Could someone in the car business explain how too many dealerships cost GM money? Too much unsold inventory sitting on lots? Not sure I understand the problem.
You reach a certain level of market saturation that you start competing with yourself. If you have too many people in one location selling the same car they’re going to have to start doing something (like sales or freebies) to get people to go to them rather than the other GM dealer. Plus as you mention there’s inventory, all of your dealers need to have a certain number of cars on the lot if only for test drives.
Because there’s a Chevy dealership every 8.2 miles, the competition is too fierce to “feed” everyone among each dealership - from salespeople to administration to repair techs...you have a whole bunch of people barely making it with the threat of losing their jobs every day.
One way to boost profitability is to do warranty work in the repair facility...sometimes a little “too much” warranty work is performed to pay the overhead of a struggling dealership. Closing a bunch of these low volume stores will save GM millions in unnecessary claims.
Because competition will be lessened, high-volume stores will move more units and in turn, because they are profitable, will pick up more advertising at their own expense which will, in turn, boost more sales.