Even as we await word on whether GMAC lives or dies, it’s increasingly clear that GM is using the lender as a hit man to decimate its dealers. Bloomberg clues us in on the motivation: “A U.S. dealership glut is damping the retailers’ profits, crimping spending on marketing, facilities and vehicles, GM and Chrysler say. GM set a goal of closing 1,750 showrooms, or 27 percent, over four years while Chrysler said it wants to thin its 3,300 dealerships, without setting a target… ‘In a number of states there’s these very elaborate procedures that you have to go through to shut dealerships,’ University of Chicago law professor Douglas Baird said in an interview. ‘In some states you just can’t do it at all.'” Philly.com shows us that GM has the means: “A half-dozen trailers rolled up to Eckenhoff Cadillac Buick Pontiac GMC in Jenkintown bright and early and wiped the lot clean of $8.4 million in inventory – Hummers, Cadillacs and all… GMAC, the beleaguered financing arm of General Motors Corp., had called the loan that had enabled Scott Eckenhoff to stock new and used vehicles. Big trailers carted away the collateral from a Big Three retailer that had been hanging on by a thread.” Opportunity? The current Motown meltdown. My question: what the Hell is GMAC going to do with all that inventory? Put another way, who’s going to bury the bodies? [thanks to Stein X. Leikanger for the tip!]
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Put another way, who’s going to bury the bodies?
They could get their moneys worth from the jobs bank?
The new car inventory(MCO) and current year is usually rebilled to other GM dealers.Used inventory is put on GM’s online used car auction or carted of to the local Manheim auction.Witness Bill Heard’s five massive defunct GM stores in Georgia. What is really confounding it’s my understanding that GM has allowed the sale of four of these dealerships to new owners. Only one has been shuttered forever.
The sad part of this story is that some of the good dealers will be casualities.
speedjebus:Within 30 days the job banks will be gone.Couple of thousand on unemployment,a few hundred on welfare.But its ok cause the job banks will be history.
You still aren’t getting this, are you mikey?
Yep, thousands of UAW/CAW members will be on unemployment or welfare and yes that’s a tragedy. But it is no worse than any other person from any other company who has been laid-off. I don’t understand why you still think UAW/CAW members should be treated better than everyone else.
Maybe you can enlighten me?
After reading the story on philly.com, it looks like things are going to get very bad for GM.
If GM plans to kill off dealers by calling loans, there are going to be a lot of pissed off people – dealer employees, and people in the communities where the dealers once existed.
So in turn, they’ll swear off GM and buy “imports”.
Not to mention the people that will never buy a GM product because of the bailout money they were given and will never repay, and the people that have been burned by GM in the past.
GM could have made life a lot easier for everyone if they would have declared bankruptcy in 2005, 2006, 2007, or even early 2008. Then they could have cut models and proceeded to build the best cars/trucks in the world, and actually follow through with it long-term. It’s hard to comprehend how stupid the leaders at that company are.
I know some people have said Rick Wagoner is smart, but he’s an idiot. Smart leaders engage in long term planning and have profitable companies. GM, not so much.
Couple of thousand on unemployment,a few hundred on welfare.
This isn’t the 1950’s. People must be flexible for a changing work environment. I have no sympathy for soon to be unemployed UAW workers who do not want to adapt to today’s ecomony.
White collar workers long ago gave up lifetime job security and pension plans. There is no tragedy here, only utter apathy on the UAW to adapt to a changing economy.
I agree i dont see why uaw/caw members should get speacial treatment. I also think its sad that most people still think the gm logo is american made? Its just a logo now. Same as harley davidson, where did the drive go to keep americas pride alive? Its sad to say greed takes over after all. Cant say to blame. If you were givin a bonus for shortcutting costs even if the product suffered, i guess its depends on how many zero’s are on the check? This country needs a new start, better ideas, and some loyalty to keep americans working. We have really smart people in this country that are not all about $ where are you?
ireallylovemangoes: I do get it.I understand this better than half the posters at TTAC do. The job banks had to go, we all are painfully aware of the facts. Job banks were born in an earlier time and they served their purpose.
We the UAW/CAW never asked to be treated any better than everyone else. What we asked for was our piece of the pie.Well now the pie is just about gone.The UAW/CAW has granted one concession after another. In the new year the CAW/UAW is gonna give up some more, and that won’t be the end of it,we all know that.
The Unions are not without fault. We also know that fact.
Incompetent management is how we got here.Union
contracts are just a symptom.The big 3 agreed to job banks. Toyota refuse to lay anybody off. What the hell is the difference?
Anyway, the topic here today is dealers.
decimate: to destroy one tenth of
@ Mikey: It was sarcasm on my part. I thought it was pretty clear…
“We the UAW/CAW never asked to be treated any better than everyone else.” Sure you did, that’s what Bob White was doing sitting at the table screaming obscenties at anyone who would listen. He wanted more for his members. Off-topic, but relevant.
Anywho, yes, this is about dealers. Have heard that 2 GM dealers here in Ottawa (one P,B,GMC the other a Chev/Cadillac) will be closing their doors within the next 2 months. I am always shocked when I hear how many people these dealerships employ. I never really appreciated how many people are employed by the retailing side of the business.
Compare Eckenhoff Cadillac’s building to any Lexus dealer in the country and you know all you need to know about the status of the “standard of the world”.
It looks more like a soft ice cream stand than a luxury car dealer.
It would be telling to see the financials and/or customer ratings from the dealers that are going to be shuttered. I seriously doubt any top dollar dealers will go away, but those at the bottom of the barrel are toast. Kind of like ALL other businesses that fail to please their customer or turn a profit.
“I have no sympathy for soon to be unemployed UAW workers who do not want to adapt to today’s ecomony.[sic]”
Where exactly do you expect these people to find good, or any, work as the “adapt”? The very beacon of the new economy, Silicon Valley, now sports an 8% unemployment rate.
When did having no sympathy for your fellow man become a badge of honor?
Jenkintown is just a few miles from my home. Its a fairly wealthy suburb of Philly. If they can’t sell Caddy’s there, GM is in even worse trouble than I thought.
There is a 10 mile stretch of the White Horse Pike near Hammonton, NJ that had 5 domestic dealerships 12 months ago. Since then, Hammonton Ford, Hammonton Chrysler, South Shore Chevy/Cadillac have closed shop, and Mike’s Finest Dodge/Chrylser is having it’s inventory removed as I type (and i would’t hold my breath for Agresta B/P/GMC).
While we here about the Bill Heard’s and the Eckenhoff’s, it’s really these smaller town dealerships going down that will crush the last pillar of domestic support. Being able to drop my car off down the street for service (warranty/specialty) work actually does have an impact on what I drive. If I have to drive 25 miles for warranty/specialty work regardless of it being an ‘import’ or domestic, I’m getting the best car or best value available.
Right now, that’s mostly Honda and Mazda territory.
The bargain driven strong market of the past decade concealed a lot of weakness in the dealer network.
I would love to see the data on the franchises are having their plug pulled. Are they using a uniform aging criteria (X $ and/or days behind) or are they using the Repo man to whack the stores that are on their hit list?
Brettc your points to me are right on the mark. I retired 5 years ago after running a very succesful Chevy-Cad store. I got away from the business out of disgust and loathing for GM and its actions towards dealers and customers. I spent my entire career in the car business and I grew to distrust and dispise Gm management for the dishonest tactics they used in dealing with us the dealer and the lack of fairness with customers. The way lack of floorplanning is forceing dealers out of business is very convenient for GM but the ill will and hatred they are creating is going to hurt them big time. This is further proof to me that my conclusion after years of interacting with them is that they are a shameless, dishonest company that cares little about their customers and even less about their dealers and employees is still the right one.
I’m late to the table on this one, but read when it ran in the Inquirer. Thanks to RF for picking it up.
But I am surprised that so many missed this salient quote way down in the text:
“This is why some locals suspect GMAC is working with GM to clamp down on sites that GM would like to see eliminated from the grid – even though GM has not released a list of targeted dealerships.
“Some dealers believe it’s just part of GM’s plan to proactively reduce the number of dealerships, and that’s one way to do it,” said Richard Weitzman of Staubach Retail’s auto group practice in Bala Cynwyd.
Weitzman, who brokers land transactions for local auto dealers, said there is a growing sense that GMAC is coming down hard on some dealers for GM, which is hoping to avert bankruptcy through steep restructuring.
GMAC’s Stoller said this was “not the case. GMAC continues to extend credit when there is an appropriate business case for doing so.”
Asked if GMAC was singling out GM’s weakest dealers, he said: “We are prudently managing our portfolio for risk in a consistent manner.”
I live just down the street from this dealer (Eckenhoff) and it was unbelievable to see this happen. They had literally hundreds of cars on their HUGE lot. One day it was full, and the next day EVERYTHING was gone. I pulled in and looked on the door/windows for an explanation for their customers to read, but there was none.
When did having no sympathy for your fellow man become a badge of honor?
This is America. If you aren’t already rich, it’s obviously because you’re not working hard enough. Social responsibility and a sense of the greater good is practically communism.