The Truth About GM's Dealer Cull

Robert Farago
by Robert Farago

One of our sources e-mailed me a copy of GM’s pre-bankruptcy dealer strategy, including the formula deciding which dealers lived and which ones died. [ Download PDF here] According to the doc, the proto-nationalized automaker pegged its ‘ideal’ dealer total at 3,380. Only, Fritz Henderson’s mob overshot their target by 220: “objective performance criteria yielded approximately 4,100 dealers vs. 3,380.” Flash forward to today, and Automotive News [sub] reports, “The House’s No. 2 Democrat said lawmakers may try to revive stalled legislation to reverse dealer terminations if General Motors Co., Chrysler Group and dealer groups don’t sit down soon to begin negotiating a settlement.” Hang on; where’s the Presidential Task Force on Automobiles in all this? Meanwhile, Senator Grassley said “it’s important for Congress to get an explanation from the manufacturers as to how they determined which dealers would be terminated and which would be retained.” Well, now you know.

Robert Farago
Robert Farago

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  • FreedMike FreedMike on Sep 24, 2009

    From my little corner of the world, the closures make sense and may have been a case of overprofileration in a growing market (Denver). Two Chrysler/Dodge/Jeep dealers closed, but there are two far stronger stores within 15-20 minutes. Ditto for the local Chevy dealer, which is slated get euthanized. Rumor has it they'll switch to Buick/GMC. The common thread: all three dealers are in newly developed suburbs, and all opened after 2000. It's a shame, but anyone who had ever shopped these stores knew they weren't setting the world on fire sales-wise.

  • FreedMike FreedMike on Sep 24, 2009
    Deepsouth : September 24th, 2009 at 7:29 pm Terminated dealers will remain deceased. Our family held one of those points killed by GM. My family worked our buns off for GM. Now, we painfully understand it’s gone forever. Luckily, our family also acquired and held multiple import franchises in separate locations. My condolences - I know this must be difficult for you and your family. I do have question, though - how was your GM store doing sales-wise compared with other local stores? In my area, the Chevy store that is set to close is a new dealer (opened 2004) that was within 20 minutes of a very high-volume Chevy dealership. Similar story with the local Chrysler store.
  • Deepsouth Deepsouth on Sep 25, 2009

    @Freedmike. The store made it's sales and CSI factory mandated goals on a consistent basis. However, it was in a less populated area. The bulk of the sales came at the expense of a larger volume GM dealers in a neighboring towns. While it's not pleasant to take the loss. It was not completely unexpected.

  • FreedMike FreedMike on Sep 25, 2009

    @Deepsouth: Thanks for the info. That sounds pretty consistent with what happened here in Colorado - dealers in outlying areas got whacked in favor of dealers in more populated areas. Hope all goes well for you.