May 15, 2009

Psssst: Who's Your Dealer?

OK, I need some help here on this:

Question: How is cutting the size of their dealer networks benefiting GM and Chrysler in theor quest to rise from the quicksand?

Granted, there might be too many dealers out there, with some of them encountering profitability concerns in these tough times. But that should be a problem for the dealers, not for the manufacturers. After all, these dealers are independent businesses, buying inventory from Detroit with the hope of re-selling it in their market and servicing their customer base. They are not on GM or Chrysler’s payroll.

Follow-up Question: If two Chrysler dealers are currently operating within a certain geographic range – each with 6 sales people – that makes for a total of twelve of them hawking this brand of vehicles. Knowing that the cost of this sales force doesn’t isn’t borne by Chrysler, isn’t having twelve sales people more advantageous than having six? Not to mention two separate ad budgets being put to work instead of one.

Finally: Doesn’t a smaller franchise network generally lower the value of the franchisor?

Just wondering…

No comments: