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Fewer dealers, more diversity: Not an easy task

OPINION
  

A stronger dealer body and one that is more diverse are not mutually exclusive. But achieving both goals is difficult. Here are notes of caution and some lessons from two automakers' attempts:

  • The Chrysler group ought to make sure that Project Alpha, which will consolidate the number of dealerships in metropolitan markets, does not derail its efforts to increase diversity.

    Making the dealer body resemble the customer base more closely is just plain good business sense, and it's the right thing to do. But it will require tenacity and corporate character to achieve that goal while eliminating some 500 of 1,300 dealerships in metropolitan markets. The Chrysler group now has 4,334 dealerships.

    In some markets, it makes sound business sense to combine Jeep, Dodge and Chrysler franchises into a single, strong dealership that can compete with non-Chrysler group stores in service, selection of vehicles and financial stability.

    But that must not become a reason - or an excuse - for failing to achieve the broader business goal of building a dealer body that more closely matches your customers.

  • As General Motors has learned, it can be difficult to increase meaningfully the number of female or minority dealers while at the same time reducing the overall number of dealerships.

    In March, GM began a program to recruit female dealer candidates. It is only somewhat encouraging that by now GM has selected three women for dealer training and placed another woman on its list of candidates who are ready to become dealers when a dealership becomes available. The next big question: When will suitable dealerships become available?

    Any prolonged uncertainty in the auto market could reduce the price of dealerships. That will sting dealers looking for an exit strategy, but it could make it easier for current dealers to consolidate dealerships in metropolitan markets.

    It still doesn't guarantee there will be enough sound dealerships available for female and minority candidates to make a noticeable difference in the diversity of GM's dealer body.

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