• Mar 5, 2010
According to Automotive News (which is citing four separate yet unknown sources), General Motors is preparing to reinstate more than 580 dealers that had applied for government-mediated arbitration to keep their franchises in the United States. For those keeping track, 580 represents exactly half of the 1,160 dealerships that signed up to go through the arbitration process. These selected dealerships would potentially be reinstated outside the process of arbitration.

GM will reportedly send letters to the 580-plus dealerships it has decided to reinstate, offering immediate restoration of their franchise rights, including the ability to order new vehicles. If a dealership does not receive a letter, GM has not chosen to restore its franchise rights and it will have the option to either settle with GM or enter the arbitration process if it so desires.

For those dealerships that aren't successful in their quest to regain franchise rights, well... there's always Sears, right?

[Source: Automotive News – sub. req'd | Image: Justin Sullivan/Getty Images]


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    • 1 Second Ago
  • 21 Comments
      • 4 Years Ago
      So much politics in the car business nowadays.
      • 4 Years Ago
      That's a lot of dealers, yeah. But economic news has been very positive lately.. so gasp... it may actually make sense to do so.
        • 4 Years Ago
        Or at the very least, soak up the cost of having those dealerships around until profits pick up again, which they are; look at the recent auto sales report on here.
        • 4 Years Ago
        This would be the one major side effect of government control. Reducing their dealer body made sense but it didn't play well in the communities that lost dealers. This is just politics.

        On the flip side an interesting side effect here in Canada is I have noticed most of the healthy GM dealers that got cut went out and grabbed another franchise. All of the sudden you have big fancy buildings and reputable experienced dealers selling Kia's or Suzuki's. Long term this could have a huge impact on some of these smaller brands. I would imagine some of the top dealerships in the US that were culled have done the same and likely wont be able or interested in taking advantage of GM's change of heart.
      Shaun
      • 4 Years Ago
      One of GM's biggest problems was it's bloated dealer body count. They need a lean, mean dealer body...not a dealership at every corner like they used to try and support.
        • 4 Years Ago
        @Shaun
        Think about it, GM is now minus Saab, Saturn and soon Hummer dealers. So, they will have reduced the number of dealers by 580 plus those of the dead brands that were not already included in the 1160.

        I miss having the Buick / Mercedes in my neighborhood. I factor in dealership accessibility in my buying decision. The closest GM dealership to me is 15 miles going the wrong way on my commute and away from my train into NYC. Its a royal pain in the a$$ having to take time off to get your car serviced.
      • 4 Years Ago
      bad Ideal they were closed down for a reason.....How about focusing on the better customer care on the current dealerships?
      • 4 Years Ago
      Poverty or prosperity delivered by..........a letter? Tacky, tasteless...cowardly, even.
      • 4 Years Ago
      Mistake IMO. GM needs to have manageable number of dealers, at least until they get on more solid footing financially.
        • 4 Years Ago
        Unless we know where the dealers are, their market share and their customer base it isn't fair to write the whole decision off as a mistake. I imagine when they made all the cuts it was under duress to try to "look good" in front of the bankruptcy judge and Congress. Now that things are better, and they are, they can logically go back and make good decisions and let some dealers back on board.
        • 4 Years Ago
        GM was planning to replace around 90% of the dealers they were closing. They don't have a good case to justify closing these dealers or they would do it. That is why they are not going to arbitration. If you are going to lose. Why would you go?

        Dealers don't cost GM money..............GM just wants pretty new showrooms. That's great. I have worked in old showrooms and newTaj Mahal's. I prefer the later. However some customers don't feel comfortable in a Taj Mahal and some don't feel comfortable in an old showroom. Both serve a need.

        I worked in one place that had not been remodeled in 40 years. Customers thought they were getting a better deal because of the low overhead. If the dealer is paying the bills and has a clientele. Leave him/her alone.
      invisiblepigeon3
      • 4 Years Ago
      You know, with their constant management shuffling and this kind of BS, it's quite apparent that GM doesn't know which way is up. They're nothing but a holding company of a bunch of failed brands.

      Please fold up your tents and go away. Stop wasting tax dollars to spin in a circle and accomplish NOTHING. Thanks for the Volt song btw.
        • 4 Years Ago
        @invisiblepigeon3
        Sorry about that, I really am one who knows it is "its", not "it's".

        But. I think the Banks and Wall Street encouraging bad mortgages and causing a freaking world-wide recession, freezing credit and killing consumer confidence might be in line for some of the blame for the problems of the Big Three. Ford escaped because they got their loans when money could be had...(and good for them.)

        Not that GM is innocent here, they were still trying to grow their way into a profit - not exactly the best position in a decimated market. The bigger they are...
        • 4 Years Ago
        @invisiblepigeon3
        Failed brands? Every single brand they have carried in the US, excluding Hummer, has lasted longer than both Honda and Japan. Failed? ~100 years of existence and successfully selling cars != failed, moron.
      • 4 Years Ago
      One step forward, two steps back?

      I guess the market will have to sort this out. Hopefully the options for buying a car evolve before cars become obsolete to include purchasing factory direct and skipping the salesperson bs altogether. If I know exactly what I want, I don't think a salesperson should get a cut of my ca$h for the privilege of booking the sale. It all goes back to the lobby power of dealers, as shown by this reinstatement, over our buying options as the lowly voter.
      • 4 Years Ago
      Hmm Government motors following on footsteps of old GM what a surprise?
      • 4 Years Ago
      I still don't see why excess dealers hurt GM, but I don't really think forcing them into accepting more than they thought was the right number is a good idea.
        • 4 Years Ago
        1) Too many dealers means that each dealer sells fewer cars (20% incremental overall sales by adding a new dealership 10 miles away, but that just means each dealer has only 60% the sales that the one dealership otherwise would've had)

        2) Competition among dealers reduces profit per vehicle at each dealership (say, from $500/vehicle to $200/vehicle)

        3) Competition for service reduces dealer revenue even further

        The above reasons lead to:

        - Lower selling price, fewer cars sold per dealer, and less revenue coming in from service reduces profit at each dealer, resulting in dealers that are run down and unpleasant.

        - Lower new car selling prices due to dealer competition (and GM's own oversaturation of product) reduces residuals when the vehicles come in for trade, making them potentially a poorer value proposition for someone looking to buy/lease a car and trade it in after 3-5 years.

        As an undergrad, I worked on a project where we were supposed to design a marketing campaign for the soon to be released 2nd gen CTS. I went to school in the St. Louis area, where there were (IIRC) something like 11 Cadillac dealerships vs 2-3 Lexus or Mercedes dealerships. Each import dealership was clean, modern, and upscale, whereas some of the Cadillac dealerships were crowded, poorly lit, or looked like they hadn't been updated since the 80s. If the product, service, and price were equal, which would you prefer to spend your hard earned money in?

        Having a dealer on every corner may have worked when you had eight brands and up-to-the-minute mainstream media wasn't at everyone's fingertips. But it's just not necessary these days, and could easily be a detriment to GM, especially with the more upmarket positioning of Buick, Cadillac, and maybe even GMC.
        • 4 Years Ago
        If the competition lowers the purchase price, it counters the lowered resale price. The only money you can't lose on a car is money you never paid because you spent less in the first place!

        We only have very few Cadillac dealers here and they're still run down. Now you just have to drive further to get the same experience.
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