Cars and Drivers

GM Reverses Itself On Dealer Closings

GM will spare 900 of the nearly 2,000 dealerships it planned to close.  That will leave it with 5,000.

The revised plan will save GM money. Closing dealerships adds to the company’s costs because of unsold inventory and legal fights with angry dealers.  Many GM dealers have taken their grievances to arbitration, so the No.1 U.S.  car company will save money on attorney’s fees as well. GM said last year it was shutting the dealerships because they were no longer needed after the Pontiac and Saturn brands were killed. Another reason was that GM’s sales plummeted by a third in 2009. The entire domestic market produced only about 10 million unit sales, down from 16 million in 2005 and 2006.

GM now has a greater need to keep several hundred dealers open other than saving a modest amount of money. The car company’s sales are up 35% this year when the shuttered brands are backed out. It cannot compete against  rivals such as Toyota Motor (NYSE: TM) and Ford Motor Corporation (NYSE: F) if its dealer network does not reach the same areas that they do.

GM is still gambling that its sales will be good enough this year to support an IPO. The firm has cut as much costs as it can. That leaves revenue improvement as its only realistic way to increase its net income.

GM’s risk in maintaining a larger dealer base than planned is modest. The potential of incremental sales may end up being essential. CEO Ed Whitacre has made promises to the Treasury and the taxpayers. Keeping 900 dealers open that might have gone away is an ace in the hole.

Douglas A. McIntyre

Are You Still Paying With a Debit Card?

The average American spends $17,274 on debit cards a year, and it’s a HUGE mistake. First, debit cards don’t have the same fraud protections as credit cards. Once your money is gone, it’s gone. But more importantly you can actually get something back from this spending every time you swipe.

Issuers are handing out wild bonuses right now. With some you can earn up to 5% back on every purchase. That’s like getting a 5% discount on everything you buy!

Our top pick is kind of hard to imagine. Not only does it pay up to 5% back, it also includes a $200 cash back reward in the first six months, a 0% intro APR, and…. $0 annual fee. It’s quite literally free money for any one that uses a card regularly. Click here to learn more!

 

Flywheel Publishing has partnered with CardRatings to provide coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.

AI Portfolio

Discover Our Top AI Stocks

Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.

You can follow him investing $500,000 of his own money on our top AI stocks for free.