GM's plan for Dealers

[bets]

Hi - does anyone have any good speculation on GM's plans for the dealer body? Also, someone told me of an initiative called "the 10", which refers to a major dealer consolidation/buyout plan to be all done by the year 2010. Anyone heard of that? It's a strange time to be a GM dealer!!

[pjdevereaux2003]

It seems clear that GM has too many dealerships, just like they have too many union workers and too many retirees. Why would they treat the dealers any differently, particularly given their dire financial circumstances.

In some fashion, GM has to get rid of a lot of dealers. GM is saddled with a dealer network that made sense in the past but not now. Too many dealers trying to sell product that is not well accepted by the consumer. Look how many fewer dealerships Honda and Toyota have compared to GM. I bet there are darn few megadealers making as much money with their GM franchises as they are with their Honda and Toyota stores.

Expect GM to declare bankruptcy. They can kill all the birds with one shot - workers, retirees and dealers, by cancelling their existing contracts. GM will cancel a huge number of marginal dealerships and only renew the larger, better capitalized operators who can weather the inevitable cycle of bad product and in good times can advertise more, stock and sell more cars and and afford more policy adjustments. That is good for GM, good for the consumer and good for the surviving dealer principals.

GM has done a poor job of supporting dealers with good product and has done a disservice to many dealers by overpopulating areas with too many dealerships.

In the end, they can fix their balance sheet and unload billions in expenses with a bankruptcy filing but that won't change their product, with the exception of Chevy trucks and Cadillac isn't too compelling, at least not to consumers.

[GONEFISHIN]

bets,
How long ago did you hear about the "10 plan" Any reliability in the source

[bets]

Well, it's a guy who has lots of contacts but not anywhere near the horses mouth! However, the dealer situation is in the big reorg. plan, and we are cretainly way overdealered, and every other initiative they come up with has some stupid little name, so I think there is some truth in it. I am considering getting ahead of anything that happens and make some big changes on my own since I am a small dealer in a very overdealered area, which may include dumping GM and going totally used and a service franchise. I would rather do that before they go belly up, but hesitate if they might offer a buyout.