GM, dealers to discuss closing shops-plans to trim 30% of its franchisees by 2012

[babylonsister]

GM, dealers to discuss closing shops
Automaker plans to trim 30% of its franchisees by 2012

BY TIM HIGGINS • FREE PRESS BUSINESS WRITER • January 23, 2009


NEW ORLEANS -- General Motors Corp.'s dealers, who've privately been making decisions about whether to try to stay open in the suffering economy or just close shop, will get their chance to meet with the automaker this weekend about its plans to slash dealerships by nearly 30% over the next three years.

GM plans to hold closed-door meetings with its franchisees during the annual National Automobile Dealers Association convention -- the first since the automaker received approval of $13.4 billion in federal loans that call for the company to make changes to several areas of the business, including its dealer network.

"There's a concern," said John McEleney, a GM dealer from Clinton, Iowa, who is the incoming NADA chairman. "No matter what, there's going to be change."

GM has told Congress it plans to eliminate 1,750 dealers by 2012 -- including as many as 500 this year -- and has indicated it would also reduce its U.S. focus from eight brands to four. That leaves uncertainty hanging over Hummer, Saab and Saturn dealers. (Pontiac is to become a niche brand.) While GM is still formulating its final plans to meet a Feb. 17 deadline, industry analysts told the Free Press they believe GM's dealer-reduction goals can be met, largely because of the sour economy that has hit dealers hard. Tight credit markets and a lack of consumer confidence helped GM sales drop 22.7% last year.

"I think they're going to find that a lot of dealers are going to go out of business on their own accord," Sheldon Sandler of Bel Air Partners, a Princeton, N.J., company that advises dealer companies, said of GM.

more...

http://www.freep.com/article/20090123/BUSINESS01/901230391

[endarkenment]

1. So basically GM is planning for a permanent major slide.

Why compete when going out of business is so much easier?

[Skink]

2. They made cars to well.

Pretty much all of America can wait until electric vehicles come on line for the next car purchase.

[AndyA]

3. I think this will be a good thing.

We don't need MORE dealers, we need BETTER dealers. They need to single out the ones with the most customer service complaints. There are a lot of pathetic car dealers out there, who don't believe in taking care of the customer. Close them down, and keep the good ones.

[ThomWV]

4. Not far from here there is a Chrysler dealership with a half built new showroom

They started work on building an entirely new dealership showroom/service facility which is about an acre under one roof. Needless to say construction on it came to dead halt about a month ago. You'd have to think that the dealership's owner could have seen it coming, but apparently not.

[jaksavage]

5. Ford GM and Chrysler

We had three dealers here 2 years ago.
Now none.

[blue_onyx]

6. I bet a lot of the dealers that close will be Pontiac

since that brand will become a "niche brand." A big chunk could be Saturn dealers, depending on whether GM decides to keep the brand going or not (I hope they do). GM has tried to condense Pontiac, GMC, and Buick into one dealer so those that sell only one brand may be in trouble. My parents buy from a Buick dealer that only sells Buick so I wouldn't be surprised if that dealer is closed.