GM Won't Name Doomed Dealers

GM just released its official statement regarding the approximately 1,100 dealers it will not renew contracts with by the end of 2010. Besides confirming that number, the company also said it would not release a list of the stores included in the group.

It did say that number was on top of the 470 Saturn, Hummer and Saab dealers already dealing with the possible sale of their brands. GM executive Mark LaNeve said that around 400 to 500 of the dealers are very small, selling only 35 units a year. The remainder have had poor performance for many years, according to LaNeve, and were likely to go out of business before this decision was made, according to internal accounting. La Neve said this advance notification allows dealers to gradually sell down their inventory and parts, acquire a different franchise and lay off employees over time instead of all at once.The 1,100 dealers made up just 7% of sales in 2008.

Because GM is not disclosing which dealers are on its list, the company is leaving it to the franchise owners themselves to let customers know their long-term plans. However, this could cast doubts on every GM dealership when car shoppers are considering when and where they decide to buy. We would suggest any car shoppers ask a dealer representative if they are not getting their franchise renewed.

Comments

I think you have a typo in the number of small dealerships. Should it be 450?

yes should've been 4-500

how does a dealership that only sells 35 units a year even stay open this long?

Broq

I guess if they're really that small their costs aren't huge.

I guess I should have said: How does a salesperson working at a dealer that ONLY moves 35 units per year stay afloat?!!!

broq

Seems like they would be mom 'n pop dealerships where the owners are the salespeople.

I suspect dealerships make more money from service, parts, pre-owned, body shop than from new car sales.

Ah, that makes sense, H.

Broq

SO YOU ARE GOING TO BUY A NEW CAR AS I AM ......AND YOU SAY ARE YOU ON THE LIST?
OF COURSE THEY ARE GOING TO BE TRUTHFUL!!!!!

GM HAS AN OBLIGATION TO POST THE CLOSINGS SO THEIR LONG-TERM CUSTOMERS ARE PROTECTED

Broq,

Probably a lot of them have other, non-GM lines that make up the bulk of their business. I know the Jeep dealer in my area that Chrysler axed only sold about 50 Jeeps a year, but he also sells Fords. At one time it was a Olds-Ford-Jeep dealer.

Further proof that GM is run by idiots. Chrysler did the right thing by releasing the list. Now customers will just stay away from GM dealers because they will not know for sure if they are closing or not. They could ask the dealer, but why bother. Just go somewhere else. Lots of options other than GM out there. GM has made a tactical mistake on this one, just like so many other mistakes they have made.

Derrick G,
Yes, I think many of these dealerships likely have other franchises attached or large used car lots etc.

This issue is not complete. Unlike Chrysler, GM dealers are still protected by franchise laws and will have their say in court before franchises are terminated next year. Until then, it would be bad business to label yourself a lame-duck dealership.

Yeah, that's true, a lot of them are part of other dealers. We have a large one in our area, on the news recently, because they're having both Chrysler and GM portions of shut down (too many in one area), so those dealers will be relatively fine.

There is a lot of confusion out there and GM is contributing to a great deal of it. I owned a 2007 Torrent (until earlier this week) and received a letter from GM about the plan to phase out Pontiac. Here's a direct quote:

'Pontiac will continue in operation through the end of 2010 and, following that date, you will continue to be able to receive service on your Pontiac vehicle at any Buick-Pontiac-GMC Dealer.'

So, according to this sentence, Pontiac dealers will remain in business, able to perform service until January 1, 2011. Does that mean all of them? If not, will there be one in or near my small town? This contradicts the widely reported October 2010 termination date.

Second, why are they saying that, after Pontiac goes away, I can get service at a Buick-Pontiac-GMC Dealer? Wouldn't it be more accurate to call it a 'Buick-GMC' dealer? And, is it both makes or either? Will all Buick dealers also handle GMC at that time and vice versa? Will stand alone GMC dealers be able to perform warranty work on my Pontiac?

As with today's announcement that '1100 dealers are going away but we're not going to tell you who', GM has no clue how to operate in these uncharted waters. Customers like me are spooked.

The Torrent is gone, sold for a song with the proceeds now residing in the bank. I'm keeping my Prius. Someone other than me will be the savior of GM.

Some of these very small dealers are actually repair places in rural towns that sell cars literally on the side (of the building). In northeast California, there's a small mountain town named McArthur. The Chevy dealer is Hiway Garage. I assume they're going to be just a repair place shortly. In Mt. Shasta, CA, about 60 miles from the Oregon border, there used to be a place called Bruno's Garage that sold some Dodge products occasionally. A larger dealer from Redding bought it and turned it into a full-fledged dealership. I heard they're staying open.

The reason Chrysler released the list to the press is that the list is in a document filed with the bankruptcy court. So, it's public information. GM isn't in Chapter 11, so it doesn't have to make the list public.

On the other hand, I'm buying a new Pontiac or GMC next year. I bought a Pontiac from a Pontiac-GMC-Buick dealer close to home, but I take my Olds to a dealership where I boutht my Intrigue, which is now a Cadillac-Buick-GMC-Pontiac dealer. The latter took over a troubled Olds dealer, just before the Olds demise was announced, then took over a Buick dealer that GM was running, having pulled the franchisee's agreement for shoddy repairs in the Service Dept. Then, it bought the Pontiac-GMC dealer from a fellow who wanted to concentrate on his Chevy store. Considering the shear volume of cars, I would bet the latter will keep his franchise for Cadillac, Buick, and GMC.

But, I would like to know, before I go shopping.

I like the mechanics of just not renewing the contract instead of forced closing. The culling process works I just wish the manufacturers had the patience to see it through.

The day of reckoning is nearing. Time is winding down for GM (1.09 ↓5.22%) and all of its investors, dealers, customers and other interested parties.

Their place in time was captured in:
http://www.youtube.com/watch?v=F0QJeJkZczE

Good luck to all!

See more at: http://carczarconsulting.com

GM isn't saying what dealers are going away because some of them may not go away and that might hurt that dealer's business if in fact they stick around. GM isn't in Chapter 11 so those dealers still have a cause to fight back, their states will back them up too. The ones Chrysler announced will go away, those dealers don't have protection from state laws anymore.

I'M A TECHNICIAN WHO HAS WORKED FOR 3 DIFFERENT G.M. DEALERSHIPS IN PHOENIX A.Z. RECENTLY 3 DEALERS HAVE GONE UNDER, ALL 3 GAVE ABOUT A 10 MIN. NOTICE TO ALL THE EMPLOYEES. CURRENTLY WORKING AT A SATURN DEALER, MYSELF AND THE OTHER TECHS CANNOT GET A STRAIGHT ANSWER IF WERE ON THE HIT LIST OR NOT. THIS LEAVES ME NO OTHER OPTION BUT TO GO BACK TO SCHOOL AND FINISH MY ENGINEERING DEGREE. WILL THIS LAND ME A SECURE JOB; WHO'S TO SAY.

I work for a PA dealership that has six different locations, 4 in the GM lines, 1 in Dodge and the other 3 foreign lines. Our Dodge is clsoing. I have been there 17 years at one of the GM locations and no one is talking. I think it is very unfair of GM not to tell the GM worker if they in danger of losing their job only to protect the Dealer who will eventually say we are closing just so they do not loose their business and profit until they have to close. The employees would probaly stay with them because there is no where else to go in the automotive line but it will give them an opportunity to also retrain while they still have a job or pick up one of the jobs offered from the surviving dealers. If they drop the ball in 10-10 all the jobs will be already taken and the unemployment lines will be longer than ever. WHY WILL GM ONLY PROTECT THE DEALER AND NOT THE LOYAL GM EMPLOYEES WHO IF NOT FOR THEM THE DEALERS WOULD NOT BE ABLE TO BE A DEALER. I think GM should announce the list to the public and quit worrying about the Dealers who they are putting out of business anyway.

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"We would suggest any car shoppers ask a dealer representative if they are not getting their franchise renewed."
You show up at the dealership and ask the salesman that question, guess what the answer will be? Of course it will be renewed. We are one of the top 10 GM dealerships, blah, blah, blah...

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I can certainly appreciate your point of view in this case. I think there is a very fine line in certain circumstances between a decision that governs a process and a step that results from that decision. I could easily go either way with this case.

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Because GM is not disclosing which dealers are on its list, the company is leaving it to the franchise owners themselves to let customers know their long-term plans. However, this could cast doubts on every GM dealership when car shoppers are considering when and where they decide to buy. We would suggest any car shoppers ask a dealer representative if they are not getting their franchise renewed.