By Bernie Woodall
SAN FRANCISCO, Feb 5 (Reuters) - General Motors Co will reshape its U.S. dealership network on both coasts and may add dealers in the Los Angeles and San Francisco areas, North American President Mark Reuss said on Saturday.
The long-term project will take years to complete, said Reuss who was not specific on how the moving of some dealerships and the opening of others would be financed.
It took years for the automaker to position its dealer footprint and it will take years for it to undergo all of the necessary changes, Reuss told reporters on the sidelines of the National Automobile Dealers Association annual convention.
'Our footprints on the coasts have been destroyed' by a series of events including GM's 2009 bankruptcy, the financial crisis that gripped the U.S. auto industry in 2008 and 2009, and 20 years of what Reuss admitted were 'bad' products.
The outright number of U.S. dealers may not change much from the current 4,500 selling Chevrolet, Buick, GMC and Cadillac, the four brands remaining after GM's 2009 bankruptcy, said Reuss and Don Johnson, vice president for GM sales.
When GM announced plans to scale down its dealer count from the 6,150 it had before its mid-2009 bankruptcy financed by the Obama administration, it initially wanted to terminate 1,300 dealers, including many that sold four brands GM shed - Pontiac, Saturn, Hummer and Saab.
Congress in December 2009 required GM as well as Chrysler to establish an arbitration process for the dealers the automakers wanted to terminate. By that process, GM agreed to keep about half of those once targeted for termination.
The U.S. Treasury has cut its ownership stake in GM to 33 percent of common shares from 61 percent before the company's record initial public offering in November.
'RELEVANT' IN CALIFORNIA
Johnson said a new lineup of GM cars that was more fuel-efficient and gets better quality ratings from groups like Consumer Reports set the automaker up for competing better in areas like California.
'We didn't have the product,' Johnson said. 'We didn't have the focus. We were irrelevant to California consumers. We are relevant now.'
GM now has 227 dealers in California, the state with the largest auto market.
Johnson said that Long Island near New York City is another area where GM needed to increase or realign its presence.
He and Reuss said that they included the U.S. Gulf Coast. Referring to U.S. coastal areas, Reuss and Johnson said the number of GM dealers may decrease as it reshaped its network.
Johnson said that in some urban areas dealers may be vying for the same customers. A dealer in a depressed area may move to a site that was closed or to a new one. The GM executives said each area and dealership will be reviewed individually, and they offered no specifics on how to finance the moves.
In late 2009, the year that U.S. auto sales hit 27-year lows of 10.4 million vehicles sold, less than 40 percent of GM dealers were profitable. Now, more than 90 percent of GM dealers make money, Johnson said.
Reuss said that GM needed to increase its leasing, which fell to nothing during its bankruptcy and now stands around 8.5 percent versus an industry where leases make up 20 percent of new-vehicle sales. But Reuss said the company has not set a goal for its leasing rates.
'We just want to compete. We weren't competing,' Reuss said, referring to the period two years ago when GM was not leasing cars or trucks at all.
GM through GM Financial, the rebranded financing arm that was called AmeriCredit when GM bought it in July 2010, is working to expand leasing to subprime customers, Johnson said. GM bought AmeriCredit for $3.5 billion as a way to offer loans to buyers with subprime credit ratings.
Subprime borrowers refers to a group of people who generally do not have access to regular credit markets, making them a higher risk for lenders.
Reuss said that GM was handicapped when it could not offer loans to subprime buyers. Reuss said about 40 percent of Americans have subprime credit scores. About 5 percent of GM's sales are to subprime buyers now, he said.
A trial program offering leasing of the new small sedan Chevrolet Cruze to subprime customers in Ohio, where the Cruze is built, was successful, said Reuss, who declined to say how many cars were leased in this fashion.
GM Financial will expand the trail program in the second quarter in Canada across the GM lineup, Johnson said.
(Editing by Paul Simao) Keywords: GM/DEALERS (+1-313-443-8844; bernie.woodall@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
SAN FRANCISCO, Feb 5 (Reuters) - General Motors Co will reshape its U.S. dealership network on both coasts and may add dealers in the Los Angeles and San Francisco areas, North American President Mark Reuss said on Saturday.
The long-term project will take years to complete, said Reuss who was not specific on how the moving of some dealerships and the opening of others would be financed.
It took years for the automaker to position its dealer footprint and it will take years for it to undergo all of the necessary changes, Reuss told reporters on the sidelines of the National Automobile Dealers Association annual convention.
'Our footprints on the coasts have been destroyed' by a series of events including GM's 2009 bankruptcy, the financial crisis that gripped the U.S. auto industry in 2008 and 2009, and 20 years of what Reuss admitted were 'bad' products.
The outright number of U.S. dealers may not change much from the current 4,500 selling Chevrolet, Buick, GMC and Cadillac, the four brands remaining after GM's 2009 bankruptcy, said Reuss and Don Johnson, vice president for GM sales.
When GM announced plans to scale down its dealer count from the 6,150 it had before its mid-2009 bankruptcy financed by the Obama administration, it initially wanted to terminate 1,300 dealers, including many that sold four brands GM shed - Pontiac, Saturn, Hummer and Saab.
Congress in December 2009 required GM as well as Chrysler to establish an arbitration process for the dealers the automakers wanted to terminate. By that process, GM agreed to keep about half of those once targeted for termination.
The U.S. Treasury has cut its ownership stake in GM to 33 percent of common shares from 61 percent before the company's record initial public offering in November.
'RELEVANT' IN CALIFORNIA
Johnson said a new lineup of GM cars that was more fuel-efficient and gets better quality ratings from groups like Consumer Reports set the automaker up for competing better in areas like California.
'We didn't have the product,' Johnson said. 'We didn't have the focus. We were irrelevant to California consumers. We are relevant now.'
GM now has 227 dealers in California, the state with the largest auto market.
Johnson said that Long Island near New York City is another area where GM needed to increase or realign its presence.
He and Reuss said that they included the U.S. Gulf Coast. Referring to U.S. coastal areas, Reuss and Johnson said the number of GM dealers may decrease as it reshaped its network.
Johnson said that in some urban areas dealers may be vying for the same customers. A dealer in a depressed area may move to a site that was closed or to a new one. The GM executives said each area and dealership will be reviewed individually, and they offered no specifics on how to finance the moves.
In late 2009, the year that U.S. auto sales hit 27-year lows of 10.4 million vehicles sold, less than 40 percent of GM dealers were profitable. Now, more than 90 percent of GM dealers make money, Johnson said.
Reuss said that GM needed to increase its leasing, which fell to nothing during its bankruptcy and now stands around 8.5 percent versus an industry where leases make up 20 percent of new-vehicle sales. But Reuss said the company has not set a goal for its leasing rates.
'We just want to compete. We weren't competing,' Reuss said, referring to the period two years ago when GM was not leasing cars or trucks at all.
GM through GM Financial, the rebranded financing arm that was called AmeriCredit when GM bought it in July 2010, is working to expand leasing to subprime customers, Johnson said. GM bought AmeriCredit for $3.5 billion as a way to offer loans to buyers with subprime credit ratings.
Subprime borrowers refers to a group of people who generally do not have access to regular credit markets, making them a higher risk for lenders.
Reuss said that GM was handicapped when it could not offer loans to subprime buyers. Reuss said about 40 percent of Americans have subprime credit scores. About 5 percent of GM's sales are to subprime buyers now, he said.
A trial program offering leasing of the new small sedan Chevrolet Cruze to subprime customers in Ohio, where the Cruze is built, was successful, said Reuss, who declined to say how many cars were leased in this fashion.
GM Financial will expand the trail program in the second quarter in Canada across the GM lineup, Johnson said.
(Editing by Paul Simao) Keywords: GM/DEALERS (+1-313-443-8844; bernie.woodall@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.