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Originally Posted by CamaroScotty
Look out big city dealers, D-DAY is here.
The other 2,000 dealers to be cut will be in major metropolitan and suburban areas. GM's own turnaround plans say "dealership overcapacity is most prevalent" in those markets.
The expectation is that the surviving dealerships will become larger and more profitable as a result of the thinning out, which in turn will allow them to spend more on advertising and facilities. But GM also acknowledges that its long-term decline in U.S. market share will continue as a result of the smaller network of dealers.
Typically it is an expensive proposition to buy out dealers. GM spent about $1 billion dropping Oldsmobile at the start of the decade, mostly in payments to 2,800 dealers and the repurchase of their inventory of vehicles and parts.
The company believes that the threat of bankruptcy, plus the difficult financial condition that has led to hundreds of dealership closings in the past year, will allow a far less expensive cutting of the dealership network this time.
GM's 2,700 rural dealership locations are relatively safe, even if they have lower sales volumes than some of the dealerships that will be cut. GM's turnaround plans released in February anticipated few cuts in the rural dealers in the near term.
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Hey Scotty I just herd on the news that the dealerships that will be shutting down that GM will not buy their left over cars/trucks. Will the other dealers that are staying open buy some of the inventory ?