A few days ago, General Motors announced it was closing four plants that make high gas-consumption vehicles such as trucks and SUVs. Observers have been almost gleeful. Oh how the mighty are falling. They shoulda seen it coming. The Hummer is now a contaminated brand. And so on and so on.
Well, yes. Now let’s move on. How can GM can make the best of a rapidly souring situation? One big lever, largely neglected so far by the press, is to strengthen GM’s dealer system and insulate it from the PR and financial fallout that the car company inevitably faces.
GM has, very roughly, 10,000 independent dealers in its distribution network. These businesses were already struggling to sell vehicles. Now their guilt-by-association quotient has risen, yet again. If it wants to retain any semblance of a healthy distribution system, GM has to get busy with a hundred channel management steps that reduce the hurt that dealers are bound to feel.
First and foremost, GM must work closely with its dealers to fundamentally reinvent the customer experience they offer. Lexus/Toyota’s striking success in that area has been widely discussed for decades. Now is the time to be decisive. Weed out backward-looking, old-school channel partners; invest in the willing.
GM also has to make changes beneficial to dealers in its inventory carrying policies. It has to pitch in with local advertising that plays up dealer virtues and describes GM’s new horizons, whatever they may be. Possibly it has to relax its constraints on dealers taking on other brands, without subsidizing those rivals in the process. In short, GM needs to be accommodating, even paternal, to a degree it historically has not been. And it needs to be creative, to a degree that . . . you get the picture.
As usual, distribution problems barely register in the media coverage. But they are nearly as big for GM as plant closings. They are definitely more significant than an added layer of tarnish on the reputation.