GM dealer consolidation will take time

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Monday, January 28, 2008
— While General Motors wants to speed up consolidation of auto dealers, don’t expect GM “superstores” to pop up in the next few months.

At the recent Detroit Auto Show, GM Chairman Rick Wagoner said the automaker’s sales network isn’t shrinking fast enough. Wagoner mentioned specific dealerships for Chevrolet, Saturn, Pontiac/ Buick/GMC and Cadillac/ Hummer/Saab.

Drawing the most attention was the combination of Pontiac, Buick and GMC shops into one channel at a single dealership.

In Janesville, Everhart-O’Leary Motors sells Pontiacs, while Rock County Buick-Honda-GMC sells Buicks and GMCs.

“Channeling has been going on for some time,” said Ray O’Leary of Everhart-O’Leary. “These days, when you look at the manufacturers, you see the consolidations and the reduction in production and see them trying to come up with a business model in which they’re selling fewer vehicles.

“But what they’re doing has to match the retail business model. They have to go hand in hand.”

In other words, GM can’t force the Pontiac-Buick-GMC channel into a single dealership.

“We’re all independent businesses with dealer franchise agreements,” O’Leary said. “State laws protect those agreements.”

Eliminating a dealership is difficult and costly. State laws require an automaker to prove it has good reason to end a dealer’s franchise.

But a franchise agreement wouldn’t necessarily preclude one dealer from selling his franchise to another.

That happened last fall when Finley GMC in South Beloit and Gene Dencker Buick Pontiac in Beloit merged into Finley-Dencker Buick Pontiac GMC. The merger followed GM’s channeling model of combining the three brands in one dealership.

“The question is always one of who is going to stay and who is going to go,” said O’Leary, whose dealership has a strong import business, as does Rock County Buick-Honda-GMC.

“There’s strong domestic business in the Midwest and in places like Janesville,” said O’Leary, who also sells Mazdas and Volkswagens. “Channeling is an issue for all markets, big and small, and I’m sure in GM’s grand plan, they’d like to see it in Janesville.”

Talk of GM “superstores,” where the automaker would offer all of its eight brands under one roof, also came out of Detroit last week.

GM sales chief Mark LaNeve said no announcements are imminent, but GM is working with dealers to discuss the high cost of real estate in prime locations, the possibility of offsite dealership service-and-parts facilities, and the inclusion of multiple GM brands at prime locations.

Jim Fagan of Fagan Chevrolet-Cadillac in Janesville said the superstore initiative would likely be targeted to large metro areas that have too many GM dealers, some of which operate on real estate that’s worth more than the dealership.

Material from Gazette wire services was used in this story.

Last updated: 12:44 pm Thursday, December 13, 2012

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