GM moves to cut dealers - ResearchInChina

Date:2008-01-21liaoyan  Text Size:

CAR maker General Motors said its United States sales network is not shrinking fast enough and it wants to step up dealer consolidations.

CEO Rick Wagoner said efforts will be specific to combining Pontiac, Buick and GMC dealerships into one channel, The Detroit News reported on Saturday.

"It's time to do that and the payoff is significant," Wagoner said during a recent presentation to Wall Street analysts.

General Motors Corp reduced its dealer network by about seven percent between 2005 and 2007, to 14,118, The News reported.

While the Toyota brand and GM's Chevrolet brand sold almost the same number of vehicles in 2007, there are just 1,244 Toyota dealerships, compared to more than 4,000 for Chevrolet.

Ford Motor Co and Chrysler LLC have also been working to shrink their dealer networks.

"The profit per store is much lower at the domestics, and this contributes to the strength and health of Toyota and other networks," Tom Libby, an analyst with JD Power and Associates, told the newspaper.

"It's obviously out of sync to have 4,000 dealers versus 1,200 and have the same amount of volume, and they need to fix it."

Dale Willey, chairman of the US National Automobile Dealers Association, said a large number of franchises drives competition, with consumers benefiting.

"It ought to be the dealers' decision to get out of the business," he said.

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