GM wants dealer consolidation

Last updated on May 13th, 2019 at 02:34 pm

General Motors Corp. is putting pressure on its Pontiac, Buick and GMC dealerships to consolidate, and that pressure could change the dynamics of the automotive dealership hierarchy in southeastern Wisconsin. Not only is GM making moves to group its Buick, Pontiac and GMC brands into single dealerships, those brands also will offer fewer models in the future, Mark LaNeve, General Motors North America vice president of vehicle sales, service and marketing recently told members of the International Motor Press Association.
"I’d rather have four great Pontiacs that are really distinct and stand for athletic design and performance than seven or eight capable but undistinguishable Pontiacs that fail to fully deliver on the brand’s promise," he said.
GM’s plan is being rolled out across the country, where the auto giant is actively encouraging, even helping to negotiate, the sale of smaller single-plate dealerships to larger ones that already carry more than one of its identified brands.
The only stand-alone Pontiac dealership in the metropolitan Milwaukee area is Foster Pontiac, 3636 S. 27th St., Milwaukee.
A handful of other dealers, such as Tolkan Buick/GMC Truck in Milwaukee, Rank & Son Buick/GMC and E.J. Salentine Buick Pontiac in Muskego, don’t have the complete GM alternative line package, but Foster is the only dealership with just one of the brands.
GM officials say that although they want to group the Buick, Pontiac and GMC nameplates, they will not force stand-alone dealers to sell their dealerships. Instead, if those dealers decide they want to sell their dealerships at some point in the future, the dealers will be required to sell them to others dealers within the group to complete the offerings of Buick, Pontiac and GMC in one location.
Jim Foster, vice president and general manager of Foster Pontiac, says his dealership won’t be changing hands any time soon, if ever. His parents started the dealership on Milwaukee’s south side in 1969.
In fact, Foster says that 2006 will be a far better year for his dealership than 2004 or 2005 have been.
"I will sell more cars in 2006 than I will have in 2004 or 2005 with more product lines," Foster said. "GM is eliminating cars that don’t sell and will replace them with cars that do, or will phase them out. We will have more of what people want and less of what they don’t want, and I believe that the next five years for Pontiac will be excellent."
Foster said he’s known about GM’s plan to consolidate its dealerships for years, but says it doesn’t fit into his own long-range plans.
"The problem with (GM’s) goal is that it doesn’t take into effect what I want," Foster said. "While I want to be helpful to GM and be a good dealership to them, I’m not prepared to give up my position in the marketplace because of what they want."
Foster said his family’s experience with sales and service to the Pontiac brand gives Foster Pontiac an advantage over other dealers selling the same brand, because those other dealers also have to focus on other brands. He also said many of his sales are to repeat buyers.
"GM is willing to purchase my franchise, but they can’t compensate me for the money and work that’s been spent to build this business," Foster said. "The best thing I can do is to stay here and do the same job I’ve always done. If I sell the dealership and move, I have to start over. And the third generation (of the Foster family) is already working here."
Foster saaid the South 27th Street location will remain Foster’s home base, but he is holding open the possibility of starting another dealership in the future.
Foster has seen GM change its course and reverse its priorities over the decades.
"In the 70s, they wanted them together," he said. "Then in the 80s, they wanted stand-alone dealerships. And in the 90s, they wanted stand-alone dealerships with no separate franchises. And in the late 90s, they came up with the idea to bring the three (Buick, Pontiac and GMC) together."
With the family’s years of experience, Foster said his dealership is planning to wait out this plan until the next one comes along.
"I believe my long-term future is as good as it was five years ago, maybe better," he said. "We plan to be here for the rest of our lives. We’re very successful. There’s no reason to give up a winner. It’s too hard to get a winner."
Jim Tolkan, vice president of Bob Tolkan Buick/GMC Truck, said his dealership added the GMC Truck line in 2001, and he said it would add the Pontiac line if the opportunity arose.
"(GM) started talking about (consolidation) before 2000," Tolkan said. "It’s alive and well, and it’s not going away. The three will be consolidated under one roof. It may not happen by 2010, but it will happen."
Some dealerships have looked at the idea of consolidation as a negative, Tolkan said, but he views it as an opportunity. Tolkan thinks that opportunity will come knocking, sooner or later.
"They made it clear to the dealers that if things go forward as they are in the marketplace, Buick will have three strong offerings, and Pontiac will have three strong offerings and one or two niche cars," Tolkan said. "That’s as opposed to seven or eight variations. By saying that, my take is that you won’t be able to make a living selling three cars. My take may be wrong. But that’s the inference I get from what GM announced."
John Mitcheltree, sales manager of E.J. Salentine Pontiac Buick in Muskego, said that dealership has been working to add the GMC Truck line for years.
"At this point, they tell us that our chances are better than ever, but I won’t believe it until I see them come in and off the line," he said. "We want it so bad we can taste it. So many of our customers that like working with our dealership say they would love to buy a truck from us. And we’d like to satisfy them even more."
The Lynch Dealership, with its main auto sales center located in Burlington, is one of the few dealerships in Wisconsin that sells Buick, Pontiac, GMC trucks from one source. Lynch also sells Chevy, Oldsmobile, and Jeep brands.
The new Lynch superstore will open July 11, two miles north of its current location on Highway 36 in Burlington.
GM’s plans for consolidation obviously will have no effect on the Lynch dealership. However, Lynch sales manager John Fischer said he doesn’t think the GM plan will have negative effects on single-plate dealerships, such as Foster or Tolkan, either.
"In some cases, being a single-point (dealer) is an advantage," he said. "They can carry more of the product in one line than any dealer. Where the single-point has the advantage is that they can really focus on one brand."
Fisher predicts that smaller dealers in rural areas may be snapped up by larger dealers when the opportunities arise.
"I think there will be consolidation and fewer dealers to choose from in the next few years," he said. "This will definitely hurt some of the smaller town single-point dealers."

July 8, 2005, Small Business Times, Milwaukee, WI

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