GM Cutting 1100 Dealerships Nationwide

[Lorax]

GM has just notified 1100 dealers nationwide that they are closing down by October 2010.

This on the heels of Chrysler closing 785 dealerships nationwide as well, yesterday.

My threadmates thoughts on this?

[lilpup]

no surprise and still better than losing the companies altogether

I hope we get a list today of the dealerships notified.

[firstandten]

Very sad, for those affected

Who would have thought that the government would make the private sector make the kind of cuts that the private sector claims the government would never make.

[lilpup]

The government isn't making them do it. It's something that's been needed for along time but GM originally intended to do it at a less painful pace.

[firstandten]

The government isn't making them do it. It's something that's been needed for along time but GM originally intended to do it at a less painful pace.

Given the fact that GM does need the bailout, the government is making them do it. You are correct that left to there own devices GM would have eventually made the same cuts in their own time frame.

[Lorax]

All true statements, though don't forget the time frame for downsizing, cost cutting, etc, was accellerated by the financial sector's freezing of credit.

People still need access to credit, and if any cars are to be sold, including foreign ones, we need free flowing credit at acceptable rates.

[stonechipped]

GM has done it again, they never cease to amaze me. The least of their problems is the dealerships

[ndavies]

GM has done it again, they never cease to amaze me. The least of their problems is the dealerships

The number of dealerships is just one of a long list of small problems. Every one of GM's problems has a similar argument. Each of the problems only takes a little bit out of the bottom line. Each problem is just a minor miss. Unfortunately, all the small and medium sized problems add up to a company in trouble. To get GM back on firm footing all the problems small medium and large have to be dealt with.

In May Gm had 6400 dealers Vs. Toyota's 1200. Toyota, at that time, was selling about the same number of cars as GM. There is a huge inefficiency in time and costs supporting all those extra dealers.

Also having that many dealers in shrinking markets cannibalizes the dealers profit margins. The dealers beat each other up to get the sales. This leaves them with fewer dollars for customer service and maintenance of their facilities. This leads to the crappy dealer service and the even crappier dealer rating numbers we see from JD Powers.

Having too many dealers erodes profits and further destroy customer perceptions.