“By pulling out, GM and Chrysler are giving a beachhead to Ford and some of the imports.”

Sounds like high school days…pulling out…beachhead…no wonder the auto industry is all phucked up.

Data, we need data. How many of these closing stores are located in major metro areas squashed together with their same marque brethren? How many are Saturn/Hummer/Pontiac stand alones that have no product? How many are Cadillac dealers, where GM has way too many compared to other high end marques? How many are tiny dealers (like the one in Rose City, MI) that sell maybe 20 cars a year? How many are crappy dealers that just piss off people with bad service?

Dave is right IF GM/Chrysler are closing a lot of small town dealers in the middle of nowhere that service areas that have no other nearby same marque dealers. IF that is the case then yes, look at what they can do to keep them open.

BUT, even Dave said he is not sure of what is really happening. But hell, lets do what we always do here and make things up and go off half ****ed with our comments ( or full ****ed as the case is here).

Looks like there are about 450 Saturn dealerships. About 380 Hummer dealers. Then there are a few standalone Pontiac. So about 850 of the closing 1350 will have no product to sell.

There are about 1400 Cadillac dealers (compared to 350 mercedes and 250 Lexus)

Seems like 500 dealers being closed out of (7400 GM total-850) 6600 does not sound like very many when Toyota has 1450.

And if we assume there are 200 metropolitan cities in the country that is only about 2 closing per area. Heck there are 22 buick/GMC dealers within 25 miles of my home and 6 within 5 miles. Seems like a bit too many to me.

BUT AGAIN if GM is closing viable dealerships in areas that would not be serviced it should be looked at. GM needs to service the rural areas that the competition does not. This is a competitive advantage.

I can’t see small town sales numbers keeping these dealers afloat, GM, Chrysler, OR Ford. Each manufacturer had WAY too many dealers in the first place. Ford couldn’t keep a small town dealer open in this economy anymore than GM could. Sounds like ol’ Dave is still brainwashed by the old GM mindset of more has to be better.

As for small town service needs, what if people open small independent repair shops like we had in the old days! Wow, there’s a concept. Get rid of the Wal-mart car servicing environment replaced by small, private, shops that customers can feel like they know who’s fixing their stuff and know that the mechanics are trained in what they are doing, not just trained to make money.

I think it is all posturing and reasoning for political patrons. As I mentioned before, majority of local politicians come from local “elite” less then successful lawyers, real estate agents and car dealers. Many dealerships of that sort don’t sell much to the public, but to the local government. When you look at statistics, those dealerships stick out like a sour thumb, but guess who has the ear of politicians in its pocket? That is why there is a little noise. I think it is all mute point, more dealers, less dealers, if GM will continue to operate as government own entity it can operate in red for another millennium. If someone will suggest that shares would be sold, I wonder if enough schmacks already born to buy those shares after previous “Chapter 11″.

I agree with Mr David Cole that the closings WILL reduce the companies’ market share, but it’s too little, too late my friend. My local dealerships (the only ones I would have considered buying from) are already shut down. They were sending inventory to other dealerships the week the rumors of shutdowns began.
That said, if small town dealerships were not profitable, they should probably have been shut down. In theory, this should have been the decision of the business owner, not his supply chain or elected officials, but it already happened. These closed businesses aren’t just going to re-open, that would cost an insane amount of money.

Most of GMs dealerships slated for closing are still open as far as I can tell.

GM will be making a small profit in 4th qtr IF sales stay above 10.5 million and they keep increasing their market share or hold it above 20%. Once GM starts making profits GM shares will sell like hotcakes.

I think most people don’t understand what profitability is. To a small town store that sells 10-15 new and 25 used a month with standard service/parts sales numbers , $200k a year net is very, very common. These stores usually have stellar customer scores and serve the community well. The problem is, they don’t stock enough inventory to make the manufactorer happy. Then the big dealers (metro stores) whine to the manufactorer that thy are making not enough money because of the prices of the little stores with less overhead. Just because 3 outlying stores of a big city shut down, doesn’t make the big dealer bigger and more profitiable…it just sets the stage for the other small brands to grow market share. The real reason why Chevy, Chrysler, and Ford want less dealers, is because they want to make it a hassle for customers to get warrenty work done which causes them huge $$$ losses. The squeaks and rattles just get ignored instead of repared at $100 per hour. They also battle the small dealer on sales numbers because small town dealers generally sell more used( of their brand) than new vehicles, putting alot of vehicles in the service shop for even more warrenty work. Its real common to see 5 used 1 year old Ford Focus’s, and only a few new ones on a small town Ford lot….it makes more money…but it puts lots of warrenty into a small store as well. This is contrary to the big metro stores. The answer, stop building vehicles that need warrenty work, and stop selling to rental fleets that supply to 1 year old used market numbers. If that was the goal, every car company would want more dealers not less.

jdasch, I have never heard such foolishness in my life. They are closing small dealerships so they have less warranty work? No more comment here needed.

I think once the data driven metrics used to shut the GM dealers comes out the government will have to shut up. Then again I doubt they will. Interesting though is that NADA, the group that represents all the dealers is not putting up a big fuss. They and all the dealers know this is the right thing to do.

No experience, no data, no research – but asked by the Obama admin for advice.

L.M.F.A.O!

Good lord this thread is drier than a nun’s pussy. Mr. Cole is absolutely right. The majority of the smaller and rural dealerships are not the problem. The problem is having 2 or 3 or more dealerships within spitting distance of each other. Why are we still even debating this?

Well carstuff sorry to bring up some of the reasons…its not foolishness. Small dealers don’t cost the makers any money except for the problems they cause…expense. Market share…they help the maker. Customer viewpoint…they help with perception of the brand. Ask yourself why the terminated dealers that have tried to change their service shops to “Napa car centers” or other branded service centers are now going broke?? Warrenty work was making up 40% or more of their fixed operations….all now gone. Warrenty work is profitable and in the “data driven metrics”, one can see a reduction in total claims for those areas that no longer have dealers. Some people just trade in their vehicles to other brands when they can’t EASIELY get it fixed. Its all part of the decision process they(makers) use but don’t advertise to us all…don’t be fooled by a wolf in sheeps clothing. I do know of dealer nearby myself that was offered to keep his Chevy store if he did a $1MM remodel. His sales have been 5 new a month for 10 years and he is letting them have it back. Warrenty work although was $30k a month…good money, but not enough to sustain such a large investment in the front showroom. Now the nearest Chevy dealer will be 62 miles away. 2 hours round trip for a check engine light…black tape over the light will work for cheaper. GM will be spared $100.

Indeed.

I just said that one of the metrics GM/Chrysler used was NOT closing dealerships to cause customers inconvenience so that they do not come in for warranty work.

Perhaps some customers will be inconvenienced and not make the trip in some areas but popppy**** if that is the reason they are closing dealerships.

In your case sited we have a dealer with an out of date store that sold only 5 cars a month that needed a lot of work. I would compare that to a 50 year old McDonalds that needed a complete rehab due to age and sold only 10 big macs a day. Losing money and making McDonalds look bad. Sorry but there is a reason there is not a McDonalds in every little city in the midwest. Sure McDonalds does not lose the money because these are independent franchises but they still do not do it.

And $1 million redo and he would not do it? $1 million is peanuts today. A very nice house cost that much to build so putting that much into a store is not a very big investment. Even the dealer knows he has a poor location or something else is wrong.

AGAIN, just saying GM is not closing dealers to save on warranty work. Sure a closed store may reduce a LITTLE warranty due to inconvenience but not the reason to close stores.

What zipcode is the dealer in and what is the name of it?

carstuff, how do you know hummer/saturn dealers are included in those numbers? that would seem to be a bit of an assumption…

I could be mistaken on that one. GM plans on having less than 4000 dealers by the end of 2010. Many closing themselves down. Looks like 1350 is not the Saturn Hummer Saab dealerships.

From June:

http://archives.media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewmonthlyreleasedetail.do?domain=3&docid=54952

“This overall number of dealers is based on the previously announced potential sale of the Saturn, Hummer and Saab brands, or their phase-out if they can’t be sold; dealer attrition over the next 18 months, which – in these difficult times – is running at record levels; and the wind-down over time of the approximately 1,200 dealers we notified on May 15th, plus an additional 200 dealers who also received wind-down agreements last week. And I hasten to point out that, even with these cutbacks, GM will still have the biggest, most extensive dealer network in the country – more than any of our competitors, including Toyota, Honda, Nissan, Ford or Chrysler.”

So the number looks like 1350 GM closing core brands plus 850 non core brands plus 1280 closing due to attrition (dealer self imposed and running at 80/month).

Even so closing 1350 is still, if divided by 200 metro areas, less than 7.

Would be good to see how many are actually metro vs rural.

First hand knowledge of that Johnny?? LOL

do you guys think that chrysler , gm or any mgf or franchise don’t already have written into every franchise aggrement a way to terminate underperforming franchisors ,(those not reaching min sales responsibilty) they did this way so they would not have to pay for parts , special tools, vehicles, also the value of the franchise that they coul sell again. How would you folks like the deed for your
house given to you neighbor and you getting zero for it ?

it’s tough on the dealers for sure, but imagine how tough it would be if that manufacturer went belly up…there are several thousand dealers in the states that are lucky to be in business at all right now…

last i read, there was some form of compensation from the manufacturer when a dealer was shut down, but not enough to cover their parts inventory, etc…not a fun situation to be in for sure…

I have the list of the GM and Cadallic dealers that are going to be closed. If you are interested let me know and I can share it with you.

Email – karen.applebee @ yahoo.com and let me know

Carstuff is right about only one thing as far as I can tell – the numbers do indeed include Saturn and Hummer stores. All the rest is nonsense.

You see, it doesn’t matter one bit that GM has more Caddy dealers than Mercedes. It costs them nothing to have a franchise sitting there idle, and they make money when that franchise sells their cars. Sales per dealership is a BS measure, a useless comparator, and a straw argument made by people who made a poor decision and need to make it look like they did the right thing.

Whether or not they did it to reduce warranty costs, that argument makes no sense either. But what’s done is done. Mark Laneve told me they feel that a profitable dealership will reinvest in itself more than an unprofitable one, and he was probably right. But dealer profitability is not why GM had to take government funds to survive, and not why the treasury took them over. Dealers are a separate entity, privately owned and operated (with few exceptions). And it’s sort of funny that the new GM is now asking its dealers to conform to a common appearance theme at a time when their future is not certain. Oh sure, I’m about to spend half a million dollars to make my facility look like they think it should, after my Pontiac franchise was only worth $25k. Yeah, right…

And BTW, my dealership was not closed. I am still in the fold with other makes.

But the decision on whether or not to close my doors, whether or not I am profitable, whether what I do for a living is worth the time and aggravation – all those decisions are rightfully mine. Not GMs, not some task force appointee. Mine. GM had no right, and the Obama administration should have never pushed it.

I never understood how the manufacturers could close the dealers, because the dealers were privately owned. It’s like AT&T closing Wireless Toyz, or Microsoft closing Best Buy.

GM did not close the dealerships. They pulled the franchise agreement which means they no longer supplied vehicles to the dealership. There is a Chrylser dealer here that is still open but is selling used cars and servicing.

Best Buy is not a franchisee of Microsoft. Best Buy sells Microsoft stuff at their own pleasure. Either Microsoft could decide to not allow BB to sell their stuff, or BB could decide to not sell Microsoft stuff, w/o having the others permission.

Because of State franchise laws protecting franchisees a dealer has lots of rights and cannot have their franchise agreement canceled easily. In this case GM went bankrupt and the franchises were all re franchised with the new GM company unless GM decided not to.

carstuff, are you that dense? There are very few reasons (if any) that Microsoft would ever keep a retailer from selling their stuff. That’s backwards logic, but is essentially what GM and Chrysler did. No one has ever shown good reason to close these dealers (OK, we’ll use your term – ‘pull the franchise agreement’). No one.

You seem to think you have a good idea what’s going on here, but from my perspective you haven’t got a clue.