Bailout Watch 510: GM To Terminate 40% of Its U.S. Dealers

Robert Farago
by Robert Farago

GM’s new new new new new new pre-bankruptcy turnaround plan calls for a dealer cull to end all dealer culls. Until the next dealer cull. “Working with its dealers, GM anticipates reducing its U.S. dealer count from 6,246 in 2008 to 3,605 by the end of 2010, a reduction of 42 percent. This is a further reduction of 500 dealers, and four years sooner, than in the February 17 Plan. The goal is to accomplish this reduction in an orderly, cost-effective, and customer-focused way. This reduction in U.S. dealers will allow for a more competitive dealer network and higher sales effectiveness in all markets. More details on these initiatives will be provided in May.” Yes, how about those details? While “working for dealers” is clear code for a payday, there’s no way GM—and by that I mean you and me—can take the hit any such payoff would require. Or could they? The mind boggles.

Robert Farago
Robert Farago

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  • MikeyDee MikeyDee on Apr 27, 2009

    Landcrusher, here is my reasoning... All the carmakers are scaling back production now. Once they are slowed down, it takes a while for them to ramp up again. We know that whatever the "new" GM looks like, they will be making fewer units and selling them in fewer dealerships. Same for Chrysler. As for the thousands of cars sitting on ships docked at sea, I would not want to buy a car who's engine had not been cranked up in over 1.5 years. Add this the fact that a lot of car owners are holding on to their old cars because they're scared to jump in and make the big commitment, or they can't get loans because the banks are really tough right now. All these folks will need a new car in a few years. Where will they find them?

  • Fincar1 Fincar1 on Apr 27, 2009

    I was going to say something about this in reply to a post of John Horner's yesterday, something to the effect that too many dealers for a company with too small a market share means not enough cars on each guy's lot. Only way to fix that? Cut the number of dealers. How this gets done will make a lot of difference: if people in Whistler have to go all the way to Vancouver to buy a GM car rather than dealing with Greg Gardner in Squamish, that'll be more of a loss than if one of several Chevy dealers in, say, Vancouver closes. There has been one interesting change in the dealership picture in my local town: All the GM lines are under one management now, rather than Chev/Cad in one and Pontiac/Buick/GMC under another. Of course, this is a large multi-dealership operation, which also owns the Chrysler/Jeep (new building last year), Toyota, and Honda dealerships in the same town, and a couple of Acura and Lexus dealerships closer to the Microsoft campus. Also, one of the larger independent lots specializing in last-stop-before-the-wrecking-yard cars has disappeared.

  • Ronnie Schreiber Ronnie Schreiber on Apr 27, 2009
    This gang wrapped a whole bunch of hooey in the blanket of “executive privilege”. Read about the abuses of the Wilson and FDR administrations in terms of executive privilege and civil liberties. You'll gain some needed perspective.
  • Jwolfe Jwolfe on Apr 27, 2009

    The great car shortage is an interesting theory indeed. Don't bet on the parked cars not selling. There are 2 reasons, count them just TWO reasons, a car doesnt sell. A) it's not ready or B) it's too high. Shut up, I understand, color, mpg, all that shit is valid, but weigh details into category B on my theory . A or B period end of story. When they get cheap enough, they sell. I could see more of the great truck/suv shortage than great car shortage coming into play in 2011. Disagree with start inventorying non Chry and GM new units now, 1.7 years is a long ass time to sit on unsolds betting on the come. If your correct, the interest during the hold would eat up enough hay to take the fun out of it. It cost ave 5 bucks a day to inventory and insure a piece of unsold stock. 300 AVAILIBLE FOR IMMEDIATE DELIVERY we'll no shit...these damn things eat alot of hay, they need to go. Wonder what it costs to insure and interest unsolds on a manufacturer's income statment?

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