GM to Axe 1100 Dealers at High Noon

Robert Farago
by Robert Farago
gm to axe 1100 dealers at high noon

Bloomberg reports that General Motors marketing maven Mark LaNeve is set to announce that the bankruptcy-bound automaker will drop the axe on 1100 US dealers at noon EDT (16:00 UTC). The move is designed to reduce GM’s dealer count from 6200 to 3200. Don’t tell the MSM, but the news is nowhere as dramatic as it seems. First, the cull won’t—in fact, can’t—take place until after The General files for Chapter 11, where bankruptcy law trumps franchise law. As Bloomberg’s insider says, “GM is hoping for an orderly wind-down of the affected dealers over the next year or so.” In that sense, the pre-C11 dealercide decision is just for show.

GM’s lame duck management are proving to GM’s real owners, The Presidential Task Force on Automobiles (PTFOA), that the suits “get it.” You know, faster, pussycat, kill, kill, kill! At the same time, the dealer ditching announcement is classic misdirection. General Motors (i.e., the PTFOA) has already started eliminating stores in a far more effective way by “allowing” GMAC to withdraw floorplanning loans.

Anyway, how the stores and the corporate mothership will dispose of one-sixth of the 750k units (120k or so) on the ground is the real, multi-billion dollar question . . .

“A concern of all dealers would be if the market value of vehicles were to decline because terminated dealers would be desperate to sell,” said Jim Eagan, a partner at consulting firm Plante & Moran in Southfield, Michigan.

Eagan said he hoped that GM would force the remaining franchisees to purchase inventory from stores being closed. Bankrupt Chrysler LLC took similar steps when it announced the shutdown of 789 dealerships yesterday.

Yes, they did, didn’t they? But it’s hard to see how “good” GM or “wikkid pissa” Chrysler could force dealers who survive their family and friends fatwa to “buy” vehicles from the dealers destined to meet Allah (sooner rather than later). Who sets the price? How would they pay for them? (Please, God, no more taxpayer subsidies.) Where would they PUT them?

Much more likely: the mother of all fire sales. As they said in Tin Men, “Bonanza is not an accurate depiction of the West.” Sorry, I mean you gotta move the metal.

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  • Charly Charly on May 15, 2009

    The Offer that GM gives to its death row dealers is good, but it is better than what they would get with CH11 GM. AFAIK the deal is putting back the cars and buy pack of tooling and signs. The C11 deal is no deal at all. I think they hope that a lot of dealers will take the deal offered.

  • on May 16, 2009

    [...] set to announce that the bankruptcy-bound automaker will drop the axe on 1100 US. fique por dentro clique aqui. Fonte: [...]

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