Are there really too many General Motors dealers? Or is GM barking up the wrong trees by calling for consolidations of its franchise groups into Buick-Pontiac-GMC and Cadillac-Saab-Hummer combinations?
One of the strengths of the auto industry these past 105 years has been the establishment of dedicated solo dealerships selling one product line. Early brands such as Oldsmobile, Buick and Ford grew through stand-alone stores, with gasoline pumps in front, and this precedent dominated the industry as one new auto maker after another entered the business.
By 1912, there were about 12,000 Ford dealers spread across the country — all in separate stores, former Ford Motor Co. President and Chrysler Corp Chairman, Lee Iacocca recalls. “It was a gusher that struck every town.”
The 1916 Detroit auto show, managed by Harold H. (Scoop) Shuart, manager of the Detroit Auto Dealers Assn., featured no fewer than 80 separate domestic makes — all with dedicated dealers. Chevrolet had come into being by then, and it was to become a dealership franchiser under the GM umbrella with a dealership everywhere there was a Ford store.
In fact, the policy of setting up a Chevy outlet as a challenger for Ford itself became a pervasive competitive force as auto sales continued to expand.
That situation prevails today, creating a shoppers' dynamic which drives sales, serves community needs, keeps local media flush with ads and — even in the smallest of towns — constitutes a historical landmark.
Chevrolet and Ford, the bow-tie and the blue oval respectively, sat across Main Street from one another, or next door, selling full lines of cars and trucks the American way — pillars of the community, and far more valuable to towns than McDonalds, Starbucks, or even Wal-Mart.
As other early brands came and went in America, victim of over-expansion of brands and the Great Depression, all their dedicated dealers came and went with them.
The one-brand philosophy endured industry-wide until the late 1920s, when the new Chrysler Corp. established Chrysler-Plymouth and Dodge-Plymouth stores, followed in the late 1930s by Ford's Lincoln-Mercury.
In the 1950s, four brands, that survived the industry “hiatus” of World War II, combined into two pairs — Studebaker Packard and Nash-Hudson. But their solo stores stayed mostly separate entities, drawing strength from long-established reputations and motivated by a concern that pairing franchises in the same building would be counter-productive. Formation of American Motors in 1954 with the merger of the four brands did not save any of the brand names involved from eventual termination.
When Volkswagen arrived in the U.S. in the 1950s, it preferred the solo dealership route. Most of these VW dealers remain operational today, a few having dualed with VW's luxury brand, Audi.
The ensuing Japanese influx relied on GM dealers for retail outlets, with separate showrooms, but few were Chevrolet or Ford establishments. Buick, Oldsmobile and Pontiac dealers who signed charter Toyota, Honda and Datsun (Nissan's former name) franchises did so for lack of a small entry-level car to compete against VW's Beetle, Ford's Pinto and Chevrolet's Vega.
Dualing of franchises, outside of Chevrolet and Ford, mushroomed in the 1980s when retiring or under-performing Buick, Olds and Pontiac dealers in smaller towns were encouraged by GM to sell their franchises to surviving GM dealers. GM did not want to deprive owners of dealers who could meet their service needs, or were inclined to stay loyal to the same brand car. But the biggest years for Buick, Olds and Pontiac were achieved — when they each reached No. 3 in sales — when their stand-alone dealers were prevalent and dualing was not an option.
It's “survival of the fittest,” Mark LaNeve, GM's vice-president for North America sales, service and marketing says of the modern-day Buick-Pontiac-GMC combination scheme. But being lumped together in showrooms with other brands wasn't how they became the fittest.
Mac Gordon is the dean of U.S. automotive writers. He can be reached at [email protected].
