GM working to shrink its dealer network, Pt. 2: introducing GM Collections

Yesterday we wrote about GM's intent to shrink its 14,118-strong dealer network, with one idea to combine Pontiac, Buick, and GMC dealers into larger, more modern flagship outlets. Turns out that was only part of the plan: according to Automotive News, "General Motors is preparing to make public a plan to encourage the creation of superstores in major metro areas that would carry every GM brand."

These superstores, which would be called GM Collections, are being evaluated for major metropolitan markets where the real estate itself is more valuable than the dealer franchise. For dealers interested in such an outlet, GM's idea is to move service and parts centers off-site to make room for all of the brands. Some dealers think that's a turn-off for consumers, others report good results. In LA, this has been standard practice for a while, with some service departments 25 minutes away from their dealerships. We don't find anything wrong with it, either -- after all, once you've bought the car, how often do you need to go back to the showroom?

The superstores plan is another part of the consolidation plan. In addition to combining Pontiac, Buick, and GMC, the General is also thinking about merging Cadillac, Hummer, and Saab dealerships, which would leave only Chevrolet and Saturn as standalone entities.

UPDATE: Mark LaNeve sent an email to GM dealers this morning saying that the article in "Automotive News concerning a major push to put all of GM brands under one roof is out of context and a mischaracterization." There are no plans to make an announcement about new metro superstores at the NADA conference next month in San Francisco. However, Automotive News still maintains that GM will allow certain stores to carry all of GM's eight brands. We've included the full text of LaNeve's email after the jump (thanks Rob!) and you can check out Automotive News' updated article here (sub. req.).

[Source: Automotive News - Sub Req.]

Important Message from Mark LaNeve
Dear GM Dealers:

The recent article in Automotive News concerning a major push to put all of GM brands under one roof is out of context and a mischaracterization of our ongoing channel and dealer profit improvement initiatives.

There will be no announcements of any kind regarding any new initiative or change to our channel strategy at the upcoming NADA convention in San Francisco.

What is true is that we have made tremendous progress on our channel efforts to date and recently completed a series of meetings with over 2000 Buick-Pontiac-GMC dealers where we updated them on our progress and plans for the future of the BPG channel.

We have also worked with our dealers on consolidation activity and made significant progress over the past couple of years.

In conjunction with the profitability subcommittee of the National Dealer Council, we have established a Dealer Profitability Department, dramatically reduced dealer inventory, increased the Wholesale Floor Plan program and are looking at many other initiatives.

One of the critical issues facing dealers is the high cost of real estate in the prime locations. We are working with the Subcommittee to address the proper size of dealer facilities, explore additional remote service opportunities and the inclusion of more than one channel at a prime location. To some extent, these types of discussions and activities are nothing new and have been going on for some time on a limited basis.

It is unfortunate the story gave the impression of a major policy announcement or shift in strategy. GM remains committed to working diligently to improving our dealers throughput, return on investment (ROI) and franchise value.

Thank You.

Mark LaNeve

Vice President

Vehicle Sales, Service and Marketing

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