Two years ago General Motors had 6,049 dealers spread across the United States. Post-bankruptcy, that number is down to 4,500 retail outlets. The dealer cutback was supposed to help GM's bottom line while simultaneously bolstering sales and profits at the remaining dealerships, but has it worked? Automotive News reports that the early returns are mixed.
When General Motors announced a couple of weeks ago that it had completed the arbitration process with all of its discontinued dealers, the automaker no doubt hoped that its painful retail shrinkage process was over. But sadly, it was not to be – Rally Auto Group of Palmdale, CA, is apparently not quite ready to call it quits.
General Motors and Chrysler terminated the contracts of thousands of dealers while the automakers were in bankruptcy proceedings; a move that was required by the Obama Administration's auto task force as a condition of bankruptcy. The scheme was heralded as a way to save the struggling automakers millions or even billions of dollars, but special inspector general for the Troubled Asset Relief Program (TARP) Neil Barofsky claims in an audit that the dealer closings weren't "necessarily critical t