REPORT: GM to let rejected dealers apply for new franchises
General Motors' bankruptcy lasted all of 42 days, and the General got a lot of liabilities off the book in that short window of opportunity. One of the more controversial moves was to give 1,300 dealers across the US a pink slip post-dated for October 2010, bringing the Detroit, MI-based automaker down to a more manageable 3,600 retail outlets. The move rankled local communities and lawmakers alike, as tens of thousands of jobs will soon disappear. GM says the move will save them bushels full of cash by lowering overlapping marketing efforts and making the remaining dealerships more competitive with the General's lower market share.
While those sound like rational reasons to close dealerships, GM's decision to open several new stores across the US is a bit confusing. GM isn't revealing how many dealerships will be added or which urban and rural areas will receive the Buick, Cadillac, Chevrolet and GMC outlet, but Automotive News is reporting that some of the jettisoned dealerships will be able to apply for new stores. GM spokesman Greg Martin reportedly told AN that GM is looking at, "select points in certain markets around the country as part of our ongoing analysis of our dealer consolidation efforts." The Committee to Restore Dealer Rights, which represents some of the rejected dealers, told the industry pub that at least twelve of the dealers from Michigan, Illinois, Pennsylvania, Ohio, Colorado and Massachusetts received letters inviting them to apply for a new dealership.
The National Automotive Dealers Association no doubt appreciates GM allowing select rejected dealers apply for new franchises, but the dealer mouthpiece feels those retailers should have first dibs for any new stores. Many lawmakers agree, and both politicians and dealer rights groups reportedly feel that GM's terms are inadequate. In September, GM CEO Fritz Henderson reportedly told Michigan lawmakers that the company could restore a limited number of rejected dealers, but new compensation was off the table.
[Source: Automotive News - Sub. Req. | Image: Justin Sullivan/Getty]
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Reader Comments (Page 1 of 2)
dasupersprint91 11:03AM (11/13/2009)
I'm in Québec, Canada, and the dealer that sold Chevy/Cadillac/GMC 2 months ago dealer is now a Ford.
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Aprime 11:59AM (11/13/2009)
Similarily our Saturn dealer has joined the ranks of Kia.
hypermiler 2:14PM (11/13/2009)
Saturn dealers do not need to go back to GM; import brands want them.
sfdenny 4:51PM (11/15/2009)
FYI - the Saturn retailer pictured in Colma, CA was closed long before the GM restructuring. I wish it had still been open when I bought my Astra in November 2008.
BoxerFanatic 11:07AM (11/13/2009)
Why would someone sign up to be abused again?
Some of the dealers closed were long time businesses, with good track records, and were summarily dismissed, while the company shuffled them off, but is talking about opening new facilities with 'the other hand.'
What is to keep that from happening again the next time the General feels like it?
It would take a very big, very demonstrable sea-change in attitude at GM management, not to mention that If I had been cut, I would be very hesitant to get back into bed with a government-owned entity ever again.
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Farris 11:24AM (11/13/2009)
Well put, Boxer. I remember reading more than one article about 30+ year old GM shops that had to close up shop.
Tourian 12:01PM (11/13/2009)
I guess you know the terms of deals being offered to new or existing dealers that will allow you to say that it most be unsatisfactory and a raw deal? Please share.
BoxerFanatic 1:55PM (11/13/2009)
@Tourian,
I doubt that the franchise deals were laid out badly before, yet the government still came in, and put GM into the place of cutting of franchise holders, with little or no warning, recourse, and rumors of political collusion.
I wouldn't trust terms from these people as far as I could drop the contract to the floor. They may look fine, who knows.
But they aren't trustworthy.
ckm 1:56PM (11/13/2009)
Just because a dealer is good and has been around for 30+ years does not mean it is a good distribution point for GM. Just like everything else, demographic patterns shift over time and it's highly likely that what used to be a good area for Cadillacs no longer is.
That said, I do think they did a poor job of handling this. GM has been a company with terrible management and I don't think that has changed. All you have to do is read Steve Rattner's public assessment to realize how bad it is/was and nothing changes overnight.
Tourian 2:52PM (11/13/2009)
@BF
I know you doubt it, that's my point. I'm just pointing out all the armchair quarterbacking that goes on with statements like yours. You really don't know enough to draw those conclusions its just popular to be negative about everything. If the none of the old dealers take up New GM's offer to get back in bed with them, people like you will say "Of course they wouldn't, it was a raw deal and nobody would be stupid enough to make a deal with the devil." With the devil being the government, GM, Obama, democrats, etc. If some dealers DO jump back in, most likely with better locations, less (or no) competition from other GM brands, you would still say "Well those dealers are stupid for taking a raw deal from the devil."
Some will some won't. Some car dealers are smart business savvy individuals, just like a lot of the people at GM and the government. It may be possible they know more then people like you do, especially those who aren't privy to the terms of the deal.
AZZO45b 2:55PM (11/13/2009)
EXACTAMONDO Boxer!!!!
Like an abused wife taking back her abusive hubby. In SE/ MI where I live the local Chevy dealer in upscale W. Bloomfield is being dumped by GM. He also owns a Cadillac dealer right next door & that's right next to his Ferrari & Maserati show rooms.
Rumor has it GM questions his "loyality" to GM because of his Ferrari & Maserati franchises. Yeah, who would want to trust some wanker to fix your Cadillac when his same group fixes 300K Ferraris ???
The bigger DOH factor.... GM is assisting a new franchise to build & open a BRAND NEW dealership a mile or so up the road!!! This stretch of road is pricy & IMO would be better to spend smaller $$$ re-developing the existing location. Lets hope GM is reaching out to this Chevy & Cadillac dealer & putting those idiotic plans on hold
Tourian 5:52PM (11/13/2009)
@AZZO
That is part of the New GM's tactics. Used to be they would keep stores 12 miles apart, but if they feel like you aren't pulling your weight and you are smack dab in the middle of an area they deem to have higher potential then you are producing, they reserve the right to plop a point 6 miles away and effectively run you out of town. More then likely the the new points are going to get more then a little bit of special treatment from GM.
sw 11:18AM (11/13/2009)
"GM's decision to open several new stores across the US is a bit confusing"
It's not at all confusing. The management team at GM is just plain awful. Perhaps Alan Mulally or John Krafcik should offer courses to their execs on how not to be completely useless.
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alex 11:25AM (11/13/2009)
i love all the arm chair execs. maybe there is some sound reasoning for closing some dealers while opening new ones. for example, maybe an area has 3 chevy dealers, but only needs one so they are going to close 2. but there's no cadillac dealer, so one of them can apply for a caddy franchise.
nah, it's much easier to assume everyone is always wrong.
Tool 11:51AM (11/13/2009)
I suspect that GM 'rejected' a number of dealer points where the dealer was crappy (poor customer service) but still a good market for GM. So now there are a number of open points. Hence the need to find a new better dealer to replace the crappy one.
Tourian 11:58AM (11/13/2009)
@alex
Exactly, just because they are closing a lot doesn't automatically mean they will achieve the right mix or distribution of the channels.
sw 2:56PM (11/13/2009)
@Alex
I'm not saying I'd be the replacement, what I am saying is that their management team sucks. A look at what their market share used to be, and where they are now is all the proof anybody would need to reach the same conclusion.
This is what GM said "The move will save them bushels full of cash by lowering overlapping marketing efforts and making the remaining dealerships more competitive with the General's lower market share"
To do the exact opposite in a matter of months is kind of stupid and must be quite a sting to the dealerships let go. Would've been easier to just relocate some of the original dealers in the first place don't you think?
Nightcrawler 11:25AM (11/13/2009)
One of our bigger local dealers used to be a Cadillac/Pontiac/Oldsmobile dealer. Needless to say there is only Cadillac left a decade later. Are standalone Caddy dealers common and considered viable? I can't think of any around here that doesn't also sell another line.
After all, how many Cadillacs can you sell in a month, unless you are in Beverly Hills or somewhere like that. Sure, the profit margin on a Cadillac is a lot higher than for a Chevy, but is it high enough to make selling a few cars a month a profitable business?
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Tourian 12:03PM (11/13/2009)
They tried to push Caddy dealers to become Hummer-Saab dealers as well, so yeah, there are more then a handful of standalone Caddy dealer around.
montoym 3:39PM (11/13/2009)
Most all of the Caddy dealers around where I live are standalone. Only one I can think of that isn't is Caddy-Chevy and it's in a small town and has been around for some 60yrs.