Closing auto dealers: Dumb move

[pauldun170]

Lets just recap
Automakers wanted to dump underperforming dealerships and also reduce saturation.
Franchise laws made this an expensive and onerous task.
Gov\Tarp came along and said 'we'll make it easy for you'
Automakers jumped on it.

Benefits

Long-term gains

The upside of cuts is that the surviving dealers can present a better image for the manufacturer and over time, said Dilts, the surviving dealer network will be able to pick up lost sales volume as the economy improves.

More profitable dealers can spend more on store upgrades, build more service bays to take care of customers and provide better salaries and higher commissions to attract the best employees.

"We feel that customers like to visit nice, clean, upgraded facilities," said Garontakos.

Just reducing the sheer number of dealerships isn't the goal for GM.

"They're going to leave their 'power stores' together in their key markets," said Dilts.

GM's dealership network gives it certain advantages over a rival like Toyota said GM sales spokesman John McDonald.

There isn't much else that I can add.
This auditor complained that closing the dealerships added to unemployment rolls and the government didn't add as much weight to that when it offered the automakers help in getting around franchise laws.
The point of helping out the automakers was to help the automakers...not the dealerships. Its better to have some great franchises than alot of shitty ones because the shitty ones drag your brand down. Having em close together devalues your product because now you have pricing nonsense as two crappy dealer compete, both dealers with excess inventory screwing up your forecasts because now you gotta deal with multiple dealers instead of one all trying to sell product that just wont move.

[101lifts2]

Pauldun I think you are pretty misguided in this thread. I have alot more experience with auto OEMs and dealerships than many here. I have spoken about buisness practices with many dealer principles (owners) over the years. The fact of the matter is this: While GM takes in alot of cash, it was shelling out more. The main reason was too many like products with too much inventory, so plants had to be closed and personall had to be reduced. Now...if you do this, you simply do not have enough inventory to support 4,XXX dealers, so the bankruptcy protected GM from getting sued.

More dealers = more revenue for GM. Period, especially if the dealers are hungry. Also, don't forget GM has fixed costs with its IT, Service support, sales support that the dealer pays GM per month. If you cut the dealer body in half, you loose half of this revenue, while still having to provide the same level of service to the remaining dealers. Also, in most cases GM will jack the monthly fees per month to compensate for the reduction in the dealer count.

The advantage for dealer reduction is at the dealership itself. Less competition and less vehicles produced will ensure a steady steam of revenue, but because of this, these dealers are no longer "hungry' and will be content with selling only slightly more vehicles or servicing slightly more vehicles than before.

Isuzu is going through the exact same thing...550 truck dealers (GM/Isuzu) down to 300 (Isuzu). Vehicle sales WILL decrease and it will be loose for Isuzu and win for the remaining dealers.

[pauldun170]

Originally Posted by 101lifts2

Pauldun I think you are pretty misguided in this thread. I have alot more experience with auto OEMs and dealerships than many here. I have spoken about buisness practices with many dealer principles (owners) over the years. The fact of the matter is this: While GM takes in alot of cash, it was shelling out more. The main reason was too many like products with too much inventory, so plants had to be closed and personall had to be reduced. Now...if you do this, you simply do not have enough inventory to support 4,XXX dealers, so the bankruptcy protected GM from getting sued.

More dealers = more revenue for GM. Period, especially if the dealers are hungry. Also, don't forget GM has fixed costs with its IT, Service support, sales support that the dealer pays GM per month. If you cut the dealer body in half, you loose half of this revenue, while still having to provide the same level of service to the remaining dealers. Also, in most cases GM will jack the monthly fees per month to compensate for the reduction in the dealer count.

The only real benefit for dealer reduction is at the dealership itself. Less competition and less vehicles produced will ensure a steady steam of revenue, but because of this, these dealers are no longer "hungry' and will be content with selling only slightly more vehicles or servicing slightly more vehicles than before.

Isuzu is going through the exact same thing...550 truck dealers (GM/Isuzu) down to 300 (Isuzu). Vehicle sales WILL decrease and it will be loose for Isuzu and win for the remaining dealers.

ok

[101lifts2]

Originally Posted by pauldun170

ok

Did Homeslice wear you out?

[pauldun170]

http://www.youtube.com/watch?v=nFDqv...eature=channel