I have no idea why Mark LaNeve still works for General Motors. The former Cadillac man was serving Kool-Aid on the bridge when CEO Rick Wagoner was Richard Nixon channeling Captain Queeg. When Old GM sank into bankruptcy, LaNeve (and Bob Lutz and Fritz Henderson and the whole damn crew) should have gone down with the ship. Instead, they transferred to another boat and headed straight for the same iceberg. No surprise there: hitting icebergs is who they are and what they do. I’m not saying that LaNeve’s recent remarks about culling GM stores [via Automotive News] reveal that he’s wrong to trim the automaker’s bloated dealer network. I’m saying that LaNeve is going about it the wrong way. Here’s my thinking . . .
GM’s market share continues to erode. Blame the U.S. economy all you like, but the automaker’s volume is shrinking like a sea island cotton polo shirt in a vat of boiling water. GM suits may think their [remaining] products are category killers (WE WIN!), but they’re not. And even if they were, GM’s branding is so bad that Bob Lutz is in charge.
As PCH101 will tell you, these product-related deficiencies mean that New GM can’t compensate for lost income by raising prices (although they’re trying). Longer term, GM’s product development process is in chaos, and they have limited financial resources to sort it out.
Bottom line: GM doesn’t have the time to kick the competition’s ass, or convince anyone that they have if they did. So New GM has to play the cards they’ve been dealt; they have to stop believing that the next card will be the next big thing (e.g. Cruze control, Voltmania, Cadillac SPORTWAGON? etc.). By the same token, GM has to play their cards conservatively. The time for doubling down (e.g. GMT-900) is over.
GM’s rural dealers are not GM’s trump card. Again: they don’t have one. But small town dealers are the only face cards the company’s got left. Switching metaphors (that one’s played-out), rural dealers are GM’s last redoubt. The General troops are dead on both coasts. The heartland is the last place in America where GM’s products don’t have to be significantly better than Toyondissan’s to move.
Contrary to the MSM’s meme, GM’s sales in “flyoverland” are not down to knee-jerk patriotism. As AN rightly points out, GM’s survival in small town America can be attributed to one simple fact: rural dealers are local dealers.
In Paynesville, a town of 2,200 about 75 miles northwest of Minneapolis, several of [closed Chevy dealer Doug] Hawkinson’s customers say that if the store closes, they’ll abandon GM.
“I would look for something different to drive,” says customer Jim Langmo, owner of Langmo Farms in Paynesville. “Service is greater than the vehicle’s brand.”
That should be music to the ears of a nationalized car company whose branding is in complete shambles. But how can it be when the automaker in question is walking away from [at least] 900k rural customers? Don’t worry; be happy; they’re worried.
GM’s top sales executive admits that he’s worried that GM will lose customers.
Mark LaNeve, GM vice president of U.S. sales, says there are about 3 million “free agents” — current GM customers who bought vehicles from stores that will close. About 30 percent of those customers are in rural markets, he says, meaning that about 900,000 GM owners are up for grabs.
As part of its plan to trim 1,350 U.S. stores by Oct. 31, 2010, GM plans to eliminate about 500 dealerships in rural markets.
“In the major markets, I’m completely confident,” LaNeve said in an interview in late August. “In the rural markets, I’m a little worried about retaining the customers where we wound down a dealer. I’m nervous about that.”
I bet you’re thinking this is the money shot: the quote that proves that LaNeve is insane. After all, A) Anyone at GM who’s completely confident about anything is deranged and B) High anxiety without corrective action is a sure path to the nuthouse. But no. The really wacko bit comes next.
When GM’s dealership consolidation is completed, GM will have 1,500 dealerships in rural markets and 2,500 in metro areas, LaNeve says. He is confident that GM can retain most of its customers because GM’s U.S. dealership count will outnumber that of most rivals.
So GM’s main defense against the negative effects of dealer cuts is the size of its dealer network. Go figure.
LaNeve, how did that more-dealers-than-the-other-guy thing work out for you so far?
Oh that’s right, you went bankrupt and took my tax money with you.
So, not so good then…
LaNEve sickens me. He isa much worse than insane, he is a total, USDA choice, 100%, clueless idiot,
and, to make matters worse, you and I the taxpayers, are paying his probably OBSCENE, 100% inversely proportional to his competence, salary!
True story. When I was interviewing for management consulting jobs coming out of business school, I interviewed with a firm that was doing a lot of work with GM. They gave me a case interview based on work with Oldsmobile, back before GM euthanized the division.
They said, if you could change anything you wanted to save Olds what would it be? I started to lecture them about product and brand aand they stopped me. “OK, you can change anything you want except product.”
I told them pretty much what Robert is suggesting. Focus on the rural dealers who have strong customer relationships in the community and build them up with CPO, servicing and financing programs.
The partner who was leading the interview said: “Wrong: what we told Oldsmobile to do was focus on the mega dealers out by the airport, because that’s where the volume is.”
Yeah. I didn’t join that firm.
An ex-girlfriend of mine was born and raised in middle of nowhere Nebraska. The closest town of any significance (i.e., it has a Walmart and car dealerships) was 30 miles away. The closest town with a shopping mall was 50 miles away. Her family was a Chevy family, mostly because they knew the owner of the dealership and the dealership was fairly close (30 miles isn’t a big deal in rural areas). Basically, they bought Chevy because of the dealer selling the car, not the brand on the front. If the Chevy dealership that is 30 miles away is closing, they may go to the Ford or Dodge dealership 30 miles away or they’ll go to the bigger town 50 miles away that has a Chevy, Ford, Dodge, Toyota, and Honda dealerships. The next vehicle they purchase is going to based on what fits their needs best, not out a sense of loyalty to a friend of theirs. It may be a GM product, it may not. That’s GMs problem.
As I mentioned in an earlier post, Maine, not flyover, but certainly rural, currently has about 11 Cadillac dealers. After the planned cull, there will be 1. In Bangor. Neither the really rural, nor the most populated area of the state.
This makes sense to whom?
Some are fine, long-established businesses, too.
I don’t mean this rhetorically, I really do want an answer.
Did New GM say when they are going to return to profitability? I really can’t recall them talking about that.
Because if they did, did they reason whether their 45% drop in sales affected it or not?
The reason I ask is because, I was reading a very interesting article on whether California could be the first failed state of the USA (link available on request). Apparently, things are so bad there, Nevada are trying to coax businesses out of California into Nevada. I’ve seen their adverts and they are quite funny. Anyway, my point is this. If California, really does become a failed state and totally bankrupt, this will certainly have a ripple effect all over the USA. Now because New GM is rather USA focused, this will certainly hit their bottom line. They sold a controlling stake in Opel, Chevrolet is still a fledging brand in Europe and they’ve already lost their number one status in China to Volkswagen.
In short, I can’t see where New GM is going to go from here.
I’m convinced that this round of bailouts / bankruptcy wasn’t designed to fix any of the root issues. it was just to buy time and wait for the economy to fix itself.
Unfortunately the economy is in deep doo-doo and will likely take 10-15 years to fix itself (longer if we keep piling on debt / printing money).
I expect 2-3 more bailouts for GM from Uncle Sugar to keep the lights on until the free money runs out and some real hard decisions have to be made.
For now the government doesn’t have to do anything hard.. Just print money and wire transfer it to Detroit. Easy peasy…
LaNeve and crew just need to hang out and wait for the government checks to clear to keep all these folks employed and off unemployment/welfare.
LaNeve is a patriot in this wacky new world that we are currently living in.
“In the rural markets, I’m a little worried about retaining the customers where we wound down a dealer. I’m nervous about that.”
When Mark LaNeve admits to being “a little worried” and “nervous” how bad is it really? I think on the scale of most of the rest of us, this would be crawl in bed and pull the covers over your head.
There has long been an understanding in the industry that GM has come this far because of the strength of its dealer network. The reason they survived the seventies and eighties was simply this strength overcoming the abysmal product.
While the small town dealer sells cars to and influences folks in these 3-5 thousand population centers, what about the metro dealers? Any city of 2-5 hundred thousand and up citizens covers a large geographic area. Most often these dealers are active in the market segment of these communities and live there. They sponsor the little league teams, are active in fund raising and political pursuits, and carry a wide circle of influence. These dealer principles have an opportunity to to influence a far broader section of people than the small town dealer ever could.
In many if not most communities, eliminating the dealer on one side of town means the consumer needs to travel to the other side of town to purchase the same brand. As now an “orphaned” consumer, why not check the competition on the way. While Mark may be totally confident that the elimination of metro dealers is not a problem, you are hearing the babbling of someone who never sold a car at retail in his life. Another case of overly confident arrogance on GM’s part.
There are far too many automakers and far too many models in the world, and as all auto experts know, there is way too much OVERCapacity in Auto Manufacturing.
Apparently, he Auto Illiterates in Wash DC want to outlaw Darwin and NAtural Selection and Survival of the Fittest.
A brit asked when GM will return to profitability. My answer above, in terms she will sure appreciate, is,
About the same time British Leyland will.
The sooner this clueless, sick and aging dog dies, the better off all of us long suffering taxpayers will be.
These rural GM dealers, are they actually making GM any money? Are any of GM’s dealers generating revenue on new car sales? At all? Near as I can figure out, GM is geared to be profitable (barely) at about 40% of the market or more. Realistically, they’ll never achieve that, so is keeping these rural dealers around really viable in the long term?
It seems like the kind of people who would drop money on a new car primarily based on distance are thin on the ground and likely not making you much money. Lots of these are likely selling used and/or low-margin models.
They need to resize themselves to a point where they’re able to turn a profit and concentrate on making decent profit, which means that yes, they’re going to need to kill a lot of dealers. They must disabuse themselves of the notion that Olds|Saturn|PontiacBuick will allow them to make up that volume. It’s not going to happen. They need to give up and realize that it’s Cadillac and Chevrolet from here on in.
…which leads to another problem…
In 2005 it might have been possible to wind down those arms of the company gracefully, but not after they mortgaged their future to avoid looking like putzes in the present. Now their future product offerings are a mess, they have no capital, they came out of bankruptcy, unlike even Chrysler, with no plan or future.
They have nothing else to hock, which is why we’re just floating them on through until it’s “safe” to let them die.
It’s a shame. If Wagoner & Co. could have done the honourable thing and restructured four or five years ago, when they still had money and product, they’d be in a great position. Wagoner would probably have been hailed as The Man Who Saved GM. Of course, that would have required him to make an actual decision, rather than hope the iceberg gets out of the way.
Talking about rural dealers and whether or not to keep them is deck-chair rearranging at this point. At most, all you’ll do is postpone your refreshing dip in the north Atlantic by a few minutes.
psarhjinian
Yes, well, there is that.
“In the rural markets, I’m a little worried about retaining the customers where we wound down a dealer. I’m nervous about that.” – Mark LaNeve
The Detroit-3 are closing small town Canadian dealers though this country was never as over-dealered as the U.S. Some are re-opening as Toyota stores, presumably because it offers pickup trucks.
It’s a pickle..
GM’s products can’t sell for more than they cost…
In the old days, this meant that GM would burn through all their cash and die quickly, restoring pricing power to other manufactures.
In the new world, everybody starves, very slowly.
Why does the head of GM marketing look, talk and act like an oily used car salesman trying to pull a fast one on grandma?
I wonder how much of Ford’s increased market share is thanks to “The Great GM Rural Purge”?
If your average Chevy loving farmer has to drive to “The Big City” to get as Silverado, I suspect he’ll defect to a not so bad Ford F150 down at the local Ford shop.
If your average Chevy loving farmer has to drive to “The Big City” to get as Silverado, I suspect he’ll defect to a not so bad Ford F150 down at the local Ford shop.
If your livelihood depends on the kind of customers who will put things like reliability, performance and, yes, price, behind “how far do I have to drive to buy it?” when we’re talking about the second-largest purchase they’ll ever make…
…well, then, you’re in trouble. Serious trouble.
The kind of people who an afford a new car and are this, well, simple or gullible are not common. Adding more rural dealers to exploit a vanishing and not-very-profitable chunk of the market is not a winning strategy.
I can (sort of) understand closing a Chevy dealer in a city that has at least one other one. Personally, I think more dealers is better in general-never understood this “we have too many dealers” stuff at all, but at least there’s some logic if they are very close together.
I can’t understand closing a Chevy dealer when the nearest other Chevy dealer is 50 or 100 miles away-and a Ford, Dodge, or Toyota dealer is closer.
In general, the more places that sell your product (any product), the better. Especially if you don’t own said dealers directly-little overhead on your part. If some of the dealers fail finacially, then that’s fine. But don’t force them out of business if they are making money (and making money for you).
They need to resize themselves to a point where they’re able to turn a profit and concentrate on making decent profit, which means that yes, they’re going to need to kill a lot of dealers.
They do need to re-size but they need to close the right dealers. Within a seven mile radius of my house, there are five Chevy dealers. All five are going to survive the cull. Walking around my neighborhood and driving around the local communities, I can tell you I don’t see enough new Chevy’s on the road to justify five local dealerships. I see more new Honda’s, Toyota’s, and Ford’s around than new Chevy’s.
They do need to re-size but they need to close the right dealers. Within a seven mile radius of my house, there are five Chevy dealers. All five are going to survive the cull.
If those dealers make them money (sort of) then the fact that there’s five of them is moot and inter-dealer attrition will take care of them, and that attrition comes out of the pockets of the dealers, mostly, not GM.
The true problem with GM’s dealer network isn’t that there’s too many of them as much as they’re a both a symptom and a cause of their having too many brands. Two Chevy dealers across the street from each other means competition; a Chevy and a Pontiac/Buick/GMC dealer means GM is doing twice the work for two-thirds of the return.
The divisional structure made sense when GM was absolutely huge because it gave them a way to make even more volume. They have no chance at that kind of marketshare now, and BPG exists only as a subsidy to dealers and a way to make GM execs feel better.
A lot is made about GM being run by accountants and not engineers, but this kind of behaviour is the fault of neither: it’s the kind of thing you see among people who came up through Sales and who deal only in gross volumes instead of net margins.
Eg, people like Mark La Neve.
GM’s Brazil unit is doing something right:
http://www.latimes.com/business/la-fi-gm-qa5-2009oct05,0,764389.story
“If those dealers make them money (sort of) then the fact that there’s five of them is moot and inter-dealer attrition will take care of them, and that attrition comes out of the pockets of the dealers, mostly, not GM.”
No it is not. Chevy Dealers were not the picture of profitability before the crisis either. L:ook at the stats in Automotive news, cars sold per dealership every month. Lexus and Toyota and Honda usually take the top 3 spots.
If there are 5 Chevy dealers within a few miles of each other, there need to be at most TWO, not one, so that there is sufficient competition between them, and they do not become inefficient by being a monopoly, but on the other hand you do not need FIVE of them, not with GM going from a 50% ++market share (when these five probably began) to less than 20% now, and going to 10% soon!!!!
No it is not. Chevy Dealers were not the picture of profitability before the crisis either. L:ook at the stats in Automotive news, cars sold per dealership every month. Lexus and Toyota and Honda usually take the top 3 spots.
And that’s fine, because those Chevy dealers are competing with each other and cutting their own throats. They don’t realistically cost GM very much. GM doesn’t have to go through the legal rigmarole of terminating them because they’ll either die off naturally. At worst, they’re mediocre dealerships, but that’s not at all unique to GM nor the result of their being five of them in a small radius.
The problem is the Buick, Pontiac (formerly), GMC, Saturn (formerly), Hummer (formerly) and Saab (maybe) dealers that required significant overhead. Those brands and their marketing and maintenance added cost for absolutely no good reason. GM has to maintain significant marketing, infrastructure and production overhead for these brands.
jacad: “In many if not most communities, eliminating the dealer on one side of town means the consumer needs to travel to the other side of town to purchase the same brand. As now an “orphaned” consumer, why not check the competition on the way.”
I live in a metro area. There’s a Chevy dealer on the edge of my fairly well-heeled town, about two miles from my house. It’s close to the principal campus for a fairly large and profitable company. If that dealership closes, there’s still 5 Chevy dealers within 20 miles, still on this side of the metro area (the closest will be 13 miles). The Chevy dealers are thicker on the other side of the metro area. You could close several there and there would probably still be one within 10 miles of any given potential consumer.
Still, as I said, the nearest Chevy dealer is right here, the nearest Toyota dealer is 15 miles away and, by the look of the roads, the town has had no trouble driving an extra 13 miles to get a car they want. There plenty of new Toyotas on the road.
Moreover, I’ll bet the Chevy intenders don’t mind driving an extra 20 miles to get the deal they want. What few new Chevys I see are fairly lilkely to be sporting dealer stickers from the other end of town.
The dozens of Chevy dealers in the area aren’t competing with Toyota, they’re competing with each other for a shrinking slice of pie.
The GM dealership in our town carries all of the General’s products. They are thus not competing much with another GM dealership (the nearest competing GM house is 40 miles away). Might not be a bad model if they kill off a couple of nameplates (especially GMC which only competes with Chevy).
There are people in this iron mining area that will not be seen driving a foreign nameplate (regardless of where it is actually built), but if the GM dealer closes, they will switch to Ford. Most will not travel to another community to buy a Chevy. I see all kinds of Dale Ernhart and Tony Stewart stickers on Fords and Dodges here. They aren’t attached to the corporation, but they do want what they perceive as a domestic.
The value of a ‘rural dealer’ is exactly the same as that of the Maltese Falcon.
People who live in the middle of nowhere (and I have been one) are accustomed to traveling for what they want.
Only the hardest core of rube-ery did business with the ‘rural’ dealer when I lived in that scenario – most folks wanted to drive the 50+ miles to deal with someone at a large dealer.
You wanna have your car wrenched by the one mechanic they have in their 2 service bays, or do you want someone who actually sees enough cars to diagnose your issue?
Small dealers cost the mothership (no matter the brand) money. If you don’t understand that metric, then you really have no concept of the reality of doing business.
You want insane?
A year ago, demanding that GM cut dealers was all the rage. So they did. And now that they did, they’re insane.
A year ago, demanding that GM go bankrupt was all the rage. And they did. And now that they did – which included cutting dealers – they’re insane.
This isn’t about criticizing GM. It’s about dogging anything they do until they die. And when they do, we the taxpayers lose all the money we put in to the company, and hundreds of thousands of people lose their jobs. It’ll be a huge loss for the whole country.
But there will be winners in all this – the people who predicted GM’s failure will be able to pat themselves on the back publicly and say what a smart bunch of fellows they were to see this coming. Never mind that negative buzz like that is a major factor in keeping GM down to begin with.
I wish I could say that’s insane, but I’d use a different word.
Toyota has about 1500 stores in the US. Typically they are located in cities with populations of about 100,000 or greater. Their strategy is to cover as much of the country as they can, with as few dealers as possible.
“In the major markets, I’m completely confident,” LaNeve said in an interview in late August. “In the rural markets, I’m a little worried about retaining the customers where we wound down a dealer. I’m nervous about that.”
I bet you’re thinking this is the money shot: the quote that proves that LaNeve is insane. After all, A) Anyone at GM who’s completely confident about anything is deranged and B) High anxiety without corrective action is a sure path to the nuthouse.
RF, I think you’re parsing his words a bit too finely. LaNeve was talking about retaining customers whose dealers have closed. He’s confident that in major markets customers will be relatively easy to retain because they’ll have a dealer nearby, while in rural areas it’s going to be more of a challenge.
Makes sense to me.
It seems to me that any dealer culling should necessarily consider maintaining geographic coverage and not yielding a market advantage by making customers travel too far to reach dealers.
Autosavant :
October 5th, 2009 at 11:04 am
The sooner this clueless, sick and aging dog dies, the better off all of us long suffering taxpayers will be.
…except, of course, hundreds of thousands of taxpayers who work for the sick, aging dog. Unfortunately, they won’t die, will they?
If and when GM fails, the suffering for ALL us taxpayers will have just begun. First we’ll have to bail out the state of Michigan, because it’ll go completely tits-up; Indiana and Ohio will be next.
Then we’ll have to pay for the unemployment, job retraining, and eventually, welfare and Medicaid for all the laid off autoworkers who won’t be able to find jobs – not even at Wal-Mart. They’ll be on the public dole for God knows how long.
Then all the people who worked for the suppliers will lose their jobs. They’ll join the old GM workers through the unemployment-to-welfare system. Ditto for all the people who worked for GM dealers.
Long-suffering? I don’t think the “I Heart GM’s Death” crowd even fathoms how bad it’ll get if their wish comes true.
And that’s fine, because those Chevy dealers are competing with each other and cutting their own throats. They don’t realistically cost GM very much. GM doesn’t have to go through the legal rigmarole of terminating them because they’ll either die off naturally. At worst, they’re mediocre dealerships, but that’s not at all unique to GM nor the result of their being five of them in a small radius.
Too many dealers still hurts the company because price competition at the retail level will affect resale value.
Also the dealerships cost the company money in terms of dealer support. For every X number of dealers they need Y number of regional managers. Brochures and other promotional materials must also be provided.
I think the idea is to have fewer, but healthier dealers. If those five Chevy dealers were two, they’d each sell more cars per dealer, reducing costs per car, plus with less price competition, avg profit per car would be better.
I don’t know much about business but it seems to me that profits would be maximized for both the companies and dealers by keeping supply just barely up with demand.
Starbucks learned that you can reach a saturation point.
The biggest issue is that there’s is a big difference between what is healthy (or at least survivable) for a dealer and what is good for GM.
The problem with killing a small-town single dealer is that it makes good sense for GM (most of these mom-and-pops don’t do all that much volume), EXCEPT that you are killing what is often the single biggest business in the area. Even a rinky-dink new car dealer is a big player in small-town society. That’s a lot of good will lost.
In the big city, cutting weaker performers won’t have the same local ripples (someone else can sponser little league), but attrition won’t do the job nearly well enough. Dealers can survive on volume and margins that are just shy of disastorous for the mothership (repairs, used cars etc.). They fight for the dealership for limitted allocation jackpots and “blue sky” value more than anything else. A dealer that can’t sell Buick anymore may be only marginally worse off, but the “value” of his store would plummet.
Cutting dealers is like dealing with an infection. You can’t negociate, because the germs are doing well enough for themselves, thank you very much.
The problem with letting nature take its course and cull excess dealerships naturally is that it is an ugly and brutal process that is alienating customers.
The cold hard fact is that GM’s market share is a fraction of what it used to be. That means all their dealers have to fight over the same shrinking slice of pie.
It becomes a problem for GM because the dealers end up cutting costs to the bone in order to compete with their brother dealer. The dealership starts looking ragged. They can’t hire decent help. They start cutting corners. They start screwing over customers for every dollar.
The GM dealers end up in a vicious circle of cost cutting that prevents GM from getting top dollar for their cars.
While this is going on, the customers can walk into another car make, with a nice modern clean showroom, white glove service, and more expensive cars. They may pay more, but they feel safer and like they are getting more for their money.
Killing a rural dealer who doesn’t bring in enough revenue doesn’t have the impact as much as it used to. Even farmers have internet access now and can shop and compare prices and features.
Yes, it would be great to have a top notch dealer on every corner of the country. But it is simply unsustainable.
The fact is, GM can’t wait for nature to run its course. It doesn’t have the money or time. It has to thin the heard now so that the survivors fatten up to fight the real competition, not each other.
@ lw
I’m convinced that this round of bailouts / bankruptcy wasn’t designed to fix any of the root issues. it was just to buy time and wait for the economy to fix itself.
I think you’re right. It long ago ceased being about the companies themselves or the individuals per se.
It’s about money going out into already active areas of the economy as stimulus.
The real cost? No structural reform is being realised in the US economy. It’s so disingenuous and false for the people affected; nothing is being done for people to move into new industry or new productive tasks.
That’s not an easy thing to do suddenly and quickly however, but keeping them in the same dying industry won’t work either.
@ Freedmike
I think your arguments are correct. If GM disappears and thousands are turfed out to fend for themselves it will have a larger flow on effect (one that would be debated for sure).
Keeping GM afloat is the “best” of two bad choices. I think that’s all that can be said. It seems popular to claim that this as a false choice, but those packin’ the Common Sense® don’t offer a “Third Way” to deal with the “clueless, sick and aging dog”.
To the issue at hand; the previous collection of dealers were clearly able to keep the doors open, so one suspects that they were viable businesses, if you regard hand-to-mouth as viable I guess.
That being the case, the question then arises what does closing those dealers do? It eliminates the base cost overhead of operating those sites and allows margin to be retained. The effectively combined dealers operate a more sustainable retail business with lower overheads.
If they can establish that, standards of those business can be raised (service levels, general quality of people employed). Once you have that, you can raise the price of your product.
Maybe it will take 20 years? Longer?
Of course all of this falls down if there is a real gap in your product, or your product is unwanted, or you continue competition within your own damned businesses!
PeteMoran :
October 5th, 2009 at 11:25 pm
To the issue at hand; the previous collection of dealers were clearly able to keep the doors open, so one suspects that they were viable businesses, if you regard hand-to-mouth as viable I guess.
True, but many of these “viable” new car dealers were really used car dealers with a new car and service franchise. Definitely true of the Chevy dealer in my area that’s walking the Green Mile.
And when they do, we the taxpayers lose all the money we put in to the company, and hundreds of thousands of people lose their jobs. It’ll be a huge loss for the whole country.
It will happen eventually anyway. It was going to happen; even without the recession at all, much less the financial crisis, GM and Chrysler were doomed. They were mortgaging the future for several years. But I guess you’re a big believer in Too Big To Fail. You and the banks.
Never mind that negative buzz like that is a major factor in keeping GM down to begin with.
A bigger factor is people believing that “negative buzz” is really GM’s problems, instead of product and cost structure.
…except, of course, hundreds of thousands of taxpayers who work for the sick, aging dog. Unfortunately, they won’t die, will they?
You’re willing to condemn hundreds of thousands of taxpayers who don’t work for GM to unemployment so that you can save the GM workers. Don’t talk to me about selfishness.
Then all the people who worked for the suppliers will lose their jobs. They’ll join the old GM workers through the unemployment-to-welfare system. Ditto for all the people who worked for GM dealers.
None of the suppliers will possibly sell to the surviving car companies? None of the suppliers of the other car companies will hire? None of the GM dealers will reopen as other dealers? None of the people who worked for those dealers will be able to find jobs at other dealers?
@ johnthacker
You’re willing to condemn hundreds of thousands of taxpayers who don’t work for GM to unemployment so that you can save the GM workers.
How do you figure that?
@Katie,
GM don’t have to return to profitability. They just have to give new cars to Congress-folk, Bawney Fwank, Nancy Pewosi and Charwy Wangle, every year and they’ll keep on receiving my tax dollars. Simple!
One of the big draws of rural dealers was the ability to service the car locally.
Now GM is shutting those local dealers and forcing people to drive large distances to other dealers.
If you have to drive a long distance to another dealership to get service are you going to get the higher quality imported job or the crap GM is putting out?
I love my GMC Sierra: great reliability, very good build, excellent as a working truck. But my GM car? No way I’d ever consider another GM car based on the build quality and reliability of that, especially if I had to drive any distance for service.
Reasons why too many dealers suck:
1) not enough profit when two are eating a meal large enough for one, so the dealers are skeezier, more desperate, and generally more likely to try to get one over on the customers. This degrades the brands reputation quite badly.
2) In GMs case, the Pontiac, Olds, Chevy, Caddy, Saturn, GMC, Hummer & w/e the hell else want a full lineup to sell. Unless you want to spend ridiculous amounts of money duplicating R&D, you end up badge engineering so that Pontiac dealers have a minivan to sell, and Chevy has the Corvette and Camaro while the sporty brand tries to hawk rebadged Aveo’s. Basically it is a major factor in that brand degradation that has been so problematic for GM.
Anybody got other reasons?
And yes, people will just go to the Ford dealer. Rural America is probably not too keen on the bailout in the first place, its a pita, and hell, what goes GM have to sell that would make you go out of your way to buy one?
They will lose a lot of people. Shutting down a local business will be the last time GM sees a lot of people.
johnthacker :
October 6th, 2009 at 12:51 am
You’re willing to condemn hundreds of thousands of taxpayers who don’t work for GM to unemployment so that you can save the GM workers. Don’t talk to me about selfishness.
Oh, give me a break…what workers are losing their jobs because GM was propped up? Be specific, please.
The prospects for GM are worse than is stated here. Many, many people are deeply offended by the bailout and the transfer of GM and Chrysler to the UAW. I hear from several people who are potential buyers of American cars and they all say the same; that they might consider buying a Ford, but they will never, so long as they live, buy a GM or Chrysler. Recent sales figures bear this out.
The best thing that could possibly have happened to auto workers and the taxpayers would have been to run GM and Chrysler through a real bankruptcy and sell the assets, designs, tooling and trademarks to private investors who might have invested sufficient additional capital to give the companies a chance. Of course, UAW contract obligations would have stayed with the bankruptcy courts.
Some sort of real bankruptcy will eventually happen. The gubbermint cannot afford to print enough money to keep these corpses from rotting. Unfortunately, it will come too late for there to be any chance to make viable car companies out of whatever remains.
How much will the taxpayers lose? It is a meaningless question. They have already lost every penny put into this farce. Every day that passes is just more money lost. Cut the losses now and give whatever is left of the economy a chance to heal.
What does it cost GM to support a small rural dealer?
George Bruce :
October 6th, 2009 at 10:14 pm
The best thing that could possibly have happened to auto workers and the taxpayers would have been to run GM and Chrysler through a real bankruptcy and sell the assets, designs, tooling and trademarks to private investors who might have invested sufficient additional capital to give the companies a chance.
Let’s get real, George…GM was $180 billion in debt. What investor could have bought them? Only one: Uncle Sam.