CarDealer123

Why Is GM Sending Ultimatums to Its Dealers?

I am a Chevrolet Dealer in Virginia. The mass dealer closings are really only possible in bankruptcy because bankruptcy law trumps state franchise law. What you say about the dealer's investment is true. It is also true that dealers don't cost manufacturer's anything from a dollars and cents measureable perspective. That is why there is so much outrage directed at the administration and the task force. While I am very upset at the manner in which they are retaining some of us. Basically they are forcing us to sign a very onerous amendment to the existing dealer agreement which basically requires us to sign away all our rights. It is absolutely unfair and unAmerican. The state laws that protect dealers from this kind of heavy handed-ness also make it nearly impossible and extremenly costly to terminate dealers who fail to live up to their end of the franchise agreement. The dealer agreement calls for the dealer to satisfactorily represent the brand in a specific Assigned Geographic Sales and Service Area (AGSSA).
How many times have you been to a dealer where:
the facilities were old and dirty? the salesforce was untrained?
the management unprofessional?
the dealer didn't stock a sufficient selection of product?
The service department was incompetent?
Most importantly, these dealers also tend to perform poorly in the area of retail sales which does cost the manufacturer in the form of lost business. The manufacturer spends a ton of money just trying to get on the consumers list of cars to consider. If he can manage to do that and the consumer's visit to the local dealership is less than a positive experience and he leaves the dealership without buying, the manufacturer has to pray that the consumer will give them a second chance at the next dealership representing the brand. Chances are the consumer will not. So you see, it does cost the manufacturer dearly if the dealer isn't getting the job done.
Any time a dealer like this is allowed to continue representing the franchise, he gives all dealers of that brand a bad name. As much as I hate the way they are doing it, this is GM's once in a lifetime chance to get rid of these poor performing dealers. They must take advantage of it.
The Chrysler debacle is much worse because their decisions on which dealers to eliminate seem to be unjustifiable. In some cases keeping the poor performer because they own the dealer's real estate or hold the mortgage on the property.