Lastly, GM and Chrysler are using the bankruptcy process to shed hundreds of small or money-losing dealerships. GM plans to drop 2,600 of its 6,000 dealers and Chrysler 789 of its 3,200.From an article in the Wall Street Journal. OK, "money-losing dealerships" I can sort of understand. Maybe there is some kind of charge back arrangement where the manufacturer has to pay some money to dealers who can not make a go of it on their own.
Small dealers I can also sort of understand. Given the bureaucracy inherent in large corporations, I can see where a small dealer could cost more in administration than it was worth. In this day and age of fancy computer systems, it shouldn't, but if GM is as much like a dinosaur as it's size suggests, then it is understandable.
Evidently I am not the only one in the dark:
Hoyer, a Maryland Democrat, said that neither the White House nor the companies themselves had offered any economic rationale for the closing of the dealerships.Also from The Wall Street Journal.
Assume you need 1 person in your central sales-support for every 10 resellers out there, regardless of their volumes. Then by dropping the 10 poorest performing resellers you can save 1 central sales-support guy from your payroll.
ReplyDeleteSee the piece I did on pareto analysis last month.