Dealers Weigh In on GM-Nissan Alliance

Strategic Insights -

As billionaire investor Kirk Kerkorian's proposal for an alliance between General Motors (GM), Nissan, and France's Renault gains momentum, GM's 7,330 dealers in the US are taking a critical stance. In an interview, Virginia-based dealer Ted Linhart, owner of one Nissan and seven GM dealerships, expressed his changed views on the matter. Linhart's dealership has seen a significant increase in sales, double what they were two years ago, despite his initial reservations about renovating his Nissan store at a cost of $2.4 million.

Key Takeaways:

  • GM's dealers are a force to be reckoned with in the US, with the ability to influence state franchise laws and contribute significantly to the local economy as major taxpayers, advertisers, and political contributors.
  • The US dealer network is vast, with Toyota boasting only 1,400 dealers compared to GM's 7,330 dealers, despite having almost two-thirds of GM's sales.
  • GM's current chairman, Rick Wagoner, has won the support of many dealers, including Linhart and Paul Rubin, co-chairman of GM's national dealer council, who are urging a more gradual approach to dealer consolidation.
  • The proposed alliance might face significant resistance from GM's dealers, with many expressing concerns about the impact on their businesses and livelihoods.
  • GM has already cut one-sixth of its dealers over the past decade, but the current strategy focuses on relocating and rejuvenating existing dealerships rather than closing them.
  • The success or failure of the proposed alliance may ultimately depend on the ability of GM's management to balance the needs of its dealers and the changing market landscape.

Statistics:

  • GM has 7,330 dealers in the US.
  • Toyota has 1,400 dealers in the US.
  • Almost 1,000 of GM's dealers were forced to close when the company killed the Oldsmobile brand in 2001.
  • GM has cut one-sixth of its dealers over the past decade.
  • GM's current sales are nearly double what they were two years ago at Ted Linhart's dealership.
  • Nissan's dealerships are still consolidating outlets and replacing company-owned locations with independently managed ones.

Sources:

  • Asbury Automotive, vice-president for marketing Allen Levenson
  • Paul Rubin, Minnesota dealer and co-chairman of GM's national dealer council
  • Ted Linhart, Virginia-based GM and Nissan dealer
  • Rick Wagoner, GM's chief executive officer
  • Toyota
  • Nissan
  • The Wall Street Journal (not explicitly mentioned, but suggested as a publication where the story could have been published based on the tone and content)