The is the story of Joe and Susan who decided to buy a new car. They settled on a GM, General Motors Corporation (NYSE: GM) product because they wanted to buy American. They drove to their local dealer only to find that the street sign has disappeared and a sign on the building said "gone out of business." So they said to themselves, let's go to another dealer. Maybe we'll find one open.
This little story will be repeated over and over again in 1,100 small towns all across America because GM is closing about 1/6 of its dealerships. Since GM is still not in bankruptcy, it agreed to take back the unsold cars and trucks from the closing dealerships.
Chrysler, on the other hand is in bankruptcy proceedings and is not bound to take back its inventory. Chrysler plans to revoke the franchises of about 1/4 of its 3,200 dealerships.
Ford Motor Company (NYSE: F) while still standing tall, is reducing its dealer network to make the company more efficient.
"Efficiency" is the word in the auto industry. By 2010 GM will close 3,600 dealerships which is 42% of its 6,200 shops. In these shaky times, the future of Saturn, Hummer and Saab is in danger and may be history in a few months.
Would you buy a GM product?
Will Rich Ross really have a positive impact on Disney's movie operations?
Consumers sick of recession, may spend extra on holidays
Corrections, seasonality and Santa Claus
Reader Comments (Page 1 of 1)
5-15-2009 @ 6:23PM
Dan Barnett said...
Why buy a GM? Any warranty could be voided in a bankruptcy. Any extended warranty would be really speculative. Finding a repair dealership just got alot harder. Replacement parts may prove difficult to find in the future. Apparently claims for the Chevy Volt have proved to be wildly optimistic (lie is such a nasty word)
Who has other reasons?
5-15-2009 @ 9:30PM
william lindblad said...
I can give you a whole list of reasons that this failure should be avoided.
Duesenberg, Pierce Arrow, Cord, Auburn,Marmon, etc., and that is just in the 30s. Add to it Hudson, Packard, Studebaker, Kaiser/Frazer, Nash, Crosley and AMC from WWII to present.
Does anyone realize what is going to happen when the last remnants of our manufacturing base are history?
The entire auto industry world wide is in trouble. Does that not tell you something? Trucks and cars are not selling. The retailers have vast inventory of lawn mowers and yard tractors. Simply put, what is selling?
5-16-2009 @ 4:22AM
sgentilejr said...
Auto dealerships are privately owned (not owned by GM or Chrysler) The dealers are the "Sales Force" of the auto companies just as the Avon Lady is the salesperson for Avon. Closing dealerships and Eliminating tens of thousands of salesmen will only result in substantially lower sales of their products and not one cent in savings since the auto makers do not pay the costs for operating the dealerships and they charge for delivering vehicles and parts to dealers.
5-16-2009 @ 9:47AM
rwv said...
Big 3 DO NOT need a loan from US....they need SALES,sales mean profit,profit means stability,stability means jobs,jobs mean consumer spending...follow me?...send every LEGAL TAXPAYER in the USA say over 35 yrs old a voucher for the "Big 3" to PURCHASE FROM INVENTORY...instead of a loan which will disappear,make it a Credit Default Swap for taxpayers since we are the ones who are lending MONEY!...Follow me?
5-16-2009 @ 11:20AM
jedeyeben said...
How about this... Make a car that is worth a crap, looks and runs well, then maybe they could sell something. I know they used to have some really interesting, and inovative products... back in the 50s and 60s.
They didnt even have to worry about competition back then either, but for the last 30- 40 years all they have done is design and manufacture junk and push it on the buying public while all their asian, and euro rivals continue to evolve and surpass them in all aspects.
I hate to see anyone lose their jobs and livelyhoods, but hold your executives accountable to run a good company and not drive it staight to the grave.