Potential BOLT customers being suctioned up by Tesla !

[RobStark]

When General Motors emerged from bankruptcy they were a 'new entity'. They could have dumped all of the franchises of the prior entity and started over.

Closed Chrysler dealers win appeals court ruling

The courts have reversed unilateral closing of franchise dealers as part of bankruptcy proceedings.

Additionally, IF GM/Chrysler were to shut down all of their dealers during bankruptcy proceedings appetite in Congress to fund bailouts would have been far far less.

 

[SageBrush]

Closed Chrysler dealers win appeals court ruling

The courts have reversed unilateral closing of franchise dealers as part of bankruptcy proceedings.

Additionally, IF GM/Chrysler were to shut down all of their dealers during bankruptcy proceedings appetite in Congress to fund bailouts would have been far far less.

Your link is too poorly written, and with too much legalese for me to follow, but here is the bottom line:
Of close to 800 franchises that were closed, some 44 have re-opened. You might say that the majority were happy to close but 400 sought arbitration. So RedSage is right in saying that BK was a perfect time to shutter dealerships -- or at least 95% of the ones they didn't want.

 

[RobStark]

Your link is too poorly written, and with too much legalese for me to follow, but here is the bottom line:
Of close to 800 franchises that were closed, some 44 have re-opened. You might say that the majority were happy to close but 400 sought arbitration. So RedSage is right in saying that BK was a perfect time to shutter dealerships -- or at least 95% of the ones they didn't want.

Those were 800 marginal dealers and 44 have reopened.

Trying to close them all would include Auto Nation, Penske, etc.

That would have been a completely different legal fight.

One which GM and Chrysler would be far more likely to lose.

And again less likely GM gets $11B bailout.

 

[SageBrush]

Trying to close them all would include Auto Nation, Penske, etc.

Sure, but that misses the point that GM is delighted with the franchise arrangement ... some of the time

 

[Red Sage]

Closed Chrysler dealers win appeals court ruling

The courts have reversed unilateral closing of franchise dealers as part of bankruptcy proceedings.

Additionally, IF GM/Chrysler were to shut down all of their dealers during bankruptcy proceedings appetite in Congress to fund bailouts would have been far far less.

Thanks for the link! I think that article just goes a bit further toward expressing why the so-called 'franchised dealership system' is so foul. Years can go by and they just won't go away, even after bankruptcy. Always trying to get a slice of the pie and a seat at the table.

Just like it seems every January/February there is a new onslaught of articles noting how the UAW still wants to unionize the Tesla Fremont plant. They've only been trying to get a foot in the door and claws on more membership dues since 2010, the instant they learned Toyota was selling the site to Tesla. Those guys don't give up either.

I think the problem is that GM and Chrysler kept using 'independent franchised dealerships', as I said before. They could have just closed them all, everywhere, then began selling direct. There is plenty of evidence to not only suggest, but outright prove that using the 'franchised dealership system' is not to the advantage of automobile manufacturers at all. The way the franchise laws that govern the sale of new cars are written, the only burden on an 'independent franchised dealership' is to state their belief that a request from a manufacturer is 'unusual' or 'unreasonable' and that automatically makes it 'unfair' in the eyes of the law. That sucks.

Protecting the existence of 'independent franchised dealerships' should not be a politically motivated official position at all. It is as ridiculous as promising to bring back coast-to-coast livery stables, buggy whip vendors, and jobs in coal mining. Times change, life goes on, the strong adapt, and survive... Heck, I haven't worked in my chosen career for 25 years since I got laid off from an architectural firm in Santa Monica. Luckily I have been able to use my skills in other endeavors. There are no guarantees, no safety nets, no bailouts, or second chances for 'the rest of us'... So why should the stealerships deserve special treatment?

The members of Congress and GM/Chrysler all had access to the same 2009 Department of Justice report as we do:

Economic Effects Of State Bans On Direct Manufacturer Sales To Car Buyers | ATR | Department of Justice

It outlines precisely why it is that reducing or eliminating franchise dealerships in favor of direct sales might be a good move for modern automobile manufacturers.

Since 2014 at least the Federal Trade Commission has also voiced their support for direct sales to be allowed. This is from January 2016:

Auto Regulation Workshop

If that link doesn't work, try these instead:

Auto Distribution: Current Issues & Future Trends - Part 1 | Federal Trade Commission

Auto Distribution: Current Issues & Future Trends - Part 2 | Federal Trade Commission

Auto Distribution: Current Issues & Future Trends - Part 3 | Federal Trade Commission

Auto Distribution: Current Issues & Future Trends - Part 4 | Federal Trade Commission

 

[Red Sage]

Those were 800 marginal dealers and 44 have reopened.

Trying to close them all would include Auto Nation, Penske, etc.

That would have been a completely different legal fight.

One which GM and Chrysler would be far more likely to lose.

And again less likely GM gets $11B bailout.

Despite playing 'hardball' of a sort with GM, the government seemed rather desperate to 'save' them. Had GM truly sought a new, fresh start, they would have got it. And that would have included dumping the UAW along with NADA members if they had stuck to their guns. Instead, they accepted the cash from the Bank of Uncle Sam and a handful of concessions then went about their way -- business as usual.

Since they were a new entity after bankruptcy, there would be no one to file suit against. GM could have changed their entire distribution network, built it from the ground up. Instead of a phoenix rising, GM became a pigeon on a stool, begging for crumbs from the UAW, NADA, and the Government.

That was a mistake.

 

[SageBrush]

Honestly, I am not so sure that GM is unhappy with the franchise model. All the whining may just be smoke to foist a high barrier of competition on Tesla.

 

[Red Sage]

No. GM is perfectly happy with dealers. They sold over 3,000,000 vehicles in the US during 2016. More than anyone else. GM may be slightly embarrassed that despite their wide distribution network, quite a few of their sub-$40,000 passenger vehicles were outsold by the Tesla Model S.

 

[SageBrush]

Honestly, I am not so sure that GM is unhappy with the franchise model.

No. GM is perfectly happy with dealers.

Are we disagreeing here ?

 

[wycolo]

As perhaps the Saturn Division was different from mainstream GM, so might the EV Division now occupy a similar parallel universe within the huge corporation where customers are rationally served in unique fashion a most forward looking product not bound by the ICE hamstrings and traditions.

Present owners of a Tesla would be wise to consider the Chevy Bolt for a 2nd car that would maximize your usage patterns. Even in a year or so when the Model 3 is released since by then you might find a used Bolt for less money.
--

 

[Red Sage]

Are we disagreeing here ?

Not so much a disagreement as a difference in perspective.

Mainly, GM may not have blamed the 'franchise dealership system' for their woes... But the U.S. government certainly identified it as a problem that must be somehow 'FiXED' during bankruptcy proceedings. It is possible that what transpired is the result of negotiations between all parties involved.

I see GM sticking with the established norm as a missed opportunity. I doubt it actually was fully thought out, or even fully considered, that they could start over anew, completely from scratch. I think it more likely that the Old Guard at GM sorely resisted the notion of undergoing the expense of opening their own retail locations for Direct Sales. But they were probably considering the notion of either buying existing franchises, or having a cash outlay for newly located facilities, and didn't want to incur that expense (when they could be getting quarterly bonuses instead).

Today, though, with what would have been a rapidly growing Tesla if not for delaying tactics used in Colorado, Texas, Virginia, Missouri, North Carolina, Pennsylvania, Ohio, Massachusetts, Connecticut, New York, New Jersey, and Michigan among others, it is clear that Direct Sales can work in combination with a properly set up website. Viewed from a tech standpoint, it is the obvious way to distribute vehicles for a newly formed company, and should have worked well for one newly emerged from bankruptcy as well. I think that in the long term, Direct Sales will prove to be extremely efficient and scalable, either up or down, regardless of market conditions to maximize profitability by being where the Customers are.

The only reason Tesla's system seems so vulnerable now is because certain regulators and government officials have dug in their heels to support the status quo in the face of rapid innovation. If, somehow, Tesla had been able to quietly open 5-to-10 Stores/Galleries/Service Centers in every State before the Model S was released, the 'independent franchised dealerships' wouldn't have had a leg to stand on. But back in 2010, 2011, and 2012 Tesla was strapped for cash and it simply made more sense to expand their presence at brick & mortar locations as they went along. That wise move became a faulty one because the Model S was so shockingly good out the gate and received so many outstanding accolades while seeing very good Sales rates in a short period. They were, in effect, a victim of their own success.

GM is now in a bed they must lay in. It may be lumpy, bumpy, and occasionally spiky, but it is a familiar if not entirely comfortable one. They could not bear the thought that Tesla would not have to endure such discomfort or learn to live with it, as they have. So, yeah... Misery loves company and stuff. What I find odd is how GM didn't realize they were in fact arguing against their own position by claiming Direct Sales would give Tesla an 'unfair advantage'. They'd might as well have asked to get the same advantage for themselves.

 

[Red Sage]

As perhaps the Saturn Division was different from mainstream GM, so might the EV Division now occupy a similar parallel universe within the huge corporation where customers are rationally served in unique fashion a most forward looking product not bound by the ICE hamstrings and traditions.

Present owners of a Tesla would be wise to consider the Chevy Bolt for a 2nd car that would maximize your usage patterns. Even in a year or so when the Model 3 is released since by then you might find a used Bolt for less money.
--

I have often considered the notion of a returning Saturn, EAGLE, Plymouth, or Mercury division... Dedicated to Direct Sales of electric vehicles. Unfortunately, it is highly unlikely to happen. The UAW and NADA would go out of their way to make sure such a thing did not happen. The lawsuits would fly.

The original corporations that held those marques would have to let them go, by sale, gift, or abandonment, to another entity. The older companies could have no direct connection to any new firm, else they would be accused of 'pulling a fast one'. The appearance of impropriety, even if nothing were illegal at all, could cause issues and stuff.

It seems that anything that either 'independent franchised dealerships' or unions believe is 'wrong' is automatically considered to be either illegal, or that it should be illegal if it isn't, when it comes to the business of manufacturing and selling cars.

But one of my dreams is that GM might start an ELECTRA brand that lived up to the name... Long range fully electric cars that took on the Tesla Model S in Performance while also delivering 'Luxury' to those who crave it. That could be awesome.