GM Set to Spend $200 Million on California, East Coast Dealership Upgrades

General Motors Co. plans to spend more than $200 million to help dealers in metro regions of California, New York, and New Jersey renovate, move, or close showrooms, people close to the matter told The Detroit News.

The move is geared toward increasing sales and gaining marketshare in these regions, where the automaker has historically lagged its competitors. The new initiative is in addition to an existing facility upgrade program in which GM anticipates 92% of its dealers will renovate their stores by 2016.

GM focused first on California, a state in which 1.6 million cars are sold annually, and 20% of dealers there have already completed store upgrades. In some cases, GM used capital to help dealers move, buy out and resell stores, or change floundering operations, said GM North America President Mark Reuss, to ensure dealerships are in the right locations for car buyers.

The Detroit carmaker’s dealer count in the Golden State fell to 217 in April from 222 at yearend 2011, though the company declined to give an exact number of those stores shuttered or relocated from the initiative. Though the company’s statewide marketshare dropped to 9.8% last year from 11.8% in 2011 and 10.6% in 2010, retail share in the Los Angeles market rose to 7.2% last year, a 0.1% increase from yearend 2010. The San Francisco region grew to 5.9% from 5.5% in 2010. 

GM is now turning its attention to the New York City metro region, whose retail marketshare dropped to 6.8% at yearend 2012 from 7.9% the year prior. The New York area faces challenges similar to those in California, such as high, import-heavy sales volumes, but the region also contends with limited dealer space and higher real estate prices. GM may assist in some New York-area dealers to move service departments off-site, according to Kurt McNeil, vice president of U.S. sales operations.