Quote:
Originally Posted by goof2
Basic economics is fine but, at least in the case of GM, the reality is the structure of their dealer network had very little to do with the company's bankruptcy. Making shitty cars with a shitty cost structure, a lot of which was labor cost related, did. GM lost over $70 billion from FY2004 to Q3 of FY2008. For a frame of reference those losses are over $65 million for each dealer cut in less than 5 years. How much of that do you think was tied to the dealer network being unsustainable?
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Your argument is that dealers were not responsible for for the automakers condition. Are you concluding that in pursuit of reorganization and creating a model that would leave to increased market competitiveness, it is unreasonable for manufacturers to sever contracts and obligations to existing under-performing dealers and pursue a distribution model that fits existing market conditions?
Is it improper for the auto manufacturers to control their distribution using the strategy they desire?
US manufacturers have a legacy dealership network that does no longer fits their market share. More dealers do not equal more sales and when a manufacturer has a brand equity problem (in some cases aggravated by points in your distribution network) in addition to pricing issues due to internetwork competition there is a valid case to redecorate your map.