Bailout Watch 558: GM Dealer Network Analysis Revealed
Well, we still don’t have that list of doomed GM dealers. Senator Rockefeller’s office has failed to return eight phone calls asking for the information: the list he requested from GM CEO Fritz Henderson, who promised, under oath to provide. Meanwhile, here, finally, is the supporting documentation for GM’s dealer cull. The bankrupt automaker submitted the document [ link here] to Friday’s Stupak hearing on dealer closing. Bottom line: GM’s dealer network reductions enable an estimated $415 million in “gross structural cost savings potential.” What is it with these guys? There are lots of good reasons to shrink GM’s dealer network. In the face of a total industry bailout that’s topped $100 billion, Henderson’s “rooftop” cost saving ain’t it.
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What really boggles my mind is that GM couldn't immediately and clearly state what the cost benefit of the dealer cull would be. Henderson is a bean counter after all - he may not know how to run GM, but surely he would have crunched the numbers before doing this.
Can somebody explain to me how you can increase your market share, while eliminating 25% of your dealers and lowering your marketing budget? What's going to make me drive 10 miles farther to check out a GM dealer's showroom? GM's product pipeline is better than Chrysler's but it's not fantastic. Until the end of 2009, it looks like they have a nice Chevrolet Equinox arriving very soon and a Buick LaCrosse coming for fall. Other than that, is there anything new?
What I found interesting in my area (West of Boston MA) there are two local GM dealers. (Chevy, Buick,GMC,Pontiac) are advertising that they are "Key" dealers. Both of them sell a a lot of cars. And both, (are you sitting down) have a good reputation for service. One of the dealers has several other brands, the stores are spread out. While the latter has one store, that has been in only two locations since 1940. As for location placement, I don't know much about car dealers or how a franchise location is selected, but some time ago, I knew someone that wanted to set up take burger place. He looked into McDonald's but they soundly rejected his rural location. He then built his own place, and did pretty good. Within two years McDonald's had a store up and running. In a location about 40 minutes from his place. The store was not very far from where he proposed the original location.
@ Jimmystartup Man that hearing was painful - the "opening" portion took over 50 minutes! Things don't even begin to get interesting until the 56 minute mark where Jimmy P says that the brand-clones did not result in incremental volume of units sold. Farago should appreciate that dig at brand engineering.