General Motors intention to enter into the retailing marketplace for new vehicles would be a serious mistake with dire consequences.
The reality is automobile manufacturers do not know how to sell cars profitably one by one to Mr. and Mrs. Consumer.
During my half-century career in the retail automobile business I have never known of a profitable GM retail store. If a retail store existed, it was the result of a failed high-profile private location, or because the rental expense for the dealership was so high as to make earning a profit impossible.
At this point it is important to make a distinction between a true factory store, owned by Detroit and operated by wholesale personnel, and a Motors Holding Division investment whereby a capable experienced operator who is short on capital is a minority partner with the factory in the dealership.
The latter requires a 15% investment by the dealer-candidate who ultimately buys out factory partners from future profits. Some of the most successful GM dealers in America started out this way.
I began my Chevrolet dealership in 1957 as a minority stockholder with a Motors Holding partner. I was able to buy out the GM interest in less than four years and during that period there was no favored treatment from the Chevrolet Division.
In fact, there was little love lost between GM's Motors Holding Division and the various GM car and truck divisions.
GM reps experienced a lot of resistance selling factory "Mickey Mouse" programs to GM Motors Holding dealers. There was a great deal of hostility in many GM zone offices toward Motors Holding dealerships because they would not bend to the whims and wishes of the local GM hierarchy.
There is no doubt GM has experienced market share loss in the last 15 years but it is a mistake to blame this loss on the retail sales organization of dealers.
In recent years GM products have been a day late and a dollar short, and it is just recently they have been reading from the same page as their competitors.
Fix what needs fixing in the design and production departments, and leave the marketing and sales in the hands of those who know it best - the dealers.
There are literally thousands of young aggressive managers in the marketplace who are long on desire and ambition and short of capital. Invest the millions of dollars required for company stores in supporting retail-oriented entrepreneurs with capital through Motors Holding Investments.
Focus entirely on developing fresh new products and stay out of company stores where you can't find your butts with both hands.
GM's major competitor, Ford, has already tested the feasibility of retail company stores with negative results. Their dealers have mounted tremendous protests and they have run afoul of dozens of state franchise laws.
Many of these laws specifically restrict the retailing of new vehicles by manufacturers. The laws were enacted to protect dealers from unfair competition from their franchisers and also to control the indiscriminate establishment of new dealers on every street corner.
Many automobile CEOs believe any ills they experience in the marketplace can be addressed simply by appointing more dealer points. This may be true in instances where dealers have not responded to demographic changes.
However, the process of changing points is often treated irresponsibly with candidates who are inexperienced and unqualified.
Good dealer-operators create profits for the entire market. Retail dealerships wholly owned and staffed by many factory personnel lack the passion and commitment which drives successful car dealers.
In a room filled with car people it has been my experience to easily separate factory people and dealers.
An old story is of the true automobile salesperson who, upon attending a new-car announcement and beholding the spotlighted vehicle, proclaims, "What a great used-car that's going to be!"
The execs at General Motors have got enough challenges on their plates without learning the retail sales end of the business from scratch.
They'd only mess things up. They should concentrate instead on bringing Cadillac back to its exalted position in the industry and giving Chevrolet dealers timely products they need to regain their leadership position.
Finally, get off the Saturn adoration kick and don't ignore the nameplates who brought you through the dark days of the 4-6-8 engine, the oil-leaking Corvair, the disastrous air-ride suspension and the Vega rust bucket.
Nat Shulman was owner of Best Chevrolet in Hingham, MA for many years.
