GM Making Progress On Dealership Trim
We’ve long held that in order to return to a sound financial footing, GM needs to cut a huge number of dealerships from its bloated portfolio. The General is still working on the “huge number” part, but having already cut 226 dealerships this year, things seem to be headed in the right direction compared with smaller reductions of 260 and 87 stores in the last two years respectively. With 6,550 outlets still in operation, GM’s Mark LaNeve tells Automotive News (sub) that he wants the cuts to reach 400 by the end of the year.”We see (sales) recovering, but not immediately,” says LaNeve. “In that kind of a market, you’re going to have less dealer throughput, a lot of pressure on profitability.” Luckily for LaNeve, dealerships are not waiting for nasty letters from Detroit to motivate them to exit the market. “It’s no secret the business climate out here is very difficult, and there’s pressure from all sides, particularly the credit side,” says the manager of a Georgia dealer group. “GM has to get involved with this at some level to ensure the right dealers stay. It’s very difficult, and they just can’t save everybody out here.” And why would they?
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There needs to be mega dealerships. Two or three dealers put their money together to build a pretty, shiny store that has lots of used cars to actually make some money. Here is Pittsburgh, there's a dealership called Cochran, that is huge, carrying all of the GM dealerships plus several more. They make money by the volume of the operation. I know that's just wishful thinking 'cause we all know that you can't fit two car dealers egos inside a 100k square foot building!
My thought is with highrpm, I wonder whether the number of dealers really matters. I understand Bunter's point but I don't think it is Chevrolet competing against Chevrolet so much as it is the Chevy Traverse vs. the GMC Acadia vs. the Buick Enclave vs. the Saturn Outlook. As John Horner says, they need one award winning model in each segment and I think that can be accomplished with Chevrolet, Cadillac and probably Buick as an appendage of Chevrolet (due to its Asian popularity.) Toss off Pontiac, GMC, Saturn, Saab & Hummer and the internal competition and dealer participants will take care of itself.
rpol35-Sell Buick to the Chinese yesterday. Get some cash out of it. But you are right that Chevy and Caddy at all they should have in the US. The Lambda cannibalism is certainly at the the heart of my "self competition", but yes, I do think that Chevy dealers in some areas eat each others lunch on those occassions when they have a vehicle people want. There are reasons Toyota limits it's dealer numbers. Take care, Bunter