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Posts Tagged ‘dealer closings’

GM Wraps Up Bitter Dealer Arbitration Process

Will trim dealer count to 4,500, but 100s more saved.

by on Aug.06, 2010

The new face of Cadillac; GM is expecting 1,000 retailers to upgrade this year.

General Motors has wrapped up its often-contentious effort to trim its dealership network, eliminating more than 1,500 outlets, but saving roughly 500 more than it originally had hoped to terminate — for a total of 4,500.

The maker says the downsized distribution system, which will still be the nation’s largest, should help it become more competitive in the wake of its 2009 bankruptcy and the elimination of four of its eight North American brands.

“A strong, profitable dealer network selling and servicing the world’s best cars and trucks is a genuine market advantage,” said Mark Reuss, president of GM’s U.S. operations.

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In June 2009, in the midst of its Chapter 11 reorganization, GM had 6,049 retail outlets in the U.S.  As part of its restructuring, the maker abandoned the Saturn, Hummer and Pontiac brands and eventually sold off Saab, simultaneously moving to “wind down” its franchise agreements with 2,064 retailers.

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There is a Bright Side to Dealership Closings

It is a new place to store your collector car!

by on Jan.10, 2010

One of the problems with owning a collector car, aside from spousal nagging, is where to store it, especially in the off-season of winter storms in certain latitudes. Even the South has been buried in recent weeks under two-foot snowfalls.

There is a truism along the lines that one man’s misfortune is another’s good luck. And so it is with storing your four-wheeled treasure: a former auto dealership facility.

As everyone knows, the current economic recession’s effects are especially hard-felt around the Motor City, on account of the roughly 38% drop from a 16-million-unit sales year to one of “merely” 10-million cars and trucks. This is on top of the nationwide real estate burst bubble from fraudulent mortgages that is highly concentrated in Florida, Nevada and California—and Detroit.

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Vintage Observations!

There is now a new, and nationwide trend as a result of the auto industry’s anguish about 2,000 closed auto dealerships from coast to coast are in play. These came about from (1) GM and Chrysler being forced to cut off low-selling franchises (although a “cash and carry my vote” Congress is meddling some here), (2) GM eliminating complete dealership networks by discontinuing Pontiac and Saturn, and (3) just the normal friction of business failures as the economy is in the deepest and longest recession since the great depression.   (more…)

Dealer Group “Disappointed” in GM’s Plan to Close Thousands of Stores. Customers Could be Too

NADA says GM needs to treat dealers fairly and is lobbying for concessions. Owners need to lobby for themselves.

by on Apr.29, 2009

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"We feel a strong sense of disappointment that GM has, for whatever reason, decided to accelerate dealer consolidation in such a drastic way."

The controversy surrounding General Motors pending reorganization continues to attract disapproval from related firms struggling to survive the effects of GM’s forced transition to a drastically smaller auto company. For owners of GM vehicles and prospective buyers, the next 30 days will be critical time when the choice of a buying a car, or having it serviced at a dealer could affect the value of what is still the second largest investment – after a home — that most Americans make. GM has said it will close 2,641 dealer locations from its existing 6,246 stores by next year.

The latest criticism comes from a statement by the National Automobile Dealers Association, which said that GM’s plan to eliminate dealers came as a “surprise” and will hurt sales, even though the closings were basically outlined by GM back in February.

There is also the now real threat of lawsuits by dealers against the company that could drag on for years. It is clearly not in the interest of GM vehicle owners to get caught in the middle of litigation, even if their warranties will be honored. Owners should be confident that the dealer they are using has a future, and that its employees are properly compensated and following the authorized service procedures. Can a customer expect fair treatment from a dealer that is financial threatened?

“GM’s decision to radically cut its dealer network over the next 18 months comes as a surprise. We understand the realities of current market conditions. But nevertheless, we feel a strong sense of disappointment that GM has, for whatever reason, decided to accelerate dealer consolidation in such a drastic way,” said John McEleney, chairman of the National Automobile Dealers Association.

NADA has asked GM and Chrysler dealers to contribute $2,000 for each store to a legal fund in the event of a bankruptcy. “It is critically important that dealers have legal advisers with expertise in bankruptcy and corporate restructuring,” Nada said to GM dealers in a letter. “ If GM were to file, its bankruptcy would almost certainly be one of the largest and most complex corporate reorganizations in the nation’s history.” Chrysler dealers got a similar plea. Bankruptcy or not, the threat of legal action is real.

GM said it is moving forward with dealer closings to meet the terms for continued loans imposed on it by the Auto Task Force. The GM goal is to accomplish this reduction in an “orderly, cost-effective, and customer-focused way.” GM said that fewer U.S. dealers will allow for a more competitive dealer network and higher sales effectiveness in all markets. But it didn’t provide any information that consumers could act on now. (more…)