Autoblog

Surviving GM dealers see mixed benefits of smaller network

Chris Shunk — Sat, 06 Nov 2010 09:55:00 EST

Filed under: Buick, Cadillac, Chevrolet, GM, GMC

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.

Since 2009 was such a bad year for car sales, most GM dealers are faring better so far in 2010, as the company's overall sales are up six percent. Consider that GM is selling six percent more vehicles without Pontiac, Hummer, Saab and Saturn, and the remaining dealers are doing better still. But the biggest winners of GM's dealer reduction aren't large dealerships. Many of the 1,500 dealers that got the axe were smaller stores in rural areas. It makes sense, then, that the remaining small-town dealers are doing better as a result.

GM spokesperson Ryndee Carney tells AN that the surviving dealers have a reported 6.7 million customers up for grabs; people who either own a GM vehicle from one of the defunct brands or purchased from a dealership that no longer exists. That's a lot of potential warranty, service and trade-in cash waiting to be had. To ensure that these customers know where their nearby dealerships are, GM has been mailing out notices with service coupons and other dealer info. Dealers themselves are also doing legwork to pick up orphaned customers, picking up out-of-work salespeople who bring their client lists with them.

It's hard to tell how long it'll be until the remaining GM dealers start to feel the impact of the closing of 1,500 dealers, since many of those stores just stopped selling and servicing vehicles in October. The one thing that the entire dealer body would benefit from is a stronger auto market, but that doesn't appear as though it'll happen anytime soon.

[Source: Automotive News - sub. req.]

Surviving GM dealers see mixed benefits of smaller network originally appeared on Autoblog on Sat, 06 Nov 2010 09:55:00 EST. Please see our terms for use of feeds.

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California Chevrolet dealer unhappy with arbitration, sues for franchise

Sam Abuelsamid — Tue, 17 Aug 2010 09:30:00 EST

Filed under: Government/Legal, Chevrolet, GM

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.

The arbiter in Rally's case removed the dealer's Chevrolet franchise and awarded it to a Saturn dealer that was located nearby; but allowed Rally to keep its Cadillac, Buick and GMC dealerships. Rally claims that, under the law passed by congress last year that created the dealer arbitration process, the arbiter should not have split the franchises but rather kept the whole dealership together or ordered it closed in its entirety.

So far, Rally is the only GM dealer to sue in the wake of the arbitration process, though three Chrysler dealers have also reportedly sued.

[Source: Automotive News - Sub. Req'd]

California Chevrolet dealer unhappy with arbitration, sues for franchise originally appeared on Autoblog on Tue, 17 Aug 2010 09:30:00 EST. Please see our terms for use of feeds.

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Cadillac stores make up bulk of reinstated GM dealerships

Chris Shunk — Tue, 16 Mar 2010 18:01:00 EST

Filed under: Cadillac, GM, Luxury

When General Motors entered bankruptcy last spring, the automaker announced the closure of 1,350 dealers and another 650 dealerships that had more than one brand. Recently, The General announced that it planned to reinstate 661 dealers of the 1,161 that applied for a stay of execution, though GM was short on details surrounding why those dealers were chosen. Many of those dealers never actually left the GM dealer group when the automaker gave dealers until October, 2010 to wind down their stores.

A report from Automotive News quotes multiple sources who say that a large percentage of reinstated dealers carried the Cadillac brand. While GM hasn't publicly announced any brand breakdowns of which dealerships were reinstated, 55 of the 75 dealers AN spoke to that were given a new lease on life were of the Wreath and Crest variety.

When GM sent out notices to dealers around the country informing owners that their dealerships were being phased out, a large portion of those stores were reportedly rural Cadillac outlets. AN reports that The General was looking to decrease the dealer footprint of Cadillac from 1,422 U.S. stores to closer to 500. The idea was to more closely mimic the urban-centric model used by Lexus and BMW; a plan that AN says GM has now ditched.

Still, GM reportedly earmarked 922 Cadillac stores for closure. Even if the majority of reinstated stores sell Cadillacs, we're thinking The General has still managed to significantly shrink the retail footprint of its luxury marquee.

[Source: Automotive News - Sub. Req. | Image: Mark Wilson/Getty Images]

Cadillac stores make up bulk of reinstated GM dealerships originally appeared on Autoblog on Tue, 16 Mar 2010 18:01:00 EST. Please see our terms for use of feeds.

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Report: GM launching pair of low-pressure 'test' dealerships that offer competitor car drives

Jeremy Korzeniewski — Fri, 12 Mar 2010 15:30:00 EST

Filed under: Car Buying, Marketing/Advertising, Chevrolet, GM

A[nother] different kind of car company. A[nother] different kind of car. Apparently, as it once did with its Saturn division, General Motors is again fiddling with the tried-and-true dealership sales model by creating two separate new test programs that would potentially offer a low-pressure car buying environment.

One of them, a so-called Test Drive Studio, would be a "permanent or semi-permanent, minimally branded, brick-and-mortar" facility that would first appear in Chevrolet-centric areas such as Miami, Los Angeles, Philadelphia, and Chicago. Included amongst the newfangled features would be test drives in the Chevy Malibu, Traverse and Equinox, followed by their main competition. "May the Best Car Win," indeed.

According to Steve Tihanyi, general director for marketing services, alliances and branded entertainment, "It's a non-threatening environment. It's not pressure-filled; you can drive all the right competitive products against the [vehicles]. If you take Malibu as an example, we will also have vehicles like Camry, Accord, Ford Fusion, or Taurus, so you get a really good cluster of vehicles to experience at your own pace."

Also new will be a competitive test-drive program that will run concurrently with auto shows in 30 markets all around the United States. "One thing we know about auto shows is a lot of people who come will be in market in zero to 12 months," says Tihanyi.

To go along with the new dealership test model, GM will start a digital marketing campaign in each of the four aforementioned test markets, targeting buyers currently shopping for vehicles in GM's competitive markets. Says Tihanyi, "So, hypothetically, if you are on Edmunds.com and shopping a Camry, we are going to offer up an opportunity to come to the Test Drive Studio in that market to compare everything you have in your shopping set right now. Our feeling is you may have not had the Malibu in your consideration set, but if you try it, you will."

[Source: Marketing Daily | Image: Scott Olson/Getty]

Report: GM launching pair of low-pressure 'test' dealerships that offer competitor car drives originally appeared on Autoblog on Fri, 12 Mar 2010 15:30:00 EST. Please see our terms for use of feeds.

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Cadillac distancing itself from parent GM to elude bankruptcy stigma?

Jonathon Ramsey — Tue, 09 Mar 2010 14:29:00 EST

Filed under: Etc.

Cadillac XTS Concept - Click above for high-res image gallery

There's no way to misunderstand Cadillac spokesman Nick Twork on this: "The Cadillac brand is best communicated as Cadillac without GM." For proof of his intent all you'll need to do is swing by a Cadillac showroom where soon you'll be unable to find any trace of the words "General Motors" or any hint of marketing strategies like Red Tag Sales. Even Cadillac employees are changing their e-mails from @gm.com to @cadillac.com.

Cadillac's 2009 sales posted a slightly steeper drop than GM's overall decline, and this year the luxury brand is rebounding at about half the pace of GM overall, with a 14 percent rise vs. 31 percent for its parent. That doesn't mean we should assume that the perhaps unsavory associations with "Government Motors" is what's holding Cadillac back, but the brand doesn't want to leave anything undone in its quest to again be the best.

GM wants to move 140,000 Cadillacs this year, representing a 28 percent jump over last year's depressed figures. It's starting consumer research to figure out what buyers think of the brand, will soon reveal the first round of creative by its new ad agency Bartle Bogle Hegarty, and will introduce more leasing deals that luxury buyers are keen for. And neither it nor its dealers will bring up The Brand Which Must Not Be Mentioned. Hat tip to John!

Gallery: Detroit 2010: Cadillac XTS Platinum Concept

[Source: Bloomberg]

Cadillac distancing itself from parent GM to elude bankruptcy stigma? originally appeared on Autoblog on Tue, 09 Mar 2010 14:29:00 EST. Please see our terms for use of feeds.

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Hope on the horizon? General Motors reportedly to reinstate more than 580 dealers

Jeremy Korzeniewski — Fri, 05 Mar 2010 13:28:00 EST

Filed under: Government/Legal, Hirings/Firings/Layoffs, GM

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]

Hope on the horizon? General Motors reportedly to reinstate more than 580 dealers originally appeared on Autoblog on Fri, 05 Mar 2010 13:28:00 EST. Please see our terms for use of feeds.

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Sears coming to the rescue of disenfranchised Chrysler and GM dealers?

Jonathon Ramsey — Wed, 24 Feb 2010 18:39:00 EST

Filed under: Etc., Chrysler, GM

General Motors and Chrysler dealers unsuccessful in government-mediated arbitration to save their franchises from closure are being thrown a potential life saver. This one, however, doesn't say U.S.S. Government on it, but rather, U.S.S. Sears Auto Center. The nationwide retailer want to expands its Auto Center operations that focus on service and sales and dealers with physical plants but nothing to put in them might be a workable option.

The upside for Sears is not only known dealer locations that are practically built to run Auto Center operations, but having folks who know cars representing the brand. The upshot for dealers would be the chance to run a potentially profitable business supported by a major brand, on top of which they could add used car sales. The first Chrysler-dealer-turned-Sears-outlet will be Coleman Auto Group in East Windsor, New Jersey, a conversion that happens next month.

Follow the jump to read the press release on the endeavor, and who knows, perhaps Craftsman and DieHard can succeed where Chrysler and GM couldn't.

[Source: The Car Connection]

Continue reading Sears coming to the rescue of disenfranchised Chrysler and GM dealers?

Sears coming to the rescue of disenfranchised Chrysler and GM dealers? originally appeared on Autoblog on Wed, 24 Feb 2010 18:39:00 EST. Please see our terms for use of feeds.

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Here's the Plan: GM reveals how it will deal with shuttered dealers' complaints

Jeremy Korzeniewski — Fri, 04 Dec 2009 16:27:00 EST

Filed under: Government/Legal, Hirings/Firings/Layoffs, GM

Back in May, General Motors announced plans to close down a large portion of its dealership network. Since then, a number of those franchisees have lodged complaints to both the automaker itself and appropriate policymakers, leading to possible legislation on how GM is allowed to handle the closing of dealerships. This being the case, The General is proactively drafting a new set of rules as to how it will deal with these to-be-shuttered dealerships, and it promises that some are likely to be reinstated after the process.

Specific details can be seen in the press release pasted after the break, but it seems that the new plan basically will allow these affected dealerships to get some real-life face time with the automaker to hear exactly whey they were targeted for closure. If the dealer still isn't happy with the outcome, it can elect to enter binding arbitration. If that arbiter finds that GM chose to shutter the dealership for anything other than sound business reasons, the franchise stands to be reinstated.

There's plenty more detailed in the plan, including a provision for GM to help service technicians and dealership employees find new placement, after the break. This plan will go into effect by mid-January "provided that legislation related to GM's dealer restructuring does not move forward."

[Source: General Motors | Image: Justin Sullivan/Getty Images]

Continue reading Here's the Plan: GM reveals how it will deal with shuttered dealers' complaints

Here's the Plan: GM reveals how it will deal with shuttered dealers' complaints originally appeared on Autoblog on Fri, 04 Dec 2009 16:27:00 EST. Please see our terms for use of feeds.

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REPORT: Rejected GM, Chrysler dealers telling their story on YouTube [w/VIDEO]

Dan Roth — Wed, 30 Sep 2009 10:59:00 EST

Filed under: Car Buying, Etc., Government/Legal, Hirings/Firings/Layoffs, Videos

Holdiman Motor terminated dealer plea - click above image to watch the video

Since government money washed in to pump out General Motors' and Chrysler's swamped and nearly sunken businesses, there's been little mention of the cuts to the dealer base that both automakers have made as part of their rebirth. Tammy Darvish, whose DarCars Automotive Group lost two Chrysler outlets, has started a YouTube channel that encourages terminated dealers to send in videos telling their stories.

Co-chair of the Committee to Restore Dealer Rights, Darvish feels that the dealers' stories have largely been ignored. Many of the videos tell tales of long family histories in the dealership business, and all have an air of incredulity about how their American Dreams could be snatched away. These personal accounts may not return any franchises to operation, but at the very least, the effort is cathartic and airs the plight of the many hardworking employees that found work at the now-closed stores. An example of the numerous videos on the channel posted after the jump.

[Sources: Automotive News - sub req, YouTube]

Continue reading REPORT: Rejected GM, Chrysler dealers telling their story on YouTube [w/VIDEO]

REPORT: Rejected GM, Chrysler dealers telling their story on YouTube [w/VIDEO] originally appeared on Autoblog on Wed, 30 Sep 2009 10:59:00 EST. Please see our terms for use of feeds.

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Opposite World: GM dealers reportedly fretting over too tight crossover and truck inventories

Jeremy Korzeniewski — Mon, 06 Jul 2009 19:02:00 EST

Filed under: Car Buying, Plants/Manufacturing, Buick, Chevrolet, GM, GMC

Buick Enclave - Click above for high-res image gallery

In these dark days of bankruptcy proceedings, ever-dwindling sales figures and decades of receding market share, General Motors' base of dealerships certainly has plenty of things to keep it up at night. You may be surprised to hear, though, that a dwindling supply of available inventory is one of the major problems some dealerships are currently reporting. We're not shocked to hear there's only a six-day supply of Chevrolet Camaro models on hand, but dealers are also seeking remedies for shortages of Buick Enclaves, GMC Yukon SUVs and extended-cab Sierra pickups, as well as limited supplies of Chevrolet Silverado trucks. For a company that has historically had an unhealthy attachment to high inventories across their brands, this is an unusual development indeed.

GM is aware of the shortages and Mark LaNeve, vice president of vehicle sales, service and marketing, tells Automotive News that the shortage is a normal part of the adjustment process from the old days of carrying a 120-day supply of vehicles to today's goal of a leaner 75-day supply. The General's messenger further suggests that dealers trade inventory with each other to bolster inventory until the automaker is ready to rekindle its assembly lines beginning on Monday, July 13 after the company's extended summer shutdown.

Gallery: 2008 Buick Enclave

[Source: Automotive News - sub. req'd]

Opposite World: GM dealers reportedly fretting over too tight crossover and truck inventories originally appeared on Autoblog on Mon, 06 Jul 2009 19:02:00 EST. Please see our terms for use of feeds.

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Under Fire: GM targeting metropolitan Cadillac dealers for closure?

Jonathon Ramsey — Tue, 09 Jun 2009 09:58:00 EST

Filed under: Cadillac, GM

Cadillac is one of the core brands that will form the new General Motors, but the dealership network can't continue in its current guise, according to GM sales head Mark LaNeve. There are 1,422 Cadillac dealers nationwide, more than four times the number of Mercedes-Benz dealers and more than six times the number of Lexus dealers. That kind of saturation meant that in 2008, the average Cadillac dealership did one-sixth the business of a Mercedes dealer and one-tenth the business of a Lexus dealer.

To be fair, Cadillac has fewer cars on offer than Mercedes, BMW, or Lexus. Still, GM wants to gets its dealer volume numbers closer that of the competition - proportionally speaking - and that means more dealer closings. GM hasn't said how many, but to even get close to retail parity they'd be looking at many hundreds of closures, with many of them likely to be in metropolitan areas. Whenever those dealers are chosen, as with the others, they will be allowed to remain open until their franchise agreements on October 31, 2010.

[Source: Automotive News - Sub. Req.]

Under Fire: GM targeting metropolitan Cadillac dealers for closure? originally appeared on Autoblog on Tue, 09 Jun 2009 09:58:00 EST. Please see our terms for use of feeds.

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REPORT: GM preparing to give more dealerships the axe

Jonathon Ramsey — Fri, 29 May 2009 18:29:00 EST

Filed under: Car Buying, GM, Pontiac, Earnings/Financials, Rumormill

On top of the 1,124 General Motors dealers that will be closed next year, the ailing automaker is reportedly going to announce another round of dealer closings on Monday when its bankruptcy declaration is expected. According to two Automotive News sources, 450 dealers will not see their dealer franchises renewed. For his part, Mark LaNeve, GM's VP of North American sales, said the number would be "less than half that."

No matter the number, it's more of the same bad-yet-necessary news being spread around. LaNeve notes that the dealers who won't be renewed "have very specific issues" including "specific performance issues." Among them are supposed to be some stores that are skewed exclusively or heavily Pontiac. These dealers will be shutting up shop when their franchise agreements expire in October 2010.

[Source: Automotive News -sub req'd | Image: Mark Ralston/Getty]

REPORT: GM preparing to give more dealerships the axe originally appeared on Autoblog on Fri, 29 May 2009 18:29:00 EST. Please see our terms for use of feeds.

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GM dealer downsizing could lead to barrage of lawsuits

Dan Roth — Mon, 04 May 2009 15:33:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

Rock, meet hard place. With General Motors handed a directive from the White House to be ultra-aggressive in its restructuring in order to secure more government loans, the automaker is making cuts everywhere and dealers are far from immune. As reported previously, GM's plan to shrink its retailers from nearly 6,300 to 3,700 by the end of 2010 is going to be as painful as a Civil War amputation. Initially, General Motors will deny franchise renewal to dealerships that don't measure up on metrics such as customer satisfaction, profits, volume, and capitalization. An initial group of 1,200 stores will either have an uncomfortable meeting or get a "Dear John" letter starting this month.

Unsold cars will be bought back, but GM hasn't made any intimation that it's interested in compensating for special tools, parts inventory, real estate, and the "blue-sky" value of the outlet. The move to buy back only the unsold cars is likely to lead to legal action on the part of some dealers. The dealers are not only nervous, but they've often leveraged one dealership against their others in order to capitalize their operations. Closing one store that's part of a family of dealerships could start a domino effect for that franchisee, and state franchise laws protect the dealers far more than the automaker. Without filing for Chapter 11, General Motors faces a real fight in its action to pull franchises.

[Source: Automotive News - Sub. Req.]

GM dealer downsizing could lead to barrage of lawsuits originally appeared on Autoblog on Mon, 04 May 2009 15:33:00 EST. Please see our terms for use of feeds.

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GM plans to trim 400 dealers per year until 2012

Jonathon Ramsey — Mon, 26 Jan 2009 14:43:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

Dealership rationalization was something General Motors was looking at well before the economy went pear-shaped. GM still has more than 6,300 dealerships in the U.S., and it is even more important now to start shedding some of that financial burden. That is why The General told dealers at the NADA conference that it plans to get rid of 1,600 dealerships by 2012.

GM's initial viability plan to Congress proposed an eventual reduction to 4,000 dealerships. No one knows yet, though, how GM plans to do that. GM said it will explain the dealer elimination plan in the follow-up viability plan it submits to Congress on February 17. Said one GM dealer, "They basically said, 'We're looking for strong dealers, and if you're not a strong dealer, you better evaluate your options."

GM did say that 400 dealers per year being shut isn't a firm number, simply a target. Nevertheless, dealers are none too happy. Some dealers say GM is using GMAC to force dealers out by setting capital requirements beyond a dealer's reach. GM says it has no intention of using GMAC in such a way. When the time comes, dealership liquidation will be be judged market by market, and based on a number of factors including age, location, volume, capitalization and customer satisfaction. While the plan will obviously save GM money in the long term and make it more efficient, in the short term it is going to cost GM a fortune to close 1,600 locations.

[Source: Automotive News, sub req'd, Photo by Justin Sullivan/Getty]

GM plans to trim 400 dealers per year until 2012 originally appeared on Autoblog on Mon, 26 Jan 2009 14:43:00 EST. Please see our terms for use of feeds.

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GM to delay dealer incentive payments

Jonathon Ramsey — Mon, 17 Nov 2008 18:31:00 EST

Filed under: GM, Earnings/Financials

From November 28 to December 11, GM is holding back incentive payments to dealers, including dealer cash and customer cash. Why? in the words of Mark LaNeve, GM's VP of North American sales, because "Anytime you can delay any kind of a payment, it helps cash flow" And cash is probably the most important four-letter word in any GM dictionary.

The withheld payments don't cover all the monies that GM sends to dealers, just various incentives. According to Automotive News' numbers, the two weeks of extra cash could let GM hold on to an extra $300 million. If GM needs $14 billion per month to operate, $300 million would extend the lifeline by... almost another day. Payments after December 11 would resume on a weekly basis, but with the new two-week delay, something like an employee paycheck. GM discussed the plan with the National Dealer Council beforehand and, unsurprisingly, the council understood. Follow the jump to read LaNeve's letter to dealers.

[Source: Automotive News - Sub. Req.]

Continue reading GM to delay dealer incentive payments

GM to delay dealer incentive payments originally appeared on Autoblog on Mon, 17 Nov 2008 18:31:00 EST. Please see our terms for use of feeds.

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GM working to shrink its dealer network

Jonathon Ramsey — Sat, 19 Jan 2008 16:02:00 EST

Filed under: Car Buying, Buick, Chevrolet, GM, GMC, Pontiac, Toyota, Earnings/Financials

At the end of World War II, GM "put a dealership in every little hamlet" to keep up with the postwar boom. Sixty years later, in 2005, long after that boom had ended and every domestic maker was losing market share, GM had 15,094 dealerships. By 2007 GM had reduced that to 14,118 dealers. But if GM plans to compete financially with its overseas competition, it will need to shrink that number a great deal further.

Chevrolet has 4,000 dealerships. Toyota, to sell the same amount of cars, has just 1,244 dealers. Put another way, the typical Toyota dealer moves 1,766 cars per year. The typical Chevrolet dealer moves 554. And the other domestics fare about the same: the usual Ford dealership rolls 556 vehicles off the lot every year, while a Dodge dealer does 374 per year.

GM is looking at consolidating Pontiac, Buick, and GMC shops into one. However, state franchise laws don't make closing dealerships easy, and it's hard to tell a profitable dealer that he needs to close for the good of the parent company. Dale Willey, head of the National Automobile Dealers Association, said "Dealers make the decision to get into the business, and the manufacturers accepted the dealers getting into the business. It ought to be the dealers' decision to get out of the business." While GM CEO Rick Wagoner realizes that the "payoff is significant" for reducing the number of outlets, he must know that the price will be significant as well.

[Source: Detroit News]

GM working to shrink its dealer network originally appeared on Autoblog on Sat, 19 Jan 2008 16:02:00 EST. Please see our terms for use of feeds.

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