General Motors has purchased three Pontiac-GMC stores in Houston that will be run by a local dealer.
The project, which so far has cost GM $17 million, is part of the manufacturer's strategy to create new dealership structures and boost sales.
For example, GM is attempting to relocate dealerships to high-traffic-area auto malls in Denver and in Trenton, N.J., and has created a six-dealership group in the Los Angeles area's San Fernando Valley.
In Houston, the company purchased Southwest Pontiac-GMC, Gulf Freeway Pontiac-GMC and Gillman Pontiac-GMC. Gillman was owned by Ramsay Gillman, 1997 president of the National Automobile Dealers Association.
'We have some other plans for Houston as well,' says Edd Roggenkamp, general manager of GM's dealer network. But he would not go into further detail.
Carl Barnett, former owner of the Gulf Free-way store, has purchased a minority interest in the three-store venture and has been named president of the new company, called Barnett Auto Group. He will run the organization.
'Under this new structure, we should be able to give our customers better service and a larger selection of inventory, and advertising costs should go down,' says Barnett.
Barnett says two of the stores already meet some of GM's specifications, such as being in prime locations.
He says the former Gillman store will be rebuilt and moved to a more desirable location.
Gillman says it is only right that GM use its own money to take on that task.
'I've been preaching all along that if GM wants to do these things, then they should put the money on the table,' says Gillman. 'It doesn't make economic sense for the dealer to do it.'
Barnett said he projects within two years each of the three stores will sell from 100 to 125 new units per month.
Currently, new-vehicle sales range from 65 to 100 units per month at the stores. He expects annual revenues to rise to about $100 million for the group, a 33 percent increase.
'This will be a challenge,' he says.
According to GM spokeswoman Anne Marie Sylvester, the company's market share in Houston through the first four months of this year was 31.5 percent, roughly matching GM's national share.