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Discussion Starter · #1 ·
What benefit would it be to GM and Chrysler to cancel 3000 dealership franchises? The dealers sell and repair cars as well as employ thousands of people. There is no cost or expense for GM or Chrysler except warranty claims. The dealers are responsible for all other costs on their own. So why close?
 

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What benefit would it be to GM and Chrysler to cancel 3000 dealership franchises? The dealers sell and repair cars as well as employ thousands of people. There is no cost or expense for GM or Chrysler except warranty claims. The dealers are responsible for all other costs on their own. So why close?
Because the dealers are not responsible for all other costs on their own.

The reality is that the GM dealer network is highly subsidized.
 

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Subsidized how? I worked for dealers they had to pay for and purchase everything. Give me some specifics please.....
outside of the incentives for every vehicle they sell? How about financial incentives to remodel a dealership? GM kicked in a big check to update the exterior facia at the local chevy lot.

Toyota did the same thing at a dealer about 30 minutes from me.



what did you do for the dealer? I sold cars, myself, and the one thing I learned really quick is how much the brass can keep the rest of the "plebeians" in the dark. The few things I figured out, I knew to keep my mouth shut about, and I can only imagine about the things I didn't know!
 

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Discussion Starter · #5 · (Edited)
I was a technician, service writer and service manager. I never saw GM pay for exterior updates. They always pressured the dealer as part of their franchise agreement. Pretty much the same in any franchise. Twist your arm to spend money on the latest and greatest. The financial incentives for car sales are all factored into costs. Its pretty much funny money. You do get some special discounts on special purchase but usually thats for the big dealers. They are only going to get bigger and get more of that type of discount. The only other thing I can think of that they would kick in on is local advertising - television or radio only. But again the franchise fees paid cover advertising.

Now mind you I'm dating myself. I haven't been in a dealership as a employee in over 15 years.

I think we need some brass in here to set us straight!
 

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eliminating dealers will make gm "profitable" 2 ways that I see
first fewer dealers competing with each other so higher prices and fewer incentives to sell more
second less warrenty work as it is not as easy to get to a dealer so some minor issues get ignored
all in all we will be all walking to the food stamp line
 

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eliminating dealers will make gm "profitable" 2 ways that I see
first fewer dealers competing with each other so higher prices and fewer incentives to sell more
second less warrenty work as it is not as easy to get to a dealer so some minor issues get ignored
all in all we will be all walking to the food stamp line
gm didn't become "discount central" on new vehicles because of their own dealer network -- it happened because the imports came around and built better vehicles for the same "sticker" price, and consumers wouldn't pay the same money for a lesser product. As a result, GM started offering great subsidies to buyers and dealers, and people bought the product because it was priced better.


I have to be honest, that's why I'm in a TrailBlazer. Same reason I bought my last 2 GM products, as well.

If I could have gotten a Tacoma or 4Runner for the same money as my TrailBlazer, I'd be driving the yota.

That being said, my TB was thousands less, and I love her to death.
 

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I recently saw one of the Dealership owners on Fox News. He flat out said the Dealerships are independently owned and the GM Network pays for nothing. He went on to say that if he didn't keep his dealerships clean and up to date, GM would pull the plug on him and he'd be gone.

The whole mess going on is being brought to you by the same idiots who are in the House and the Senate. They can't even run this Country right now, and now they want to control the Auto Industry. They already control quite a few banks and investment firms, why not screw up the Auto Industry too?

I hate to bang on the people in office, but personally I don't see how deleting a crap load of dealerships that the automotive industry doesn't pay a darn thing for is helping this situation. If these dealerships don't sell cars, pay their personell, the electric bill and the interest to the banks for the cars sitting on their lots is going to help this industry out.

It just makes me sick to think that a bunch of people that know absolutely nothing about the auto industry is making decisions to keep it running. The next thing we'll see is Congress designing the new vehicles and trucks. That will be a joke. As a matter of fact.............It already is.

So the answer is getting rid of dealerships actually does nothing to help the auto industry out. It's taking a dealership that sells cars off of the map. Cars that the industry needs to sell. This whole thing is flat arsed stupid!

Ask me how I really fell about the people making these dumb decisions?
 

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I recently saw one of the Dealership owners on Fox News. He flat out said the Dealerships are independently owned and the GM Network pays for nothing. He went on to say that if he didn't keep his dealerships clean and up to date, GM would pull the plug on him and he'd be gone.
He's lying.

I hate to bang on the people in office, but personally I don't see how deleting a crap load of dealerships that the automotive industry doesn't pay a darn thing for is helping this situation. If these dealerships don't sell cars, pay their personell, the electric bill and the interest to the banks for the cars sitting on their lots is going to help this industry out.
But that's under the assumption that it doesn't cost GM... But it really does.

It just makes me sick to think that a bunch of people that know absolutely nothing about the auto industry is making decisions to keep it running. The next thing we'll see is Congress designing the new vehicles and trucks. That will be a joke. As a matter of fact.............It already is.
Welcome to america!

So the answer is getting rid of dealerships actually does nothing to help the auto industry out. It's taking a dealership that sells cars off of the map. Cars that the industry needs to sell. This whole thing is flat arsed stupid!
I support dealership consolidation in areas that have multiple dealerships competing with each other. For example, Medford Oregon has a Chevy, GMC, and Pontiac/Cadilac -- all seperate locations within 3 miles of each other, owned by 2 different companies. That should become 1 big dealership, imo.

The problem with removing rural dealerships is it makes getting parts/service harder and more costly.
 

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Another point I discovered with some searching (I was also interested in getting at the truth), was that dealers in a competitive market who are selling few cars, are also more likely to supplement their cash flow by having used cars.

Now the consumer who comes in looking for a new vehicle might get steered to a used one. Where if the dealer was totally busy selling new ones, the consumer would have to go down the street to the (perceived) sleazy used car lot.

So the low-volume dealer CAN cost GM some new car sales through this side effect.
 

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So the low-volume dealer CAN cost GM some new car sales through this side effect.
GM has their own special online auctions. Dealers can do cross-dealer transfers of used inventory, but this auction system was specifically set up to handle the loads and loads of off-lease consumer and fleet sales that GM manages.

Dealers can get great "Certified Used" vehicles through this program that other "used" dealers cannot.

Furthermore, "new" car dealers are expected to take trade-in vehicles. Selling used vehicles on their lots allow them to offer more for trades because they only need to factor their own profits into the deal. Without being able to sell used vehicles, every trade would become an "auction rig" and the offered trade value goes down. Furthermore, there goes the main source of good-condition late-model used vehicle storefront! Most independent locations tend to stock more beat-up, older, higher-mileage vehicles. The few that carry a nice inventory are unable to cater to the demand that would occur if new lots stopped selling used.

Used vehicles are also a great way for a dealership to build a loyal customer base. Today's used car buyer may become tomorrows new car buyer. If someone cant afford a new chevy, they certainly can't afford a new toyota... So if they have to buy used, why not sell them a used chevy? If you don't have that offering on your lot, they will leave. Maybe they do end up at toyota, and find themselves in a nice used rig. Now that loyal chevy buyer, who would never buy that "jap import" realizes that it's all the same stuff, really. And they have a dealer that took care of them. Now when it's time for another new vehicle, that toyota lot becomes the first stop. And bam, they drive away in a brand new 4runner/tacoma/camry/whatever.

And whether used or new, a Chevy is a Chevy.... And the more buyers you get into Chevys, the more demand you have, the better your resale value -- something that hasn't been true for Chevy, because they have such a large supply, thanks to large fleet deals. Imagine the same inventory with even less accessibility? :bonk:




And let me point to Toyota. Largely viewed as successful. They offer used vehicles on their lots.
 

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Can you explain? I don't see it? The dealer pays for franchise fees and advertising. They own/lease their property and are completely independent.
the dealer pays part of advertising. GM subsidizes a lot.

The local chevy dealer in my area got a large check from GM just to update the fascia on their building.


There also a lot of logistic costs in managing a large dealer network.

But there are direct exchanges of cash from GM to the dealer, as well as other funny-money incentives that cost GM.
 

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well to confirm who pays for the remodelling of a dealership. It's about 80% manufacturer. 20% dealer owner. I to sold cars and believe it or not alot goes on behind closed doors. Whether an owner is honest or not no-one will ever tell you the truth on money making tips. Dealerships are encourage to keep up to date with company logo's slogans,etc. Manufacturers have a budget in there package for remodelling or else no-one would walk into their seperately owned dealerships. Owners get alot of incentives and they are all based on who is the manufaturer.
 

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According to a GM spokesman, too many dealers close together drive the price of the vehicle down as they try to get your business. If the dealers are far enough apart, dealers can sell their vehicles for a higher price, because in GM's mind, people won't travel that far, thus more profit for them. :weird: When I bought my SS, I traveled 25 miles and saved $9500.00, and would have driven 300 miles to do it. Plus, with the internet, I don't see their logic.
 

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According to a GM spokesman, too many dealers close together drive the price of the vehicle down as they try to get your business. If the dealers are far enough apart, dealers can sell their vehicles for a higher price, because in GM's mind, people won't travel that far, thus more profit for them.
That's one of the reasons that doesn't stand up to a bit of thought. GM sells vehicles to the dealers at an invoice price. What the dealers sell them for doesn't affect their previous transaction with GM. Dealers might make less profit if there's too much competition, and they might invest less in infrastructure and customer satisfaction, but GM's cash flow isn't changed.

The consumer benefits from dealer competition to be sure.
 

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It all has to do with the incentive of both GM and the individual dealers. If GM thinks that it is more profitable to spend money on upgrading facilities then they will do that. If not, then they might press for the upgrades but not dish out any money. It's all about money and incentive. And dealers aren't giving out upgrades just because they want to... they have to because other car companies are beating them.
 

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GM has been facing declining auto sales for years.

GM has been facing declining auto sales for years because they have listened to the voice of the customer. Loss of sales is what has mainly hurt GM plus each time a new model does roll out they have to bite the bullet and retool the factories. GM hit homerun with GMT360 but other than that their lineup is shaky at best. The Cobalt is small and under powered as well as the Malibu. GM has too many large SUV models that really don't sell that well either. Take into consideration that if models don't sell well it hurts GM's overhead being that they have to sink the money into the production costs.
 
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