General Motors is Serious About Shrinking Dealer Ranks
My old boss’s dealership closed last Thursday. A Chevy store, he had planned on selling it to another General Motors dealer in the same state. Instead, GM exercised its “right of first refusal,” a legal term meaning it has dibs to buy at the sale price, to buy the dealership and close it.
One less Chevy store in the area – exactly what General Motors says it wants to accomplish.
Last week, as well a Rhode Island dealer announced that it was surrendering its Cadillac and Pontiac franchise back to General Motors. That dealer isn’t going out of business – it will continue as a Honda dealer – but it almost half a century long relationship with GM.
In each instance, there is one very distinguishing characteristic:
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General Motors was spending its own money to reduce the number of its dealers. When asked during the North American International Auto Show in February about the company’s efforts to reduce the size of its dealership ranks, GM executives – including top boss Rick Wagoner – all said that the company was working to consolidate dealerships, preferring to have dealers merge rather than simply buy them out.
But, that’s not what happened to my old boss. Though he had a dealership in a rapidly developing part of the county, one which would seem to have been an attractive second location for an established area dealer, it doesn’t appear that GM made any effort to encourage any of the existing dealers to acquire the operation. But, it obviously wasn’t interested in having a GM dealer from outside the area come into town to compete with the established dealers.
So, it made its move and, by all accounts, paid a fair price.
All in all, it’s typical of the type of management exemplified by Rick Wagoner: nothing flashy, nothing dramatic, nothing hasty. Just incremental movement in a predetermined direction, taking opportunities as they present themselves, which – eventually – turn out to be big changes.
So, this medium sized urban community will now have to make do with four area Chevy dealers, instead of five. Meantime, one of the two Toyota dealers is putting the finishing touches on an enormous dealership facility, one that’s easily twice the size of the largest Chevy store.
In the car business, having the right franchise is sometimes just a matter of blind luck.
That Toyota dealer took on the franchise when Studebaker stopped manufacturing cars, and having the Volvo franchise wasn’t enough volume to keep the doors open.
Odd, how things sometimes work out.