Thursday, August 28, 2008



The Wall Street Journal reported this morning that GMAC has cut off Bill Heard Enterprises, a privately held, $2.1b, 14 store, multi-state Chevy dealer. (I have not verified that all of Heard’s stores are Chevy stores, but at least some are Chevy stores.) GMAC cited the dealership’s weakening credit profile for its actions, and Heard is highly unlikely to be the last dealership to be denied access to financing by GMAC.

Is there perhaps something else at work here? One of the problems that the Big 3 has is a huge surfeit of dealers. Could this be a way to eliminate stores without having to buy out dealers? Indeed, one of the Heard’s likely responses to GMAC’s action will be to close a few of its dealerships.

Cutting off dealerships who could be construed as financially marginal would appear to be both financially prudent and Machiavellian for the strapped Big 3.

No comments: