General Motors Opens Regional Centers, Expects to Save $2,000 Per Car
We know the switch to electric vehicles is changing our relationship with cars – charging, range, et al – but it seems the EV Era may also alter other aspects of the industry for legacy automakers. Suits at The General are suggesting a switch to regional fulfillment centers for inventory will save the company about $2,000 per vehicle.
And, as you’d expect, the plan involves shifting GM’s interaction with its dealers.
What’s the diff? Well, while the plan doesn’t erase the traditional dealer model, it could significantly impact the number of vehicles they have in stock at any given time. Using a regional fulfillment approach, dealers can continue to receive electric vehicles for customer test drives and immediate delivery. Here’s the rub: GM will hold additional EVs at the regional centers.
“We'll use cloud data and machine learning to continuously scan the order pipeline and available dealer and factory inventory for the best fulfillment option," said Mark Reuss, GM President at a company investor day in New York earlier this week. "We know how this works because we know what vehicles move in certain parts of the country and at certain dealerships."
The end game is, of course, to end a reliance on incentives in order to move metal. Regional fulfillment at GM is envisioned as a way to avoid dealer lots being full of cars that are the wrong color or wrong trim or whatever objection the customer is placing in front of the sales staff on that particular day. Reuss told investors that GM has already opened three centralized EV fulfillment centers —one in the Southeast and a pair in California.
Now, anyone who’s a student of dealer relations – read: Most of the B&B – will have questions. As do this site’s editorial staff, it must be said. Longtime readers will recall Jack and Bark rightly saying the real customer of an automaker is not John Doe but rather the dealers themselves. After all, they’re the ones actually ordering metal (save for the scattered shopper who custom orders a rig) and bearing the cost of these things. Most people know that’s one of the real reasons why an alert salesperson will try to push you into that Oxford White King Ranch they have out front instead of doing a dealer trade for the Atlas Blue one you really want.
Will dealers cotton to this approach? It may reduce floorplan charges and theoretically reduce overhead, though some Dealer Principals look upon a packed lot and good allocation with pride – so long as the units don’t hang around for too many days, of course. And Reuss wasn't giving details on where his team came up with the $2,000 figure. We’ll probably pontificate on this in a future post but, until then, what’s your take?
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