• Jul 7, 2010
A little more than a year ago, General Motors had in excess of 6,000 dealerships across the country. In the viability plan GM submitted to Congress the automaker stated it would shut down 400 dealerships every year, shedding 1,600 of them by 2012. The General said it eventually wanted to get down to 4,000 showrooms at some point in the future. According the the latest reports, GM is well ahead of its own schedule: it will have just 4,500 dealership by the end of this year, a 1,650-site drop from last year.

Those are the most recent words of Mark Reuss, GM's head of North America. And while his assessment includes the latest round of arbitration hearings with dealers who didn't want their agreements terminated, there are still pending arbitration cases. Reuss' estimate is meant to take those into account, but since the original spread was anywhere from 4,100 to 5,300 dealers, his number could go up or down.

Even if GM ended up with 5,300 dealers at year's end it would be an 850-dealer drop from last year, more than doubling GM's original goal. Yes, it remains far more than the number of storefronts run by mass-market Toyota, which only has about 1,500. But it's a start.

[Source: Detroit News | Image: Mark Wilson/Getty]


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  • 15 Comments
      • 4 Years Ago
      We only have a handful of Toyota dealers in our area.
      • 4 Years Ago
      In fairness to GM our Chevy dealer was closed earlier and for reasons rumored to be other than the economy but if GM's "business model" says that they can expect a huge sales increase by closing smaller (& usually more personable) dealers, the 3 school parking lots my kids attend says REALITY is something very different with many more new & used Toyota's and Dodge's than ever before - in spite of all of the Toyota and Chrysler issues in the news.







      • 4 Years Ago
      I still don't understand what function this serves. Most dealerships are owned by private citizens/corporations. They are the true customers of GM because they are the ones who "buy" the cars from GM. They then retail the product to the consumers, "us". By GM eliminating the number of dealers, aren't they actually eliminating their "customers"?

      I could see closing the few dealerships owned by GM, and not making money, but in this case shouldn't it be left up to the owners to decide whether they want to continue selling GM products?
        • 4 Years Ago
        @Corner49

        But: Do people buy GM cars in your area because there are a larger concentration of GM dealers, or are there a larger concentration of GM dealers BECAUSE people buy GM cars in your area?

        I've never met someone that bought a car because they didn't want to drive 30 miles to compare options. But I have met people that have bought cars that happened to be close to them simply because the more popular cars in the area predictably have more dealerships, due to their success in said area.

        I think you're looking at it backward. People that loyally buy GM in your area will still buy GM, even if there are fewer dealers. It was never a convenience thing, it was a sales volume thing. GM will do better if they close some dealerships, save some money, and let their same loyal fanbase drive a few extra miles.
        • 4 Years Ago
        The issue for GM is this: Suppose I have 4 Chevrolet dealership in a 20 mile radius of my house. I am in the market for a nice new Malibu LTZ. I am going to hit up each dealership and see what kind of deal I can haggle. Because they know that I have three other options, they are each going to drop as much cash and incentive on the hood as possible. At the end of the day I walk away with a brand new Malibu LTZ for $24,495; a car that should retail for $26,500. I win, a dealer gets a sale and GM still made their money. Everyone wins, right? Not really.

        The problem is this is happening across the country and as a result, it is devaluing the Malibu. GM has a price they want to sell it to dealers for but they are coming back telling GM that they need more discounts to make the sales. In the end GM loses money because there is too much internal competition.

        Meanwhile the single Toyota dealership within 20 miles of me just sold another Camry for $26,000; just about MSRP.
        • 4 Years Ago
        I'm a little confounded, too. Yes, that is how the dealer/manufacturer arrangement is supposed to go, but more often than not, it isn't. Most cars on dealers lots are held on consignment, if I understand correctly.

        The other problem I see with this is that for the last decade or so, in my area, the proximity of the D3's dealers were the leading reason they sold so well. In my city of 30,000, we have a Chrysler group dealer, a FLM dealer, a Chevrolet dealer, a PonBuGmc dealer, and Hyundai, Mitsu, and Nissan carry the torch for imports.

        Hyundai moving into town didn't disrupt sales too much because they weren't competitive except on price, even for the D3 at the time. The Nissans disrupted sales a little more, but the Sentra looks ridiculous and doesn't get exceptional gas mileage. Mitsubishi's weren't competitive, including price, except for looking relevant.

        The thing saving local dealers was that in order to buy a new VW, Honda, or Toyota, you had to drive 30+ miles. Many ppl made the drive. Most didn't. And while the Civic did seem more special, the Focus outsold it in my area by more than 4 to 1.

        If you take away that familiarity, you're going to have to have a formidable competitor on every front. I appreciate the bravado, but it seems, that if you'd just stop running dealerships on consignment, you wouldn't have to betray your regular customers, and then expect them to travel to buy your product, and expect them to feel special about it.

        And before any feelings are hurt, remember I'm talking about the last 10-15 years, and specifically my area.
        • 4 Years Ago
        perhaps I'm looking at it backwards, or perhaps I'm looking at it from the perspective of rural America, and you're looking at if from the perspective of urban America.

        I've both bought and sold cars at the local dealerships. While Honda and Toyota have been the de facto segment leaders in each class, ppl here resigned to GM, Ford, and Chrysler vehicles. Yes, some were because they wanted them, but some weren't as evidenced by the green faces of the focus drivers when their peers bought civics, or taurus buyers when their peers bought accords.

        It's not only a 30 mile MINIMUM drive to a VW, Toyota, or Honda dealership, but they are located in Plano, Rockwall, Irving, TX. That close to Dallas is considered Dallas. And Dallas is "big city". So you're submitting to traffic, "high pressure big city dealers", and a wasted day if you don't purchase, but visiting "your friendly neighborhood" dealer can be a quick stop on the way home from Chili's to check out their new wares.

        It's a matter of perception and risk analysis. Whether it's a good or bad one. More often a smaller dealership will actually be more "high pressure", but rural distrust of slick talking city salesmen trump that in the perception game.

        You may not know anyone who wouldn't drive that far. I don't know anyone aside from myself that has purchased a car online. I was just speaking on behalf of my area.

        And again, I'm not knocking any of the D3s current offerings, just acknowledging that even at their lowest point they were the hand-over-fist sales leaders in my area.
      • 4 Years Ago
      The European motorcycle manufacturers were doing a similar project and I think it is starting to come back and bite them. Take Triumph for example, I was in love with the brand and planned on being a lifetime customer. However they recently closed one of two dealers in my hometown. I will never step foot in the "stronger" dealership and so Triumph will probably loose my business to another brand that is more accessible when the time comes for a new bike.

      While there are dealers that need to go, my experience has been manufacturers are putting the pressure on smaller "mom and pop" dealerships which have been in business for years to support the new larger mega dealerships that offer less than stellar customer service, and change ownership at the drop of a hat.

      I'd rather pay more money and receive quality attention over the life of ownership than to get a "great deal" at the time of purchase and terrible service for the next 5-7 years of ownership.

      Going to less dealers can possibly negatively effect the situation. Having personally seen how the lack of competition can allow a dealership to slowly start to take advantage of people, I have some concern. It becomes too easy for a dealer to say, "This is how it is and if you don't like it where else are you going to go?"
      • 4 Years Ago
      It's a start indeed.

      But something doesn't sound right about the number of dealers that Toyota has... I mean I knew GM had WAY more of them, but 1500 seems way too low.
        • 4 Years Ago
        @Alex - yup, great news. GM NEEDS to do this to remain competitive. I love the devils advocates too, frequently you'll hear things like "i bought my GM because the dealership is only 2 miles away vs the ford at 10". really people? we're that lazy :D. Anywho, good move, I've often wondered why certain brands have dealerships on damn near every corner, it just doesnt make financial sense.
        • 4 Years Ago
        Even at 1500 you are still talking about an average of 30 dealerships per state. That is a pretty large number when you look at population densities across the country. Smaller states like Hawaii, Rhode Island, and Delaware simply don't have the physical geography for 30 dealerships. States like North Dakota, Montana and Wyoming don't have the population density to support 30 dealerships. So for states like New York, California, Texas or Pennsylvania to have an excess of 30 is not as great a surprise considering their size and major metropolitan areas.
      • 4 Years Ago
      Maybe we should send all the Toyota dealers back to Japan, We could buy more Chevy's and get "are" economy back on track. YEH !!!.
      • 4 Years Ago
      At one time, GM had 4500 Chevy stores alone. And there was business for everybody. A few smart owners also got some import franchises, suffered through some lean, trying years and are now thankful they did it. Given the terrible quality of the first samples, it's amazing to think that Toyota, Honda, etc. are still around. Of course, the US mfr's were treating their customers like idiots and lost the business to some of the imports. Italians, Czechs, French and a bunch of Brits excluded, of course.
      • 4 Years Ago
      So more lost jobs.

      My favorite part is driving by all these closed dealers. Really makes me want to buy a GM product. Nevermind the fact they are unconstitutionally owned by the federal government and needed bailout money - most which will never be paid. That's the reality. GM should have failed and they, like all those closed dealerships, are dead to me.

      Sounds about right for obama.

      HOPE CHANGE HOPE CHANGE! They are too big too fail! Quick give them billions! LOL
      • 4 Years Ago
      It's about dealer profitability and subsequent investment in their dealership's. Most of those 1500 Toyota dealers make good profits and are more than willing to invest to keep their operations state of the art. That makes the Toyota brand stronger. Too many of those thousands of GM dealers don't make any money and are running antiquated and run down operations. That's bad for the GM brands. If GM wants tone a world class car company they need high quality dealers - and fewer of them so that each can be profitable and reinvest in their operations.
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