Robinson wrote:Pontimax 01 wrote:Robinson wrote:Too bad GM wont be an "american" company for too long.
And I have a bad distaste for GM the way they **** over it's dealership network during the bailout.
SAIC only bought 1% of preferred stock for example, a mere $500 million out of the $20 Billion the IPO generated. There were more American fund companies that purchased stock then foreign companies. I would hardly worry at the moment that GM will not be American, the US government is still the largest owner with 32% or so left.
It's Chrysler is not going to be American for long, if you consider them to still be even though they were basically handed to Fiat during the bankruptcy. It's only that Fiat hasn't fulfilled it's obligations yet to increase it's ownership stake past the current 5% that I'd even say Chrysler is still American for the moment.
And the blame for the dealership closings is more on the Auto Task Force then on GM. It was put to them as a condition of receiving government aid that they reduce their severely bloated dealership network.
GM at the time had more then 6,200 dealers and Toyota by comparison had only 1,500ish. Toyota dealers were outselling individual GM dealers by a tremendous amount, even though GM had a greater market share percentage of vehicles sold. That makes each of Toyota's dealers more profitable, which allows both more money spent renovating and maintaining their dealerships, and also raises the average transaction price of each vehicle when you can't simply go from one Chevy dealer to the next a block away and play the two dealers prices against one another. Ford and GM both have been quietly shutting down dealers for several years now. But it was the outsiders that came in and said enough. GM did reinstate some dealers with an arbitration process after the bankruptcy was finished.
But quite honestly, despite the job losses, many of the dealers needed to go. There were quite a few craptastic Chevy dealers around that simply didn't meet the expectations the company needed from it's sales channels. It's better they and their outdated and poorly staffed showrooms are gone. Truth hurts at times.
One thing that is really coincidental that doesnt get talked about much is that alot of dealerships that contributed to the rebuplican party during its time of being in business were closed down regardless of sales numbers while the some slower selling ones stayed open because they contributed to the democratic party.
Now I don't know it be completely true and thats why i say its pretty coincidental and I normally dont get into political crap, but I have heard a few examples of this about a few different dealership.
I seriously doubt political affiliation had any bearing on whether a dealership survived the cuts. The things that were factored in were size, location, productivity, knowledge of product, service capabilities, and generally if the dealership could sustain itself in a smaller auto market. Any claims otherwise sound like political crying to me. The fact is that dealers had to go. Some dealers had to go because they were too small. Some dealers were closed because they didn't know their asses from a hole in the ground and did not have GM's interests in mind. Remember that a dealer is essentially a franchise that represents the manufacturer. A negative dealer experience reflects badly on any company.
GM had a huge amount of dealerships that were not that interested in selling cars. My area was a prime example. Within a 15 mile radius we probably had 15 Chevy dealers. Absolutely no need, the area couldn't support that with sales. What ended up happening is customers like myself *which I'm guilty of with Pontiac* went to one dealer and got a price, went to another and gave them that price and said match it. They would. Now you take that price back, and it becomes a war between the two to get the sale. So you either had dealers that were taking losses to move the vehicle, or you had dealers that became very disinterested in selling vehicles at all and simply survived on service work.
The new theory is that now the customers have fewer choices to get that Chevy they like. So they go to one, which now has less local competition, and pay a higher price for the vehicle, something more in line with the MSRP GM put on the car at the factory. It reduces incentives dealers have to use to move the metal, which raises the average transaction price, which in the long term raises the residual value of the car later. If you can go buy a brand new $20,000 car for $15,000 because of manufacturer and dealer incentives, then you cannot likely sell that car in a year for anywhere near 15,000 even if it's only slightly used even though it sticker-ed on the dealer lot for $20,000 before your deal. It causes excessive depreciation.
The flip side in my opinion to having less dealers is that if you make it too hard for buyers to get that Chevy, they might just end up at a Ford dealership. The assumption is that you can keep the buyer coming back with brand loyalty, when in fact most sales are rather more mercenary then that.
Posted: Thu Nov 18, 2010 6:22 pm