Closing auto dealers: Dumb move

[pauldun170]

Originally Posted by 101lifts2

Pauldun I think you are pretty misguided in this thread. I have alot more experience with auto OEMs and dealerships than many here. I have spoken about buisness practices with many dealer principles (owners) over the years. The fact of the matter is this: While GM takes in alot of cash, it was shelling out more. The main reason was too many like products with too much inventory, so plants had to be closed and personall had to be reduced. Now...if you do this, you simply do not have enough inventory to support 4,XXX dealers, so the bankruptcy protected GM from getting sued.

More dealers = more revenue for GM. Period, especially if the dealers are hungry. Also, don't forget GM has fixed costs with its IT, Service support, sales support that the dealer pays GM per month. If you cut the dealer body in half, you loose half of this revenue, while still having to provide the same level of service to the remaining dealers. Also, in most cases GM will jack the monthly fees per month to compensate for the reduction in the dealer count.

The only real benefit for dealer reduction is at the dealership itself. Less competition and less vehicles produced will ensure a steady steam of revenue, but because of this, these dealers are no longer "hungry' and will be content with selling only slightly more vehicles or servicing slightly more vehicles than before.

Isuzu is going through the exact same thing...550 truck dealers (GM/Isuzu) down to 300 (Isuzu). Vehicle sales WILL decrease and it will be loose for Isuzu and win for the remaining dealers.

ok

[101lifts2]

Originally Posted by pauldun170

ok

Did Homeslice wear you out?