Quote:
Originally Posted by goof2
GM had a lot of revenue. In 2008 GM had almost $150 billion in revenue (over $175 billion in 2007, their worst year ever). Their problem for the better part of the last decade is that they had even more expenses. Again in 2008 GM had almost $180 billion in expenses (almost $220 billion in 2007).
There are two ways for a company to get out of the red, increase revenues and decrease expenses. Obviously they all need to do both and that holds true for GM as well, but GM's expenses have been way out of control for way too long. Instead of dealing with that when they had the chance they decided to close dealerships to give the appearance of "doing something" rather than actually doing something. It is a shame really because as the organization is currently set up it is no more sustainable than it was 2 years ago.
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What value is it to GM to maintain franchise arrangements with dealerships that had poor scorecards? What value is it to GM to have two similar franchises within 3 miles of each other? what value is it to GM to have multiple dealers, each with excess inventory and possible low sales, including any financial arrangements with the individual dealers for vehicles and parts inventory?
If you have a market that supports 20 sales a month yet have two dealers with inventory to for 30 sales a month sitting down the block from each other (resulting on cars sitting idle on the lot resulting on pricing pressure as dealers try to offload inventory...resulting in market perception that your cars are worth less than MSRP) what is the benefit to GM?