Isn't this exactly what bankruptcy is for? Put GM in a pre-packaged bankruptcy (http://www.investopedia.com/terms/p/prepackagedbankruptcy.as...), and one of the planned actions should be shedding these unprofitable brands and severing the relationship with these dealers. The dealers made a bad bet on a brand, they are entitled to nothing.
That's actually hard to do - there's a myriad of state and federal laws that make this all but impossible. It cost about a billion dollars for GM to deep six the oldsmobile brand, buying out old dealers franchises, etc...
I've never really seen the appeal of franchising. You get a packaged business, but then the franchiser has you by the balls forever. Plus what I've read suggests that most franchise owners barely eke out a profit. Car dealers are probably better off, since they have service revenue independent of the parent company, but they're still dependent on a single supplier.
"McDonald's exemplifies the role of small businesses in Americans' upward mobility. The company is largely a confederation of small businesses: 85 percent of its U.S. restaurants -- average annual sales, $2.2 million -- are owned by franchisees. McDonald's has made more millionaires, and especially black and Hispanic millionaires, than any other economic entity ever, anywhere."
This article parrots Detroit's "take what you're given at shut up" view. Dealers see things differently. My family ran two automobile dealerships. The one that dealt with Detroit (Ford) had little choice in what they were given to sell, and complained in particular of Detroit shoving lots of big cars and trucks at them when the demand was for a size or two smaller.
a billion to kill a brand that costs you money is not that bad. It costs them something like 1-2 billion to bring a car from concept to production, so they'll save that money the first time they avoid having to redesign a new model.
But why kill? Sell it off...you are going to lose all that value anyways, so even if you sell Buick below market price, you still make more than if you just close the doors
[+] [-] jbarciauskas|17 years ago|reply
[+] [-] razzmataz|17 years ago|reply
That's actually hard to do - there's a myriad of state and federal laws that make this all but impossible. It cost about a billion dollars for GM to deep six the oldsmobile brand, buying out old dealers franchises, etc...
[+] [-] gamble|17 years ago|reply
[+] [-] briansmith|17 years ago|reply
-- http://www.washingtonpost.com/wp-dyn/content/article/2007/12...
[+] [-] dws|17 years ago|reply
[+] [-] blackguardx|17 years ago|reply
[+] [-] vaksel|17 years ago|reply
But why kill? Sell it off...you are going to lose all that value anyways, so even if you sell Buick below market price, you still make more than if you just close the doors
[+] [-] hugh|17 years ago|reply
[+] [-] jcl|17 years ago|reply
[+] [-] sethg|17 years ago|reply