GM Plans to Reinstate 661 Dealers to Shore Up Sales

[thundley4]

March 5 (Bloomberg) -- General Motors Co. plans to reinstate 661 dealers and may enter arbitration with as many as 400 outlets as the automaker attempts to stem declines in U.S. market share.

GM offered franchise agreement letters to the dealers, North America President Mark Reuss said today in a conference call. The company has about 5,500 outlets.

“We are eager to restore relationships with our dealers,” said Reuss. “The arbitration process creates uncertainty in the market. Issuing these Letters of Intent is good for our customers, our dealers and GM.”

The Detroit-based automaker is trying to increase U.S. sales and market share while trimming four of its eight brands. Chief Executive Officer Ed Whitacre named Reuss, 46, to the post in December in a shuffle of top managers.

GM accounted for 19.9 percent of U.S. sales of cars and light trucks last year, a drop from 22.3 percent in 2008, according to Autodata Corp. in Woodcliff Lake, New Jersey. Ford Motor Co. beat GM in monthly sales in February for the first time since 1998.

The dealer reinstatement plan “is a good thing,” said Maryann Keller, president of Maryann Keller & Associates in Stamford, Connecticut. “There were false economics in terminating that many dealers. If they restore what they’ve lost and put back into business dealers that were financially viable, then they will gain sales.”

Bloomberg

I never understood why GM was so gung ho to close dealers.  Makes me think there was some political consideration as to which dealers were closed.

[Chris_]

Bloomberg

I never understood why GM was so gung ho to close dealers.  Makes me think there was some political consideration as to which dealers were closed.

They closed them due to pressure form the government (the "reorganization plan" that the Dems in congress made them prepare).........and it was proven to be a "political" process, when the list came out, it was interestiing to note that many of the survivors were contributors to Democrats in the last election cycle, and those who received a termination letter, were many who did not.......

doc

[debk]

They closed them due to pressure form the government (the "reorganization plan" that the Dems in congress made them prepare).........and it was proven to be a "political" process, when the list came out, it was interestiing to note that many of the survivors were contributors to Democrats in the last election cycle, and those who received a termination letter, were many who did not.......

doc

A whole bunch of them were closed here....long time dealerships....poof! Just gone. 

[Chris_]

A whole bunch of them were closed here....long time dealerships....poof! Just gone. 

Well it appears that "poof" they may reappear......at least some of them......

From a strategic planning perspective, the closing of 3,000 dealerships at one time......without a lot of statistical analysis as to where the customers were going to go......was a disaster in the making......

Although GM, with 10,000 dealer points at their peak.....needed to discontinue a number of dealer locations, from what I've seen it was not done with much planning or forethought......which is why they are paying the price for it now.

The 650 that are coming back, however, are the result of the dealers suing the shit out of GM, and winning their case in the courts, or dealer arbitration (which is similar)........the announcement by GM that they are doing it because of market share is a smokescreen......and there will be more coming back as the court cases are heard and resolved.

doc

[thundley4]

Although GM, with 10,000 dealer points at their peak.....needed to discontinue a number of dealer locations, from what I've seen it was not done with much planning or forethought..

Oh there was plenty of forethought, political forethought anyway.  They knew that some had to closed , so the Dems jumped at the chance to close ones that donated to their opponents.

[Chris_]

Oh there was plenty of forethought, political forethought anyway.  They knew that some had to closed , so the Dems jumped at the chance to close ones that donated to their opponents.

I meant "marketing" forethought......

doc

[thundley4]

I meant "marketing" forethought......

doc

I seem to remember at the time, that were closing some of the more profitable dealerships. That made no sense, and now I hope some of those have been taken over by Ford.

[debk]

I seem to remember at the time, that were closing some of the more profitable dealerships. That made no sense, and now I hope some of those have been taken over by Ford.

4 that were closed here, were long-time big dealerships.

[The Village Idiot]

Bloomberg

I never understood why GM was so gung ho to close dealers.  Makes me think there was some political consideration as to which dealers were closed.

How many "reopened" dealerships will have new, politically-connected, owners?

[Chris_]

How many "reopened" dealerships will have new, politically-connected, owners?

I'm not getting this feeling from the discussion that I've heard in automotive circles.......this is the "first wave" of dealerships that have challenged GM's (and the government's) decision to close them.  The first challenges were through the "Dealer Arbitration System" which is a legal process that was set up by NADA a long time ago to resolve disputes between dealers and the manufacturer.......it is binding arbitration, so in these cases that the old dealers have won their arbitration cases, they will resume operation, or continue it, if they have not closed yet......no "new" dealer owners are yet involved in the process, although I'm sure the government would like that......

doc