As GM's Dealer Cull Wraps Up, Few Benefits Materialize

Edward Niedermeyer
by Edward Niedermeyer
as gm s dealer cull wraps up few benefits materialize

As Automotive News [sub] reports, GM has gone ahead and finalized the 500 dealer cuts that made up its bankruptcy-bailout-era dealer cull, despite resistance from some 22 members of the US House of Representatives. And despite the congressional pressure, a damning SIGTARP report, and an ongoing criminal investigation, GM hasn’t changed its tune about cutting dealers, telling AN [sub] that delaying dealer cuts

would only divert our collective attention at a critical time and would ignore the independent decisions of arbitrators and individual settlement agreements between GM and its dealers

Meanwhile, just what affect has the dealer cull had on surviving dealerships? Are they thriving? Well, not exactly…

Automotive News [sub] looks into the performance of surviving dealers, and finds a decidedly mixed bag.

At Flemington (N.J.) Chevrolet-Buick-GMC-Cadillac, General Manager Jeff Parker says service revenue is up 5 percent this year, in part because of referrals from a wind-down Chevrolet dealership 25 minutes away that closed in June…. Parker says that though his Flemington dealership has seen additional service work, he hasn’t seen an increase in new- and used-vehicle sales from the closing of Malek Chevrolet in Hopewell, N.J. He says he is concerned that those customers are looking at non-GM brands…

…Several GM dealers last week reported only a trickle of new business as a result of the wind-downs.On the other hand, some dealerships report a healthy increase in sales.

Of course, some dealers are seeing upticks in sales as a result of other dealer closures, but they tend to be in less-densely populated areas.

Bennett Motor Co., a Chevrolet-Buick store in Cheraw, S.C., has seen a 20 percent uptick in new- and used-car sales since its two largest GM competitors in rural Chesterfield County were wound down by GM, says General Manager Vic Gardner.

He expects his store will sell just over 100 new vehicles this year.

“We’re the only franchise Chevrolet dealer now in the entire county,” says Gardner, whose store is about 70 miles southeast of Charlotte, N.C.

Meanwhile, GM itself has admitted to the SIGTARP and congress that it expects no actual savings from its dealer cull. GM insists that fewer dealers is helping dealership profitability, but admits that improved products and an economic upswing is probably doing more. Meanwhile, GM’s overall sales are up only six percent compared to the ten percent increase enjoyed by the overall market. As long as GM’s sales underperform the market, culled dealers will question the wisdom of the sales channel blood-letting, but the real issue is the SIGTARP’s pending investigation. This story isn’t over by a long shot…

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  • SCE to AUX SCE to AUX on Nov 02, 2010

    Toyota has 1/2 the dealer density that GM does, and they have no trouble selling or servicing cars. I'm totally unsympathetic to any efforts to stop GM from culling dealerships.

  • FleetofWheel FleetofWheel on Nov 02, 2010

    If you follow the flawed logic of industrial/environmental planning, you would advocate that the GM/US govt open new GM dealerships in low income neighborhoods with heavy emphasis on Volt sales. If think that's silly as low income people don't buy new cars let alone high tech electro cars, then you see the folly of 'build it, mandate it and sales will come' policies.

  • ToolGuy Seems pretty reasonable to me. (Sorry)
  • Luke42 When I moved from Virginia to Illinois, the lack of vehicle safety inspections was a big deal to me. I thought it would be a big change.However, nobody drives around in an unsafe car when they have the money to get their car fixed and driving safely.Also, Virginia's inspection regimine only meant that a car was safe to drive one day a year.Having lived with and without automotive safety inspections, my confusion is that they don't really matter that much.What does matter is preventing poverty in your state, and Illinois' generally pro-union political climate does more for automotive safety (by ensuring fair wages for tradespeople) than ticketing poor people for not having enough money to maintain their cars.
  • ToolGuy When you are pulled over for speeding, whether you are given a ticket or not should depend on how attractive you are.Source: My sister 😉
  • Kcflyer What Toyota needs is a true full size body on frame suv to compete with the Expedition and Suburban and their badge engineered brethren. The new sequoia and LX are too compromised in capacity by their off road capabilities that most buyers will never use.
  • ToolGuy Rock crushes scissors, scissors cut paper, paper covers rock, and drywall dents sheet metal.