Fritzy is out of his mind if he thinks eliminating dealers will cause higher sell prices allowing the dealers to make more money and requiring less support from GM.
It would also be more believable had they targeted underperforming dealers, but we all know some crappy dealers were left open and good dealers were closed. The decision of whole to close and who not to close seems to have been made by some other criteria determined by the Obama administration and Fritzy is just parroting the talking points given to him with the list of which dealers they were going to close.
"But cost savings are not the only reason restructuring the dealer network is so important. GM's success over the long haul - which U.S. taxpayers are invested in - will depend in no small part on a healthy, strong and profitable dealer network that can provide the industry's best customer service and enhance the image of our four remaining brands: Chevrolet, Cadillac, Buick and GMC. Dealers who underperform simply cannot provide these benefits to our customers. GM's remaining dealerships will be better positioned to keep their current GM customers, while aggressively marketing to take sales from competitors."
"Second, the dealer network reductions will also save an estimated $415 million per year in structural cost savings - items like local advertising assistance, service and training, and information technology systems. These savings amount to about $180,000-per-closed dealer. In total, the dealer restructuring should result in approximate savings of over $2.5 billion per year, or over $1.1 million per closed dealer on an annual basis.
Answer: The testimony that Fritz Henderson gave on June 12, 2009 before the U.S. House of Representatives, Subcommittee for Oversight and Investigations, Committee on Energy and Commerce provides good background information to help in answering this question:
"...A focused dealer network will reduce costs for GM in a very meaningful way at a time when every dollar is precious. These cost savings come in two categories.
"First of all, a right-sized dealer network centered around strong dealers will allow us to drastically reduce, and in some case eliminate, many direct dealer support programs - programs such as the incentives paid to the dealer, factory wholesale floorplan support, and the one percent market support for each vehicle. The reductions in direct dealer support will result in annual savings of over $2 billion annually - or about $928,000 per closed dealer.
I think I saw something on the site where you were wondering why GM wants to close dealerships. Here's some info.
"How do I convince people who ask why GM has to let dealerships go--they don't cost GM anything?"
Full question (sent in during the July 13 employee webchat with Fritz Henderson): I struggle to effectively convince people when they ask why GM has to let dealerships go - they don't cost GM anything. Can we republish some talking points to help us tell this story?