GM working to shrink its dealer network

GM working to shrink its dealer network

Filed under: Car Buying, Buick, Chevrolet, GM, GMC, Pontiac, Toyota, Earnings/Financials
At the end of World War II, GM "put a dealership in every little hamlet" to keep up with the postwar boom. Sixty years later, in 2005, long after that boom had ended and every domestic maker was losing market share, GM had 15,094 dealerships. By 2007 GM had reduced that to 14,118 dealers. But if GM plans to compete financially with its overseas competition, it will need to shrink that number a great deal further.

Chevrolet has 4,000 dealerships. Toyota, to sell the same amount of cars, has just 1,244 dealers. Put another way, the typical Toyota dealer moves 1,766 cars per year. The typical Chevrolet dealer moves 554. And the other domestics fare about the same: the usual Ford dealership rolls 556 vehicles off the lot every year, while a Dodge dealer does 374 per year.

GM is looking at consolidating Pontiac, Buick, and GMC shops into one. However, state franchise laws don't make closing dealerships easy, and it's hard to tell a profitable dealer that he needs to close for the good of the parent company. Dale Willey, head of the National Automobile Dealers Association, said "Dealers make the decision to get into the business, and the manufacturers accepted the dealers getting into the business. It ought to be the dealers' decision to get out of the business." While GM CEO Rick Wagoner realizes that the "payoff is significant" for reducing the number of outlets, he must know that the price will be significant as well.

[Source: Detroit News]
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i never knew that gm had so many dealers.

ya srsly thats kinda over kill

We've got 3 Toyota dealers and 1 Lexus dealer in the Memphis Metro Area. GM has 16 dealerships within 25 miles of Memphis.....and that's not counting the same dealer twice when they have more than one make(i.e. Pontiac-Buick-GMC)but merely counting each property.

Japan and America were different back in the days. Before when foreign cars weren't around, they probably had to have many dealers. Now of course, it's an outdated tactic. At least they're acknowledging that it's a stupid way to run a business and want to change it.