By on June 9, 2010

Thanks to congressional arbitration, GM’s dealer cull has been steadily downsized since The General made the decision to axe nearly 2,000 dealers during last year’s bankruptcy. Going into bankruptcy, GM had about 6,000 dealers nationwide, and it culled nearly 2,00 of them in an attempt to lean out its distribution channels. But now the Detroit News reports that GM’s North American boss Mark Reuss has said that about half of those culled dealers will have been reinstated by this July, bringing GM’s dealer count back to the 5,000 ballpark.

When asked for confirmation, GM spokesfolks equivocated, saying:

We’re not providing numbers. Those numbers change every single day. We are talking to dealers who are trying to settle cases with us. We are going to arbitration hearings. Decisions are being handed down and those numbers change every day.

The GM and Chrysler dealer culls have been deeply controversial since day one, generating opposition in congress and among dealers. According to the National Automobile Dealers Association, GM’s reinstatement of 1,000 dealers could save as many as 47,700 jobs.

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20 Comments on “GM Dealer Cull: Now With 50 Percent Less Cull?...”

  • avatar

    dealer cull never should have happened to begin with, glad the course has been changed. unfortunately some of the damage done by previous management is irreversible.

    • 0 avatar

      I sure don’t see how having too many dealers is a good thing for Gov’t Motors. All they’re doing is once again pitting stores against each other.

      There are no fewer than six Chevy dealers — not GM, just Chevy — within a 100 mile radius of Albuquerque. That’s at least three too many.

  • avatar

    The congressional gerrymandering of GM’s dealership network will only have a temporary effect on saving jobs.

    First, most of those people must have moved on since last year’s culling. Is it really feasible to reinstate closed dealerships? What are the costs to do that?

    Second, GM has way too many dealerships even at the 4000 level. Having 5000 of them will only drag the company’s financial picture down faster, and those jobs will eventually disappear anyway. Most – admittedly not all – of these culled dealerships were inefficient or losing money. What will change?

  • avatar

    So what happens to all the capacity constrained models being spread even more thinly among these additional dealers?

    • 0 avatar
      John Horner

      The car business in awash in excess capacity. “Capacity constrained models” are rare, and they don’t stay that way long.

      In the rare cases where GM might have to do allocation of hard to get vehicles, they are free to use any reasonable criteria with which to make the allocation decision.

  • avatar

    Folks, maybe on the East Coast or in Southern California it seems there are too many dealerships, but in the great in between it’s a different story. You need dealerships nearby to sell and service new vehicles.

    When I drive the back roads between Austin, TX and SW Colorado I get a first hand look of the disappeared dealerships in the minuscule towns that are at least a one hour drive from bigger towns like Lubbock or Amarillo.

    There are no Toyota, Honda or Hyundai dealers in these rural towns. GM, Ford and Dodge were it. Many of the tiny operations got the ax. I think that was a mistake when the customer has to drive 60 to 100 miles or more for service.

    • 0 avatar
      John Horner

      Indeed, axing the successful but small local dealerships was super stupid. I think one of the reasons that the F150 is gaining a lot of market share is that Ford still has a robust dealer network in many of the smaller places where GM and Chrysler have abandoned the market.

    • 0 avatar

      Good point – I’m just curious of the costs (both real, and opportunity) to GM to keep those channels open. Although partially owned by the US, they aren’t a charity, and what’s best for the out-of-the-way towns isn’t always best for the car companies.

  • avatar
    John Horner

    Good, the dealer cull was a misguided hatchet job from the beginning.

    Ford is the healthiest of the US based auto makers and has been very carefully trimming its dealer network over time, not running berserk through the field lopping off heads.

  • avatar

    To me the strangest thing about the dealerships that were eliminated is that (at least in the metro Detroit area) there seemed to be no rhyme or reason as to which dealerships remained open and which ones closed. Both for GM and Chryco. Then less than a year later some of the stores were reopened with new operators. Since the car companies routinely receive dealer statements so they know a dealer is a viable financial entity which is a condition of keeping a franchise open it doesn’t seem as though many of the closed stores were fairly treated.

    The volume import marques have proven the domestics have way too many dealers so while it may be good news for individual dealers I don’t think it’s a benefit to GM or their dealership body as a whole.

  • avatar

    I think it’s a mixed bag.

    There were dealers who were complaining about the ever increasing demands from Detroit about upgrading their stores more frequently. Then there are the stores that haven’t updated since the 1970’s, and were still out there, making their parent companies look bad.

    I’m not so sure about GM, but I think when Chrysler was doing a good bit of consolidating before the BK. At least in my area, most of the moves were good ones. They took and melded all of the brands into one dealership and provided a way out for the dealers who were affected. Of course, they did close some smaller rural dealers and a great fuss was made about that.

    Chrysler was doing (before the BK) what GM should have been allowed to do, consolidate dealers under one banner. Imagine if you could go to a GM store and buy whatever GM produced. You CAN do that at the consolidated Chrysler/Dodge/Jeep stores.

    The dealer cull and consolidation would have provided better service to the customer, IMO. But, state franchise laws being what they are, the culled dealers are fighting to regain their franchises. It’s a semi-free country, and I hope those folks live up to their promises.

    It’s nice to have lots of dealers, but only if they’re living up to the standards set by the companies and the communities they operate in.

  • avatar

    My closest Chrysler dealer had just gone to 3 brand and just moved to a new modern facility when it was canned. The canning left me with no convenient place to take my car for dealer service.

  • avatar
    Gardiner Westbound

    GM Canada closed more than 200 dealerships, many in small cities and towns. It hoped to retain 70+ percent of discontinued Pontiac, Saturn, Saab and Hummer customers. The number so far is less than 30-percent. GM’s sales for the first four months of 2010 fell 11-percent, almost 9,000 vehicles, while the overall market climbed 11-percent. April was particularly bad, GM sales down 21-percent, market up 4-percent.

    It’s a bonanza for competitors. GM’s market share tumbled from 18.6 percent to an all-time low of 15-percent. Some say GM is fudging the numbers, it’s overall share has slid to an abysmal 7-percent.

    Father-in-law has been buying or leasing a new Buick every few years from the same rural Pontiac-Buick dealer for decades. GM shut it down. The dealer reopened under the Hyundai banner. He is now in a Hyundai Genesis and is unlikely to return to the GM fold – ever!

    How did closing dealers ever make sense? 200 dealers selling 100 cars each is 20,000 cars a year. Bonus, they keep ’em coming back for parts, service and new cars for decades. That’s a hell of customer and an irreplaceable asset. Only a moron fires his customers!

    • 0 avatar
      John Horner

      I argued loudly here on TTAC at the time of the dealer slaughters that no good would come of it. The lost sales outlets would simply result in many lost sales, and not in concentration of those sales at the remaining dealers.

      In our town a nearly brand new Chevrolet dealership with a beautiful facility shut down. Word in the local paper is that it will soon reopen, as a Honda store. Great move GM, putting resources into the hands of fierce competitors like Honda and Hyundai!

  • avatar

    The cull should have been much more extensive. I still have 5 Chevy dealers within 10 miles.

    We’ve lost thousands of dealers since 1949 – all the while selling more cars. It’s complete myth that more dealers are needed to sell more cars.

  • avatar
    Geo. Levecque

    A little off Topic, but I didn’t know how to get hold of the Boss of this site. The BBC are announcing that Germany has said No to giving Money to GM, as predicted by this Blog. Kind regards GE Levecque

  • avatar

    I can only imagine the outrage when after the restaurant wars only Taco Bell remains.

  • avatar

    Of course they’re being reinstated. Government Motors had to show it was downsizing to get the taxpayer (TARP) money. Just like they shut down 4 brands. Right?

    Then you look at the big picture and after analysing the models GM killed and the models GM has added, cluster up the rebadges and they dumped a total of:

    Pontiac G-6/Saturn Aura (Rentalbu clones)
    Hummer H-2 (Suburban/Yukon)
    Hummer H-3 (Colorado/Canyon/Suzuki thing clone)
    Pontiac Solstice/Saturn Sky
    Pontiac G-5/Saturn ION (Cobalt clones)
    Saturn outlook (Acadia/Enclave/Travers clone)
    Saturn Vue and Pontiac Torent (Equinox clones)
    Pontiac G-8 (Rebadged Aussie)
    Saturn Astra (Rebadged Opel)

    11 vehicles.

    But, but, but! Then they replaced them with

    Buick Regal (instead of the Saturn Aura)
    Buick Electra (Instead of the G-5)
    GMC Terrain (Instead of the Vue or the Torent)
    Chevy Cruze (to slot above the Cobalt)
    Chevy Wave (instead of G-3)

    Coming soon
    Buick Terrain clone
    Cadillac Outlook clone

    It’s all a ploy to make people think that GM is running “Lean and Mean” when in all actuallity (just like the article states) it’s just a matter or shuffling things around.

    BTW, Pontiac will come back as soon as the IPO arrives, just wait. It’ll be like nothing ever even happened.

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