The Ax Begins to Fall on GM's Dealers

While GM is too big to fail, not so much for many of its dealers.

Between 400 and 500 of the dealers notified Friday sold an average of only 35 vehicles a year, or about three a month.

The rest of the dealers on the list also had very low average sales by industry standards - only about five or six vehicles a week. In total the 1,100 dealers sold about 7% of GM's sales volumes last year.

"These are dealerships that were hurting, in danger of going out of business anyway," said LaNeve. "It [the letter] shouldn't be a surprise to them."

I know many small dealerships that do a brisk "pre-owned" business that could thrive selling only a handful of new cars each month. But I guess that kind of thinking is just too small for the federally-motivated great minds of the new Government Motors.

You can smell the government-sponsored elitism in an earlier paragraph of the CNN story:

The company's expectation is that the surviving dealerships will become larger and more profitable as a result of the thinning out, which in turn will allow them to spend more on advertising and facilities. But GM also acknowledges that its long-term decline in U.S. market share will continue as a result of the smaller network of dealers.

Long-term decline in market share. Do any of these geniuses understand that true sales diversity means that you take the large and the small customers alike?

What a disaster that is coming.

My prediction: these companies will continue to fail, and Washington will eventually issue an edict attempting to force Americans to buy.