Re: Why are dealers a cost to GM (GM to reduce number of dealers)

Miles wrote:

I don't understand how their dealership network is in any way a
cost or requires a money expenditure by GM to operate.

What about the cost of inventory on dealers lots? Manufactures pay
it for the first 30-90 days. More dealers equals excessive inventory
in a down economy.

I was under the impression that for most of the past year, maybe two,
that one (or all?) the big-3 were pushing cars out to their dealers that
essentially the dealers were being forced to take. The alternative
being that the big-3 would be forced to park more new cars then they
ordinarily would have otherwise.

The point being that the dealer network was acting as a reservoir for
the over-capacity that the automakers were simply unable or unwilling to
reduce fast enough.

GrtArtiste wrote:

I imagine there are service and training support costs that
corporate provides to dealers. Fewer dealers, reductions in
those costs. And the financing of unsold vehicles sitting
on dealer lots-probably some significant corporate costs
there too.

I don't know how the financing works - presumably the dealers are paying
GM interest until the cars get sold.

Notice that in all this talk about GM, that there's been no talk about
GMAC, or the fact that Cerebus owns a good chunk of GMAC.

With regard to training or other support costs, most of the cost
presumably comes in preparing manuals, training materials, etc, and
those are fixed costs regardless if you have 1 dealer or thousands of
dealers. The cost to replicate those materials is practically nothing.
You reduce the number of car models and vehicle divisions, you reduce
those costs by quite a bit.
.

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