GMAC Doing GM's Dirty Work, Killing Dealers
Even as we await word on whether GMAC lives or dies, it’s increasingly clear that GM is using the lender as a hit man to decimate its dealers. Bloomberg clues us in on the motivation: “A U.S. dealership glut is damping the retailers’ profits, crimping spending on marketing, facilities and vehicles, GM and Chrysler say. GM set a goal of closing 1,750 showrooms, or 27 percent, over four years while Chrysler said it wants to thin its 3,300 dealerships, without setting a target… ‘In a number of states there’s these very elaborate procedures that you have to go through to shut dealerships,’ University of Chicago law professor Douglas Baird said in an interview. ‘In some states you just can’t do it at all.'” Philly.com shows us that GM has the means: “A half-dozen trailers rolled up to Eckenhoff Cadillac Buick Pontiac GMC in Jenkintown bright and early and wiped the lot clean of $8.4 million in inventory – Hummers, Cadillacs and all… GMAC, the beleaguered financing arm of General Motors Corp., had called the loan that had enabled Scott Eckenhoff to stock new and used vehicles. Big trailers carted away the collateral from a Big Three retailer that had been hanging on by a thread.” Opportunity? The current Motown meltdown. My question: what the Hell is GMAC going to do with all that inventory? Put another way, who’s going to bury the bodies? [thanks to Stein X. Leikanger for the tip!]
Brettc your points to me are right on the mark. I retired 5 years ago after running a very succesful Chevy-Cad store. I got away from the business out of disgust and loathing for GM and its actions towards dealers and customers. I spent my entire career in the car business and I grew to distrust and dispise Gm management for the dishonest tactics they used in dealing with us the dealer and the lack of fairness with customers. The way lack of floorplanning is forceing dealers out of business is very convenient for GM but the ill will and hatred they are creating is going to hurt them big time. This is further proof to me that my conclusion after years of interacting with them is that they are a shameless, dishonest company that cares little about their customers and even less about their dealers and employees is still the right one.
I'm late to the table on this one, but read when it ran in the Inquirer. Thanks to RF for picking it up. But I am surprised that so many missed this salient quote way down in the text: "This is why some locals suspect GMAC is working with GM to clamp down on sites that GM would like to see eliminated from the grid - even though GM has not released a list of targeted dealerships. "Some dealers believe it's just part of GM's plan to proactively reduce the number of dealerships, and that's one way to do it," said Richard Weitzman of Staubach Retail's auto group practice in Bala Cynwyd. Weitzman, who brokers land transactions for local auto dealers, said there is a growing sense that GMAC is coming down hard on some dealers for GM, which is hoping to avert bankruptcy through steep restructuring. GMAC's Stoller said this was "not the case. GMAC continues to extend credit when there is an appropriate business case for doing so." Asked if GMAC was singling out GM's weakest dealers, he said: "We are prudently managing our portfolio for risk in a consistent manner."
I live just down the street from this dealer (Eckenhoff) and it was unbelievable to see this happen. They had literally hundreds of cars on their HUGE lot. One day it was full, and the next day EVERYTHING was gone. I pulled in and looked on the door/windows for an explanation for their customers to read, but there was none.