GM "Expects" To End 2008 With 350 To 400 Fewer Dealers; Current Count Is 6,550

[t-rex]

Originally Posted by GMCSonoma

I disagree....



I've been terribly sucessful working in a market that is not a metro market...

So if my dealer closed, the easy thinking is that our customer base would just all go to the respective franchise in the big city???

I bet not...that's one thing I've learned in over 2 decades in this business...

Wal Mart is the most sucessful retailer in US history to speak of...they did it by steamrolling into every small town that take them in, and even roll in when they weren't "welcome"...yet people flock to them!

But, GMCSonoma, "what if" your dealership ceased to be a new car outlet, but remained as a parts and service center? Or even keeping used cars?

I wish I knew more about the parts/service biz, because at least from an outsider's point of view, it would seem that GM's glut of dealers could be used as an asset, if those rural and small town dealers remained as service/parts centers.

With even rural and small town folk flocking to import brands, it would be a selling point to a potential GM buyer in those areas if they could have their car serviced locally, unlike the import competition. I don't think customers even in rural areas mind so much driving into the city to buy the car, after all they drive to the cities to buy appliances, boats, TV's and other items.

Urban dealerships, knowing full well that folks out in Bumpkinsville aren't wild about driving the 40 miles into Superior City just for authorized dealer servicing, may consider forming alliances with the small town service centers, and could point out to a potential customer that he can get his new Malibu or Lucerne serviced right there in Bumpkinsville, unlike that Camry or Avalon he's been cross-shopping.

I don't know if such a scheme would be feasible, but it seems in theory, at least, to be a reasonable way to utilise those small town and rural dealers, using excess into coverage!

If I lived in a small town, especially one a significant distance from the city, the ability to have my car serviced locally would be a serious factor in my decision making.

[CadiEldo67]

Originally Posted by FierySolstice

OK so they want to get rid of approximately 400 dealers? Saturn has 404. There you go!

Made my day

[logansowner]

Awesome news...several thousand less jobs...sweet.

[jbernie]

If times were better for GM it would be good if they could toss say $1 million to the dealerships to close up, obviously with a contract that says they are not able to open up a new dealership under any GM brand for x years.

Money isn't around to do clean up, no doubt GM would love to see a thousand or so go away sooner rather than later and make the remaining ones much stronger and more desirable places to visit.

As to the Hummer count. Is it possible to sell a particular brand but not be a dealership for that brand. Maybe they have a low volume or something?

[jbernie]

Originally Posted by logansowner

Awesome news...several thousand less jobs...sweet.

That depends, if you made reductions in the Chevrolet dealerships, potentially you would make the others stronger & larger and bring in some of the employees from other dealerships.

Would not see all of them getting jobs and other dealerships but certainly higher volumes at other dealerships would require more technicians, admin people and even sales people.

[ChevroletRevived]

Originally Posted by t-rex

But, GMCSonoma, "what if" your dealership ceased to be a new car outlet, but remained as a parts and service center? Or even keeping used cars?

I wish I knew more about the parts/service biz, because at least from an outsider's point of view, it would seem that GM's glut of dealers could be used as an asset, if those rural and small town dealers remained as service/parts centers.

With even rural and small town folk flocking to import brands, it would be a selling point to a potential GM buyer in those areas if they could have their car serviced locally, unlike the import competition. I don't think customers even in rural areas mind so much driving into the city to buy the car, after all they drive to the cities to buy appliances, boats, TV's and other items.

Urban dealerships, knowing full well that folks out in Bumpkinsville aren't wild about driving the 40 miles into Superior City just for authorized dealer servicing, may consider forming alliances with the small town service centers, and could point out to a potential customer that he can get his new Malibu or Lucerne serviced right there in Bumpkinsville, unlike that Camry or Avalon he's been cross-shopping.

I don't know if such a scheme would be feasible, but it seems in theory, at least, to be a reasonable way to utilise those small town and rural dealers, using excess into coverage!

If I lived in a small town, especially one a significant distance from the city, the ability to have my car serviced locally would be a serious factor in my decision making.

Wow, interesting idea! I'm not sure how that would work either, although I'm pretty certain it would not be feasible to have a standalone/parts service center unless it was somehow partnered with a larger metropolitan dealer. Very interesting though, never heard of that idea before.

[vcs2600]

I'm not sure if rural dealers are really the problem -- GM probably moves enough pickups through those dealers to make them worthwhile.

It's more when you get into the cities and there's a Chevy dealer and a Pontiac/GMC right across the road selling substantially the same product. Customers get wise to this and then margins go down.

[kenman923]

Originally Posted by FierySolstice

OK so they want to get rid of approximately 400 dealers? Saturn has 404. There you go!

Then what do you do with the other four?

[GMCSonoma]

Originally Posted by ChevroletRevived

Wow, interesting idea! I'm not sure how that would work either, although I'm pretty certain it would not be feasible to have a standalone/parts service center unless it was somehow partnered with a larger metropolitan dealer. Very interesting though, never heard of that idea before.

That would have to be the case...


Big brother catering to the little brother....LOL...no thanks!!!!


I know of a GM dealer in the "city", who happens to be multi-line...and my small city dealer outsold them in 2007!!! So location in larger metros doesn't mean a thing, based on what I see anyways...

[t-rex]

Originally Posted by GMCSonoma

That would have to be the case...


Big brother catering to the little brother....LOL...no thanks!!!!


I know of a GM dealer in the "city", who happens to be multi-line...and my small city dealer outsold them in 2007!!! So location in larger metros doesn't mean a thing, based on what I see anyways...

This is true, and I don't want to give the impression that I summarily believe small-town dealers should close to keep dealers in the larger cities open. Though it's likely that low volume in the cities is due to the greater glut there than in smaller towns. When I was digging around on the Chevy dealer locator, I found some cities with populations around the 100k figure with four and even five Chevrolet or Chevrolet/Buick/Pontiac dealers!

I'm sure there are more than just a few examples of dealerships in small towns, say 30 miles or so from a major city, that not only outperform the urban dealerships but actually draw customers from them.

And there are some small cities, particularly in the sparsely-populated western part of the country, that serve as major commercial centers, despite their small size. Lewiston, Idaho, for example.

But not knowing the ins and outs of how profitable parts and service are (though I've heard they all but keep the doors open), is it feasible, in your opinion, for a dealership, urban or rural, to be a profitable business with only parts and service? That is, of course, if GM were to give an incentive to surrender the new car sales?

Since there countless independent auto repair shops in most towns and cities, not to mention parts houses like Napa, it seems reasonable to assume that Wayne Schlegel Chevy-Buick-Pontiac could feasibly be a successful as "Schlegel GM Service Center". I've found most GM dealerships with a good reputation, at least in my area, built those reputations more on service than sales.

[aa2]

It is my understanding that GM has 6,500 seperate dealer locations, and about 12,000 franchises. So a Chevy-Cadillac dealership would count as 1 dealer location, and 2 franchises.


I think the networks should be substantially consolidated. And that the company should help fund the consolidation if it gets enough money. Its not as expensive as one might think either, to close 1,000 dealerships by offering 1 million in the deal, would cost 1 billion. Not that much compared to the losses we hear the company taking.

[Bravada]

The number of dealerships is not a problem itself. The problem is that they cannot earn enough operating margin to cover necessary investment and guarantee appropriate service level. Since sales staff's compensation depends on, well, sales, they will also have trouble keeping the top talent (this can also apply to service).

Another problem is that, while generally the new car business is hardly profitable, selling GM cars is probably even less profitable than selling e.g. Toyotas or Hondas - while the manufacturer bears the most of all incentive costs and obviously covers for the fact that the car has to be cheap, dealers most likely also do have to chip in to move the metal, and I believe margins are made even thinner by GM's reputation for low-ball pricing.

So, GM needs to make sure their dealers guarantee appropriate sales and service experience. This can be done several ways:

1. Offer promising dealers better financial conditions, while worsen them for those deemed unreparable or redundant. If GM would sell cars to some dealers at better prices and to some at worse, they latter would be quickly pushed out of business - it simply wouldn't pay off. Other means are financing for dealer "upgrades", co-financing promotions and sales incentives, extra remuneration for well-performing sales staff and all (though in the overregulated socialist USA some "dealership laws" might prevent that, what kind of capitalism is that if you can't e.g. own your own dealerships in some states?)

2. Make it a viable business case and an officially recognized business model for a GM "dealership" to focus on fixed ops only. While I admire GMCSonoma's dealership's performance and achievements, I am sure there are many other GM franchises with crappy sales facilities/staff and quite good service. There's no need to force the entire place to fold down, just keep those nasty salesmen off limits

There is even a business model working in some places in Europe where the manufacturer runs a network of mobile salesmen, with a fleet of demos conveniently located accross the country (often in cooperation with rental companies - GM's favorite customers ), so you just call and get a test drive and presentation at any location you prefer (close to home, work or where you shop). I could even imagine the dealers running a very small "sales area" (just for the salespeople to be able to sit down and discuss options with the client), getting paid for sales leads and generating business for the GM mobile sales network.

[Joe in T.O.]

Originally Posted by t-rex

What defines "controlling" franchise?

Pontiac seems to trump Buick and GMC, but since there's never been such thing as a standalone GMC store, what would GMC trump?

Maybe "controlling franchise" was the dominant brand at a dealer before BPG consolidation...

Here in Toronto, Ontario, Canada there used to be a standalone GMC store and it was huge! It was quite a long time ago though.

[Buickman]

imagine a tree has been there for a hundred years, with deep roots, many branches, and beautiful leaves. Red Ink Ranger Rick comes along without any training or knowledge of forestry, strips it of it's bark, infests it with termites, brings in a flock of woodpeckers, and cuts off limbs with reckless abandon. then the poor, tired old tree dies and falls over. yet, some confused horticulturalists create a website on which they discuss the merits and benefits of Ranger Rick and how it really isn't his fault since the tree was there before he arrived and was getting old anyway, and how we need fewer trees.

[08HYT]

Originally Posted by t-rex

What defines "controlling" franchise?

Pontiac seems to trump Buick and GMC, but since there's never been such thing as a standalone GMC store, what would GMC trump?

Maybe "controlling franchise" was the dominant brand at a dealer before BPG consolidation...

There has been a stand alone GMC dealer in my town since at least 1992