Auto Dealerships over the years and I believe they are at the root cause of the demise of domestic name brands along with OPEC price controls on crude oil. In my time GM, Ford and Chrysler used to build everything. Today they build trucks and the bigger is better mentality lost the ball. I wouldn't be forced to buy foreign if they had a small hatch back that had good resale, economy, handling, luxury, like the rest of the world has to offer. I say lets purge the clap trap and get the show on the road for gods sake.
      • 5 Years Ago
      Your average auto dealer needs to sell about 1000 vehicles per year to be mildly profitable.

      GM has 6500 dealers. That means to keep their network of dealers happy, GM must manufacture 6.5 million vehicles per year. Ain't happenin' Willis!

      Slow as molasses Rickshaw Rick envisioned selling 4 million vehicles per year in NA. Good plan, really. But the attrition rate was far too slow to keep pace with the failing real world economy.

      GM is now selling at an annualized rate of about 2 million vehicles per year. Yikes! That means they can only support about 2,000 dealers.

      If GM could rapidly scale down to 9 or 10 assembly plants in NA producing 3.6 million vehicles per year; then the dealership count needs to be severely chopped to 3,600 - 4,000 dealers. This is the only plan that will ensure that GM remains a viable going concern.
      • 5 Years Ago
      Im kinda surprised that GM needs to do anything but sit back and watch, i cannot get over all the dealers that have closed recently here in san diego, some real big dealers and some not so big, Alot of these dealers are closing shop cause of no sales, not from being forced to close down, my local hummer dealer has one car out front and its a mazda 3 lol ....
      • 5 Years Ago
      Give me some C-4 and I'll accelerate the closure for them.
        • 5 Years Ago
        Better be careful or you'll end up on a Nepolitano Homeland Security assesment report with all the other "undesirables".
      • 5 Years Ago
      So what is that, about 80,000 jobs ?
      • 5 Years Ago
      Sad times, to be sure. That's a whole lot of previously employed people with decent jobs that will be going home to tell their families they don't have a main source of income anymore. And its not like they can hop to the next guy and get a sales job...
      • 5 Years Ago
      Good news coming out of Detroit.

      Oklahoma investor group makes offer for Saturn
      http://www.detnews.com/article/20090415/AUTO01/904150412

      It looks like this deal will conclude this month along with the Hummer sale.
      The Saturn deal will keep GM's factories rolling out the Astra, Aura, Vue and Sky for another year or so, before the Black Oak Group latches onto other venues. Good deal for Saturn. Good deal for GM. I am sure Obama will be happy too. :)
      • 5 Years Ago
      one of the bigger dealers here in montreal is plaza - where they have all the gm divisions including hummer/saturn/saab etc.

      Its a big lot and for some stupid reason, a few months ago - they started a facelift on their main showroom - its still under construction & the front looks terrible - but honestly why now?

      This place has dealership from the 60s all over it.

      But you can still get a 10pack of g3s - there are all lined up for sale!

      • 5 Years Ago
      GM's bankruptcy is like a slow motion crash.
      • 5 Years Ago
      franchise law article:

      http://www.jerrykopel.com/2009/car-franchise-laws.htm

      key points:

      Termination of franchises. Manufacturers with "good cause" are presently out of pocket for payments to the bad franchiser by statute. The Romer bill adds to that: The unused portion of the facility lease costs and "goodwill value".

      In addition "good cause" requires a great deal of information for termination to occur. The Romer bill limits the time for the manufacturer to act--to 30 days.

      Pragmatically, it is smarter to pay off a bad franchiser than to try to meet the requirements of Colorado's car franchise statute.

      and this is a state by state thing so some states rewards damages to the franchise holder.
      • 5 Years Ago
      My guess is those underperforming dealerships will try to sue, GM will file C11, and they will go to the end of the line figuratively speaking, as creditors. In other words, when it's all over they will get nothing.

      Does anyone know of the 6000 or so dealers how many individual retail outlets they have? Most Pontiac GMC and Buicks are at one single outlet. I have a local dealer that is Chevy/Pontiac (used to be Olds too). I'm guessing they have only 3000-4000+ unique outlets for all those brands including Saturn, Hummer and Saab.
      • 5 Years Ago
      "The issue of how many U.S. dealerships GM can support has been one of the hot-button issues for U.S. officials as they drive GM toward a stepped-up restructuring that many observers have now concluded will include a bankruptcy filing."

      I would think the dealerships are supposed to support GM, not the other way around. Maybe not.
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