Death Spiral

The other part of this death spiral is that Ford found out when they tried their auto collection experiment that about 40% of the customers were loyal to the specific dealer at that specific location. In other words it was the dealer not the manufacturer that was the most important part. This is why the Ford experiment of the auto collection failed in those cities.

Now GM is going to have customer defections because they liked their specific dealer more than they like the manufacturer. Consumer preferences and confidence is a fragile thing. We will see if eliminating all these dealers is the beginning of the end for GM.