No joy in GM and Chrysler troubles

In the local paper was an interesting comment. It specifically said "About half of its (Chrysler) dealers account for 90 percent of U.S. sales." Obviously most of those being closed were at the end of their existence anyway.

 

Anybody know the details of the franchise contracts between dealers and manufacturers that has seemingly motivated dealers to persist even when losing money ? I gather that unilateral closure by the manufacturer outside of BK sends money the dealer's way, but I cannot understand why a dealer hangs on to an unprofitable business.

 

We have a Rallye Dodge closing and it's pretty sad, they have been here a very long time, the ended up on the list to close

 

Well, if I am a business owner and I am making zero profit AFTER paying all bills and saleries (including my own) that isn't that bad.
You may stick around because you are making a living and like being your own boss. You may stick around because of the benifit to your community (I would suspect this would more often be the case with rural/smaller communities).

 

You assume the dealer is losing money. From what I have read the majority of the Chrysler dealerships that are losing their franchise sell other non-Chrysler brands of cars. The may be selectively ordering Chrysler's to fill in gaps in their other brand's model line-up.

A local Hyundai / Kia / Chevy dealership does this with Chevy trucks. Hyundai has no trucks or full-size SUV's so this dealer stocks Chevy trucks. They care very few Chevy cars but instead focus on Hyundai and Kia for car sales. I doubt manufacture's like this type of strategy.

 

Our local news interviewed a Chevrolet dealer on this evenings news. He said that he didn't receive a letter from GM today cancelling his dealership but told the reporter that they only sold 10 cars last month!!! This is in a suburb of Sacramento with a pretty large population.

 

The Dodge dealership next to where I bought my Prius is on the list. Kinda sad.

Last weekend we rented a Dodge Avenger in Florida. Its center console has a 12V charger on the inside just like the Prius, but it also has a small notch on the edge so you can run your charge cable to the outside and still close the lid.

Prius owners may have to wait another 10 years for a small detail like that...

 

Car dealers have been closing for years.
It is nothing new.
It is taking away our choices and the free enterprise competition.
It will become harder to comparte prices dealer to dealer.
Remember when there were many Chrysler/Dodge/Plymouth dealers in one town?

15-20 years ago there was a Chevy Dealer in Barker, NY.
Did service on most of the cars in town, even non-GM.
Sold maybe one car a month.
GM crushed him with upgrade requirements, putting him under.
Maybe 10 jobs, but a huge economic loss for a small town.

I have watched one after the other go belly up for one reason or another.
Ford, Dodge, GM, Olds, etc................
No small mom and pop stores anymore.
They want all the dealerships to be "complexes".

Kind of like Rite Aid and Walgreens are putting out the smalll drug stores.

Like Wal-Mart crushed Ames and K-Mart.

Now what happens when all the "competition" is gone?
Consumers will pay whatever the market will bear................

 

The closest Dodge dealer near me also sells Nissan & Kia, but they only have showrooms for Dodge & Nissan. So presumably the Dodge showroom will become their Kia showroom and they may be better off selling Nissan & Kia without Dodge, we'll see...

 

First, I do have a little joy over the chrysler troubles. I just bought my Prius after my '04 PT Cruiser "Self destructed" after the 70k mile long haul warranty. The following occurred between 70k and 84k miles (in order):

A/C compressor kaput.
Oil pump leak.
Auto trans solenoid leak/replace
Auxilury blower motor broke.
Engine mount broke.
Multiple coolant leaks.
Blown head gasket (probably a result of low oil and/or overheat conditions that occured from earlier problems listed)
Wheel bearing shot

I was ....ed. I've owned crap cars before, a Kia, that broke several times. But it was honest - they didn't engineer their warranty to expire just before failures, and they honored the warranty without question. The chrysler seemed to be designed to die with the warranty - that takes engineering and effort.

I was actually considering buying some Chrysler first-tier debt and refusing to negotiate in order to "help" them into bankruptcy, but ultimately spent the money on a used Prius.

As for the dealers, those that weren't viable in the first place will probably die. Others will probably live, selling other brands or used cars. Keep in mind that dealers make most of their money on USED cars. They have higher profits, and for every new car sold in the US, several used cars are sold. Many of them can stay in business if they are smart, and work on offering premium automotive service and opening a good used car lot, competing with CarMax and AutoNation. The main reason to keep a new car dealership is it helps with marketing (brings in traffic) - not because they really make a lot of money on new cars.

They may also be the first to pick up Tata and Chery dealerships when they start coming to the USA.

-->Adam

 

Big 3 have too many dealerships competing against each other. GM alone has three times more dealerships in the US than Toyota, even though their revenue is not that much higher.

 

I know one "Mom/Pop" dealership (a Chrysler dealership, at that) that is thriving as far as I can tell. Of course, it's NOT small! But it's a family-owned business that's been around since the early 1900's, and is being run by the third generation. They have a LOT of non-family employees as well. As I said, not a small operation, but I consider it one of the "family business" holdouts.

 

Anyone heard from Malorn lately?

 

He has been posting on the topic in another thread.

 

Around here a number of dealers have already disappeared and a few more are on the hit lists. I am somewhat surprised with the sympathetic attitudes. There may be fewer sleazebags in the industry but will the concentration be higher? Going out of business? To paraphrase Mr. Goodwrench, "you're supposed to do that." To the decent, concientious, hard working people who will be losing their jobs I extend my sympathies to both of them.