Dealergate, GM closing dealers who make money
Steve posted an interesting item recently about the Chrysler dealerships that had been terminated, and, he raised some even more interesting questions about how the terminated dealers were selected. I have no answers, just more questions.
Wednesday’s Orlando Sentinel reported that two Chevy dealerships in the Orlando area received notice Tuesday that their franchise agreements will not be renewed when they expire in October, 2010. Both dealerships are owned by the Holler family.
According to the Orlando Sentinel…
The Holler family has been in the auto business since 1920. Family patriarch Bill Holler was vice president of General Motors and a general sales manager of Chevrolet from 1929 until 1945. The family has sold General Motors products in Orlando since 1938.
As some would say, that’s nice, but what have you done for me lately? Well, the Holler dealerships terminated were the number one and number two sellers of Chevy automobiles in Orlando’s “four county area”.
I don’t know the Hollers’ political affiliation, but, what I do know is that Central Florida is predominately Republican.
All I can glean from this is, either Steve’s post is worth looking into, or, Obama’s car czar is using the dartboard approach to terminate dealerships.
Update by Steve: Thanks to the Sound Off Sister for bringing this up as I’ve been meaning to write about the “top” dealers that are being cut loose.
What it comes down to is profitable dealerships are being shut down. If they are paying their bills, keeping staff employed and making money, why is GM (the Obama administration) cutting them loose?
This is the first question that dealers are asking, and no answers seem to be coming around.
If the dealers really are making money, then the problem is at the corporate level (management and unions) and not at the franchise level.
General Motors has refused to discuss individual dealerships and the reasons behind its franchise cancellations.
5 Comments
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I don't get it. Or maybe I do. Dealers have to buy everything from the manufacturer, cars, literature, parts, manuals, training etc. They do throw them holdbacks and other dealer incentives, and the salespeople get spins, but those are not mandatory. The only way a dealer could cost a manufacturer money is if the manufacturer had to buy back the cars, which they do not (see the Chrysler dealers that were forced to buy excess inventory from Chrysler and are now stuck with them, and worse, if they are closed down, they are really stuck with them!).
The only possible thing I could think of (and it fits the non capitalist modus operandi of the Obamazoids) is that they are trying to stifle competition between dealer, which drive down prices, and lower per car profits.
Of course, that does not explain why the top dealers are being canned. That is where the questions begin…
From the OS article…
My big question is were the dealers that closed really profitable. If they were not profitable and not paying their bills, why would GM let them stay around anyway?
Obamazoids,I love those names you guys make up for Obama on this site.
They are hilarious.
Maybe they should have contributed to the Democrats – there is a study which shows that dealers for both GM and Chrysler who donated to Republicans have a higher than expected rate of closure . . . after all – you can't anger the owner!