Posted on 04/19/2009 6:51:56 PM PDT by bruinbirdman
Across America, car dealers are getting desperate. Now Uncle Sam is going to put many of them out of business.
~snip~
These are desperate times for auto dealers. Some will do anything to escape their crushing debt. Others are barely holding on to longtime family businesses. Into this maelstrom comes the federal government, which has given taxpayer-supported General Motors ( GM) until May 31 to develop a new restructuring plan, with bankruptcy looming as an option. Overhauling GM's capital structure is the priority, but the government wants other changes, too. Its directives include one to prune the dealer population, now 6,246, by more than the 35% GM had planned--and to do it much faster.
Back when GM controlled half of the U.S. auto market, its huge dealer network was a competitive advantage. Now that GM is selling only 18.6% of the cars in the U.S., the dealers are a millstone. Having too many showrooms depresses profits for all of them and leaves them unable to compete effectively with dealers for other carmakers. GM knows this; it has been gradually shrinking its dealer network since 1970. In the last four years GM has eliminated 15% of its dealerships, partly by encouraging separate Buick, Pontiac and gmc outlets to combine under one roof. Over the next four years the number will shrink by a further 25%, to 4,700, as GM sheds brands like Hummer, Saab and Saturn and owners go out of business. Its goal, now rejected by the government, was to have 4,100 dealerships by 2014.
What's stopping a faster pace is a collection of state and federal laws that make it difficult for car companies to terminate or relocate a dealer franchise. Killing Oldsmobile in 2004 cost GM $1 billion to buy back unsold inventory and compensate dealers when their
(Excerpt) Read more at forbes.com ...
Well I love my Entourage minivan!
They didn’t need intelligence. They had unions. Notice the past tense.
You mean like the G.M. dealer service department that told my wife to turn up the radio, when she complained about excessive wind noise in her new Trail Blazer?
Killing Oldsmobile in 2004 cost GM $1 billion to buy back unsold inventory and compensate dealers when their franchises were terminated.
That's one reason the Obama administration seems to be guiding GM toward bankruptcy court, where a judge could break those franchise agreements. "Bankruptcy is one of the most powerful courts in the U.S. because you can do stuff that you normally can't do, like kill contracts," says David Lerner, a bankruptcy attorney in Bloomfield Hills, Mich.
For that reason, Chevy dealer Bruce McConnell of Healdsburg, Calif. thinks a GM bankruptcy is inevitable. "The franchise laws are just too strong. That's the only way they can take a wide swath through the dealer body,"
yitbos
That's Honda for you!
LOL, not long after my FIL died my MIL wanted a new car so we took her to get one. We worked out a deal with a supposed 1K off the price, then we told him she had a trade-in and he re-figured it and, lo and behold, it was the same price as w/o a trade-in. The thing that floored me is that he denied that it was the same end deal.
I’ve only bought 2 new cars and I hated dealing with car salesmen, I only buy used and I love it. I know a guy who tells me exactly the lowest price he’ll take and there is no dickering.
Crazy! People are so spoiled today. I keep several water bottles behind the seat of my truck. Don't need it cold; warm water quenches thirst. $780? Crazy.
Funny - I do the same. Always grab a case of water at the best sale price to keep in my Expedition and drink it hot or cold. My kids always count on having that water there when they want it and it teaches them they don’t need soda, too. On a hot summer day, the water does get pretty warm though!
You also have to ask “what recession?” when they offer an $800 cooler for sandwiches and soda, huh?
I have friends in the auto wholesale business who tell me that the Saturns are all but totally immune to problems, and never break.
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