Free Can Be Costly

GM—leaner, smaller, more focused—is going to be reducing the number of dealerships that carry its cars.

GM—leaner, smaller, more focused—is going to be reducing the number of dealerships that carry its cars. Which makes sense, given that the company is operating with a fraction of the brands that it did not all that long ago, back in the days when Mark LaNeve, GM vp of U.S. Sales, used to hold forth about the wisdom of eight brands. Clearly, that wasn’t all that wise.

A recent story in Automotive News about the forthcoming closings—a total of 1,350 by Halloween, 2010—LaNeve is quoted on the subject of what he calls “free agents,” of which he says there are about 3-million. Story reporter Jamie LaReau defines “free agents” as “current GM customers who bought vehicles from stores that will close.”

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Think about that. 3-million free agents. Think about that in terms of this headline from a press release that General Motors sent out January 5, 2009, reviewing its performance in 2008:

GM Reports 221,983 Deliveries in December; 2,980,688 Vehicles Sold in 2008

Now, that was some 3-million units sold during 2008 with all of the brands in place. Now it is down to Chevy, Buick, GMC, and Cadillac. Last year, Chevy sold 1,801,131 vehicles; Buick sold 137,197; GMC sold 376,996; and Cadillac moved 161,159. That’s a total of 2,476,483.

So where are these free agents going to end up? They could prove to be costly.