GM Revs Its Engine – 600 Dealerships to Be Reinstated
General Motors may be down, but its not out. After telling some 2000 dealers it would not renew their franchise agreements last October, the company will bring back 600 dealers to its network. Looks like good news following Toyota’s huge recall problems…
Rebound of Profitable Dealers
One of the most common complaints with GM’s new operation plan is that many profitable car dealerships were being cut in anticipation of lower demand. As a result, business owners who had stood by the company for years were immediately cut, despite selling plenty of vehicles and earning enough to keep their businesses afloat.
A Good Move
I still can’t understand why GM wouldn’t be interested in letting their dealership network live or die on its own merit. Sure, its understandable that GM would want every dealership to be profitable, however, it makes little sense to cut any lot that is willing and able to sell its cars. Coming from someone who lives on the Indiana/Kentucky border, I’ve come to realize that location means everything (at least here) when it comes to the car business. Going to Kentucky means lower state taxes, lower priced cars and the dealerships are even open on Sunday. (Its illegal to sell cars in Indiana on Sunday.) As a result, shoppers head straight to Kentucky to buy a car, but some ultimately shop locally, and should GM cut its Indiana border dealers to save Kentucky dealers, it may lose out on local sales to other automakers.
Franchises Cost Nothing
Franchises don’t cost GM a dime and really only help to promote the brand as a whole. Think about how many times you see a GM logo while going down the interstate, passing dealerships left and right with giant 50 foot signs promoting their wares. If GM really wants to make a comeback, it needs to accept anyone who wants to risk their livelihood on selling their cars. If the entrepreneurs believe in GM enough to stake an honest day’s wage, so should GM.
