Rick Wagoner, the CEO of General Motors Corp. (NYSE: GM), continues to batten down the hatches at the world's largest automaker. Sales in 2008 are predicted to be fairly weak, and this isn't helped by the fact that the automaker's dealer network could be compared to McDonalds Corp. (NYSE: MCD): so many locations that they seem to be on every corner.
Wagoner needs to fix that, and the CEO said this week that its U.S. consumer sales network was not shrinking enough to correlate with the sales slowdown and product mix shift it's been experiencing. Hence, many dealers will need to consolidate faster than they have been, with the focus on combining Pontiac, Buick and GMC dealerships into one channel.
Instead of marketing so many distinct brands, the time is now for GM to make sales and profit a top priority instead of trying to satisfy the demand for every style, color, look, feel and any other variable that customers nitpick over. At the end of the day, the normal passenger car is just that -- a car. However, the tendency of U.S. consumers to choose transportation based on psychological need instead of physical need still exists -- and this is where brand and dealer consolidation may get bumpy. GM's vehicle designs, until just a year ago, appeared quite bland compared to the foreign competition (with less product breadth, even). But that's just my two cents.
Even though GM saw its dealer network shrink about 7% from 2005 to 2007, more consolidation is needed. Case in point: competitor Toyota Motor Co. (NYSE: TM) sold roughly the same number of vehicles in the U.S. in 2007 as GM, but with only 1,244 dealers. GM has over 4,000 dealers. The picture is clear to me.
Savings Experiment: Snow Removal
The Money Man Behind Rick Santorum: Who Is Foster S. Friess?


Reader Comments (Page 1 of 1)
1-24-2008 @ 2:51PM
Gumby said...
yOU Wrote about chevy volt as a pure electric car. You are not accurate as Volts still has a gasoline engine that is primarily used only to crank an electric generator. Yes, Volts have electric motor(s) that is controlled by driver with a floor pedal. The electric generator charge batteires which in turn feed to electric motor(s). Hybrids is different as you have dual floor pedals that automatically switch between gasoline engine and electric (hybrid) motor. Volts is much simpler than hybrids because Volts doesnt require any gearbox or transmissioins because electric motors doesnt need them. Electric motors is basically one speed motors, but you can add gearbox to it if you really wish to. You see , electric motors has constant torque power from xero to high speed unlike gasoline engines which is optimal only in narrow range of rpm usually between 1500 to 4000. Yeah you can floor the pedal past 4000 rpm or so but you wont feel the additional torque if you can feel it at all. Electric motors start peak torque from zero rpm to top rpm. That is the beauty of electric motors. It is much similar to electric variable drills you have at home. It would keep on griniding at any speed . The power feel constant at any speed. You can compare gasoline engines to gas chainsaws that you have to rev up enough to make it cut wood or it would stall. That is the beauty of Chevy Volts and that is why Chevy Volts still need a built in gasoline engine to keep the electric generator running and feeding into batteries. Interesting? This is what car shoppers need to keep in mind when they look at Chevy Volts.
1-24-2008 @ 3:04PM
Jesse Meeker said...
If GM would remember how to sell cars, they would not need to cut dealer ranks. The dealers cannot get enought of the fast, sexy Corvettes. There is nothing as fast and luxurious in the price range. Get busy and get the same results for the rest of the car lines. More economy in the lower end, more qulaity in the upper ranges. Then you can outsell the Japanese and European makers. Olds had a real nice car in the Aurora ( the original model, 1994? to 1999 ), but the colors in the chart were not fit for the car. Earth colors are not what you should offer on a hotrod, which is what that was. The racing connection to the Indy cars was a waste of time, without some bright colors. Henry Ford offered any color you wanted on the Model T, just so long as it was black. They stopped selling to the degree that he had to come up with a new model, and it took the V8 in 1932 to pull the company back to being competitive. My $40,000 Avalanche has had three covers on the drivers seat back because the bolster keeps wearing. The seat bottom bolster is still the original. The dealer was as understanding as he could afford to be, without real assistance from GM. GM, back your vehicles. If you stand behind your older products, people will buy the new ones. 100,000 mile wanantees on the new vehicles will not sell to someone like me who wants the WHOLE vehicle to last, not just the engine and drivetrain.
If I were a stockholder, I would be bitching like crazy about the dismantleing of the company, not cheering the current idiot management on.
1-24-2008 @ 3:21PM
Gumby said...
The real drawback abut pure electric cars without any gas engine/generator inside is that you will have to plug it in . As you know, your utility bill has several brackets of electricity usage. Generally, the first few hundred kilowatt/hours of usage is at the lowest price because it is earmarked for small apartments/condos. Most homeowners use more than a few hundred kilowatt/hours per month cycle, usually past one thousand kilowatt/hours. Now, you see my local utility bill says first 300 kilowatt/hours cost about 11 cents per kilowatt/hour, then the next bracket of a couple hundred kilowatt/hours would cost 12 cents per kilowatt/hour. Wait a minute, here comes the nasty surprise!! the third bracket jump to around 22 cents per kilowatt/hour for a couple hundred more kilowatt/hours. If you really have a big house with big applicances and a big family running around, you will tend to be joining the fourth , fifth brackets that cost , yes, around 33 cents per kilowatt/hour. I never see the fifth bracket and I don t really want to know and it can be 40 cents or higher. So if you decide to buy a pure electrtic car and plug it into your house current. Chances are that you will be charging your car at the highest bracket or that your electric car will help pushing you into the fifth bracket when you will be paying for watching TV, washing clothes, cooking. Your utility bills will be a eye popping sticker shock. What you normally pay monthly can be increased 100% or more monthly because of your newfangled new electric car. That is the ugly story about plug in electric cars. That is why GM is coming up with Chevy Volts with a small gasoline engine inside to keep batteries charged in a self contained manner. Gasoline prices is not priced in brackets and you can buy as many gallons of gasoline you want but you cant do with electricity. You will pay 11, 12, 22, 32, 40, 55 cents per kilowatt / hour until your month cycle is over and you will go over again at lowest bracket. Some call it peak hour which is misleading.. Peak usage is a different issue meaning our powerplants can only supply as much electricity at any given period. It is similiar to rush hour traffic and you are backed up and there would be brown outs or black outs if you dont turn off enough widgets to spare the grids of pressure. Utilty bill brackets and peak hour usages are two different topics. Both are worthy reading but dont confuse both. Yes, Chevy Volts can be charged to run up to 40 miiles without the gas engine running, but it is not really the point. The idea is that the gasoine engine inside Chevy Volt will not be able to be jackrabbited by leadfeet drivers through intersections or drag raced at all. It will be primarily the electric motor that will do all the work of propelling Volt forward not the gasoline engine. The gasoline engine is securely tucked away and running steadily to keep batteries full, period. You can jackrabbit electric motor for all you care. Again , this is the beauty of Chevrolet Volt and there is no other car like Chevrolet Volt. Yes, it is similiar to modern freight trains that has huge diesel engines that is primarily used to generate electricity for yet other huge electric motor that is used primarily to pull the train forward. That is why we call our modern trains diesel/electric trains!! You see? Intersting , isnt it? Why we never thought of Chevrolet Volts before, ?? Well, I dont know!! Really, honest!
1-24-2008 @ 3:24PM
Gumby said...
hey brian did u read it?
1-24-2008 @ 3:28PM
Brian said...
Read it. Great perspective there -- appreciate your detailed comment ;-)
It's a reminder to always look at every angle, all alternatives and every piece of information, no?
Cheers.
1-25-2008 @ 3:03PM
VM said...
Your statement "competitor Toyota Motor Co. (NYSE: TM) sold roughly the same number of vehicles in the U.S. in 2007 as GM, but with only 1,244 dealers. GM has over 4,000 dealers." is not correct. GM outsold Toyota by Approx. 1.2M vehicles. Yes they have more dealers but the gap is not as great as you make it out to be
2-03-2008 @ 7:25AM
spambo said...
So Rick Wagoner thinks there are too many GM dealerships? How many Toyota dealerships will people drive by to get to a GM dealership?
2-03-2008 @ 7:40AM
spambo said...
Here are my thougthts.. GM needs to train dealers how to sell cars. People don't want to go into a dealership thinking the dealer is just there to screw them. I tried to buy a new GTO when they first came out and the Pontiac dealership acted like they were afraid to sell it. I bought a Silverado SS from another dealership. When I tried to get a Cavalier for my gf they were in short supply because production had ended. The dealer I bought my SS from didn't seem interested in helping me get one. GM dropped the ball on the Camaro/ Firebird line right when Ford came out with the new Mustang. So all young people looking to buy a sports car would be forced to buy a Ford or import just when GM finally got a decent engine (LSX)to use in a muscle car. I can go on about the mistakes they are poised to make in the future concerning the Holden Ute import badged as a Pontiac instead of a Chevy el Camino. GM brass is tarnished. They don't know what they are doing. They need new leadership. At the very least they can hire me as a consultent to tell them all the stupid things they are doing.