End of the Line for Hundreds of GM Dealerships
In the wake of the worst American recession since the Great Depression, plummeting vehicle sales, and impending Chapter 11 bankruptcy, embattled automaker General Motors has announced that it will end franchise agreements with 1,270 dealerships across the country next year. Of its eight current nameplates, Pontiac will be eliminated, and Saturn, Saab, and Hummer all have been sold off.
GM stretched itself too thin and saddled itself with an inflated number of uncompetitive brands. The irony of the situation is that GM is finally showing flashes of potential and is producing desirable cars (e.g. the ZR1, CTS, and upcoming LaCrosse) after years of badge engineering, bean counting, and allowing that cut-corner mindset to adversely affect the quality of its cars.
The damage is likely to get much worse: GM is seeking to slash the number of dealerships by a total of approximately 2,400 by the end of 2010. GM failed to strategically align itself globally, made poor agreements with the United Auto Workers, and neglected to value engineering and the quality of its products above all else. GM made its own bed and has to sleep in it. Regrettably, now thousands of dealers may have to pay the price for GM’s ineptitude.
Although GM launched an pathos-packed campaign (including a television commercial!) to re-new its tarnished image and gain America's support, how would you feel if you were abruptly dropped after a franchise agreement you had worked hard to negotiate and uphold? I would be livid if I lost my business due to the mismanagement and incompetence of my franchisor!
How do GM’s actions strike you? Is it fair to the franchisees? Contact me to discuss!
