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 Life After GM This article, written by Jackson Hayes and Lawrence Papoff, appeared in the July issue of Canadian AutoWorld. This magazine is also now online. There are a number of bright spots on the horizon for deleted GM dealers, assuming you know where to look. by: Jackson Hayes and Lawrence Papoff  General Motors Corp. has been moving like a company on a mission since announcing its bold restructuring plans earlier this year. Just a few months following President Obama's demands for more aggressive cuts, the Detroit-based goliath that once laid claim to the title of 'world's largest automaker' has slashed and sold-off an impressive percentage of its operations in the hopes of becoming a lean, mean, car manufacturing machine. Since that March 30 Oval Office edict, GM has initiated sales of its Hummer, Saab and Saturn lines, axed Pontiac production past 2010 and cut hundreds of dealers from its North American network. But lost amid the headlines has been any indication what these decisions mean to the slew of other manufacturers that have faired better in the economic plummet. Are other OEMs going to take advantage of a roomier retail market and several dozen jilted dealers looking for new product to sell? As usual, it all depends on whom you ask. A quick survey of several major manufacturers revealed that several have been approached by some of the axed GM dealers about jumping ship. While some would not admit to initiating discussions for the impending game of dealership musical chairs, there was no denying the opportunity for expansion is out there. "We are getting calls," affirmed John Vernile of Hyundai, who went on to say that they would look at the facility, land and operator closely before making a decision. Mitsubishi representatives admitted expansion could be in the future, noting they have planned for 10 more dealership this year and there are opportunities for GM dealers. Honda Canada also identified the potential to increase their dealer network and said they are working internally in developing strategies, though they would not give specifics on where or when those moves would occur. And Suzuki, much like all the others, said everything is driven by demand. "Each one of us has an idea of the volume we can retail," said Suzuki V-P Bill Porter. "There's a temptation to say, 'let's grab that dealer and that store. After all, they used to sell 1,000 cars a year, they must be great.' But that doesn't mean it will increase the volume because the market will determine what you sell, not the dealer. We want to achieve our goals with the people we have. It's called controlled growth." Porter explained that Suzuki's goal is to remain cost-effective; if they can do that with a handful of new stores than so be it. Auto analyst Tony Faria said the GM termination letters could prove to be quite advantageous for other automakers in a position to strike quickly. "It would mean a change of tune from touting what you used to sell to touting something new, but I think consumers will well understand that," he said. "They can pick and choose among the better terminated dealers. Of course, anyone looking at them will want to immediately question why they were dropped. But those will be cases in which they will have to look at sales records and customer service surveys." Faria says it is hard to put a percentage on how many dealers will sell the competition, become used car dealers or simply go out of business. He said it could prove to be an awkward transition for some, but added he was confident any dealership would work hard for a new OEM and bring loyal customers with them. He said in some cases, the dealerships could have been very good business that just didn't move a ton of inventory from their lot because they served a small market area. These operations could be perfect for another automaker looking to expand its dealer base. All the backroom whispers and hushed optimism aside, at least one person thinks it would be dealership suicide if those eliminated from GM's flock started sporting the colours of another brand. "Why should the automakers expand and fall into the same trap GM fell into?" wonders Ian McEwen, president of the Marckis Group. He agrees that some dealers may make the switch, but most are going to have to look elsewhere for a use for their stores. "Former dealers are going to find the usual solutions lead to a dead end." McEwen is offering a solution: Dealers should consider transforming their stores into "auto supermarkets." In other words, subdividing their dealership into a number of auto-oriented service stores with the dealer as landlord or landlord/franchisor, etc. He calls it an American idea. And he says that given the sudden surplus of stores, it's an idea whose time has come. "We are taking a menu of these options to dealers affected by the cuts. We want to see what they have an appetite for. We've talked to companies that do auto glass repairs and other light repairs, detailing, transmission repairs, daily rental and lube companies," he says. By buying a franchise, dealers can keep their parts and service managers and have a use for their customer base. Zoning should be no problem, he says. So be it with another OEM, as a used car operation or even as an "auto supermarket," there is light at the tunnel for affected GM dealers; it is just a matter of which path to take. ...........  Ian McEwen is President of The Marckis Group where he specializes in Automotive Executive Search Recruiting and Career Placement; Career Outplacement; and Franchise Opportunities. For more information, visit www.marckisgroup.com or call 1-866-627-2547 #222. Contact us about your Outplacement Staff Training and Franchising needs. ← Back |