How does closing car dealerships save GM/Chrysler money?

J

Jim_of_Oz

New member
As I understand, the dealers pay for the dealership franchise and they buy the cars and repair parts from the manufacturer to resell to customers. Where does the manufacturer's expense come in on all of this? Do I have the dealership picture wrong?
Does that mean the manufacturers pay the dealerships to stay open? If I have 15 shoe store selling shoes and I'm not paying for them, I don't care if there's underperformers - I'm still selling shoes.
 
The manufacturer no longer has to support these low performing stores.

If you owned 10 shoe stores and 2 of them weren't selling enough merchandise doesn't it make sense to close them down and concentrate on the ones that are profitable.
 
The only logic I can possibly see is that by eliminating competition among their closely clustered dealerships, the dealers that will be left will make more profit without the comparison shoppers and be in a better financial position to order more vehicles from the manufacturer.
This may or may not be the ultimate result, but it certainly limits the consumers from shopping different dealers in a reasonable area for the lowest price.
In my opinion, this defies logic - but then again, so didn't eliminating the Camaro to make room for the Avalanche.
 
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