The light bulb switches on in the heads of GM execs

The Los Angeles Times reports that GM will reinstate 661 dealerships that it had planned to shutter.  The closure of underperforming dealerships was considered a key component of last year's hastily contrived, government-sponsored bankruptcy plan.  But, a strange thing happened along the way to financial redemption under the government's direction: the dealers slated for termination objected to their untimely demise.

GM found itself besieged in arbitration by 1,160 jilted dealership owners.  With the guidance of the legal system, President Obama's hand-picked management team has experienced an epiphany; put simply, GM management has determined that it needs dealers in order to sell GM cars and trucks! 

But, if the company adds back all of those ineffective dealerships, won't the company's costs skyrocket?  After all, the company earlier claimed that eliminating these dealerships was essential to GM's rebirth.  Well, apparently not:

But maintaining hundreds of dealers more than it expected is unlikely to hurt GM's financial performance, said Jeremy Anwyl, chief executive of auto information company  

And, moreover:

"It doesn't really cost GM that much to have a dealer that is not very successful....A large number of dealers gives you coverage in rural America," he said. "Where are those people supposed to buy vehicles?" Anwyl said.

Let's see, it takes a government owned/operated car company a year to figure out that it needs points-of-sale in order to sell it's product, and that it really doesn't cost the company all that much to maintain a sales structure to meet that need.

Yep, I'd have to say these are just the guys I want to be in charge of health care.  How hard can it be?

P.S.  Does this mean that the GM bondholders who got scraped in bankruptcy might have some of their investments "reinstated"?


John Peeples