Killing Established Car Brands a Rocky Road

Washington DC November 3, 2008; The AIADA newsletter reported that as General Motors struggles to sell cars, one repeated bit of advice is that it needs to shed some brands - especially if it joins forces with Chrysler.

But there's one big roadblock in the way - the dealers who sell those cars. "It's very difficult," said Tom Libby, an auto market analyst with J.D. Power and Associates "and very time consuming. It almost always involves the manufacturer paying the dealer to close his doors."

CNN reports that state laws often restrict the terms under which a manufacturer can refuse to renew a dealer's contract and the terms under which they can allow nearby dealerships to open. So instead of just dropping them, manufacturers are simply shrinking the line-ups of some brands and combining them in one-stop dealerships with other brands.

This is what GM is doing now with its Pontiac, Buick, and GMC line-ups. Buick now has just three vehicles in its line. For a Buick dealer, GM's invitation to work out a business deal with a nearby Pontiac dealer is pretty hard to resist.

GM spokeswoman Susan Garontakos called the plan good business for all involved and not an intimidation tactic. CLICK HERE for more on how dealers are handling shrinking brands, click here.