Guest Column: Closing dealerships will not help GM, but will hurt communities

By BOBBY ADAMS, For The Capital

Published 05/19/09

General Motors has announced plans to close nearly 3,000 dealerships over the next 12 months. While the move may sound impressive to pundits and policy makers, the simple truth is that arbitrarily slashing the dealer network will do nothing to help America's ailing automakers because dealerships are not a cost center.

Dealers are independent businesses which generate over 90 percent of all automobile manufacturer revenue and provide a vast distribution channel at virtually no cost to the manufacturer.

Dealers pay for vehicles and parts inventory before those items leave the factory, as well as paying for employee costs,...

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Amplification, please? - 2009-05-20 13:56:17

It's good to hear this story coming from a person intimately involved with the industry, who absolutely knows what he's talking about. I've been curious to know how it is that independently-owned and operated dealerships can be closed from "on-high". If they own their dealership and the land, can't they make the determination? I've been confused about this and would like to know.

thanks,

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John M. - Annapolis, MD - Karma: Excellent

Good Column - 2009-05-19 15:36:58

I have to agree with Mr. Adams.

When the Dodge dealer closed in Annapolis a year or two ago it only made the Dodge ownership experience tougher for me. With our busy schedules it is impossible to bring the vehicle to their Glen Burnie location for service.

This would certainly be a consideration in buying the next vehicle.

The dealers are independent- they buy the cars and parts from the manufacturers and try to sell them for a profit. They train their staff to service and sell the vehicles. Yes the manufacturers have to support the dealers, but if you have to already support thousands of dealers a few thousand more is probably not a huge expense.

The bigger plan in all of this is probably to pave the way for more online vehicle sales.

In the end, the customer looses, the dealers loose and yes the manufacturers loose.

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Allan S - , - Karma: Neutral