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Fixing GM’s Problems

Let’s hope GM can begin to address some of the real problems it has during this period of restructuring. There’s a miriad of different issues facing us in the near future from legacy costs to a lingering product image issue to unsustainable union contracts. But in my opinion the issue that needs immediate addressing is the dealer network.

GM’s dealer network has grown over the decades to a near rediculous level. Much of this growth occured from the 50’s through the 70’s of the last century. Back then consumer dynamics were very different. There was a completely different product landscape as well. There was next to no foreign competition back then so there was true competition between brands. Those growing up during those decades know first hand, you came from an Oldsmobile family, or Buick family, or Pontiac family. Everyone wanted to end up owning a Cadillac. The brand of GM you drove meant something. You didn’t necessarily shop for something other than a Cutlass, you simply waited for the “new” Cutlass to come out and went to the same dealer (and probably salesman) you bought your last Cutlass from. Back then, a Cutlass guy probably wouldn’t even look at a Chevelle because he was an “Olds guy”. But there were reasons for that. A Cutlass looked different than a Skylark or Chevelle. It had different engines, different suspensions, and it felt different. I dare you to squint and tell me you can distinguish a Cobalt from a G5 at 30 paces or from behind the wheel.

So over the past three decades GM has tried the global platform approach to cut costs in order to compete with foreign competitors. Makes sense; one shared platform for four or five nameplates. Saves money to be sure. But it also waters down the unique charecteristics of an automobile. A perfect example is the new Lambda Platform. We now have the GMC Acadia, Saturn Outlook, Buick Enclave, and Chevy Traverse all on the same platform. They’re all the same size, look similar, have the same engines, similar price ranges, same fuel economy and so on. These days a consumer doesn’t care about GMC vs. Buick vs. Chevy. Today it’s do I want to own a GM product or an import like my neighbor. So, let’s say the consumer decides to give us a shot. For whatever reason the consumer has decided to go American. Chances are they’ll end up driving the Buick, the GMC, and maybe even the Saturn. Will they be swayed drastically by the driving or performance charecteristics of any one over the other? Not likeley. They’re the same car! So, what’s the deciding factor? Price

GM’s 60’s dealer network has done a great job of providing the car buying public with a hoar on every corner. Calm down I don’t mean to offend any hoars. And don’t blame the dealers. When you have three dealers in town selling essentially the same products and offering the same services, there’s nothing left to sell but price. Let me be specific. I’m a GMC dealer. From my office I can see a Ford dealer and a Chevy dealer. If I have a customer shopping for a 1/2 ton pickup, I can easily sell my features and benefits against the Ford. What the heck do I use against the Chevy guy? Mines easier to spell? Nope, it’s all about who sells the truck cheaper. The common scenario is that you spend hours selling your product, developing a relationship, preparing proposals, only to get the call ” gee I’d like to do business with you but the guy across the street is selling me his truck for $900 less than you”. Shoot me now!

GM has too many dealers selling the same products period. What they need are fewer dealers doing a better job selling fewer cars at a higher margin. Let me sell my Sierra against a Tundra, or a Ram, or an F-150. Not against the Silverado across the street. I’ll make more, GM will make more, the customer will have a better experience, and GM can start to rebuild our image.  It’s time for a renaissance. But GM must start at the the top and the bottom. We’ll meet in the middle with a stronger General Motors.

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