Very good question.ProTouringASC wrote: How does a dealer cost the car company any money? The dealer owns his own land, or leases it from whomever does own it. A dealer owns his own inventory, or he floorplans it through either the manufacturer or a local bank. He pays for everything from the sign out front to the paper floor mats!
The best I can tell, the only reason the current administration wants fewer GM and Chrysler dealers is so Toyota and Honda can sell more cars...
Shiny Side Up!
Bill
The head guy from Chrysler explained it (I wish I could find the link). Basically, they were in the process of watching their entire dealership body go belly up. Dealerships have been losing their financing (bank won't give them money to buy cars) and are posting losses for the year. These near dead dealerships can hang on by a thread for months, maybe years and in the process poison the nearby dealership that is surviving by forcing his prices to be lower than they should be. Then all of a sudden you have TWO Chrysler dealerships that are on their way out instead of one.
By eliminating dealerships the healthier ones will stabilize and turn profitable. They will buy more cars, have more money to expand their business and provide better service. The hope is that this increases customer satisfaction and turns into even more sales.
The long and short of it is...either cut now and get the dealership body at a point where it can be healthy profitable and even grow again or get saddled with a dealership body that is slowly dying off one by one and poisoning what good dealerships you have.
Put yourself in a Chrysler Dealer's shoes who has another Chrysler dealership 20 miles away. That guy is breathing down your neck, he's cutting every dollar he can. He lays off guys. Hires high pressure sales guys who piss off customers, hires cheaper mechanics who don't know the product and cuts corners on warranty work. So you MUST do the same, you have no choice. It turns into a race to bankruptcy for both of you. Then! All of a sudden Chrysler comes a long and AXES the other guy. Wow. Your sales spike 30% overnight. Sure you increase your prices, but its only enough to keep them from going to the guy 50 miles away. The extra money lets you do warranty work correctly, keep the senior guys on who know Chryslers like the back of their hand. Maybe even toss a customer a loaner more often than not. Sure it sucks for the dealership that got canned but the Company survives, and is better.
Well, that is the hope. It still doesn't change the fact that if you still make a crappy product, nobody wants it.
-Mike
) Pontiac exclusives will be empty stores. In multi-make GM stores Pontiac will vanish... GM is combining Buick, GMC & Cadilac in many locals (as in HERE) and Most Chevys will be stand alones.
I worked for the same Ford dealer for 17 years and wanted to do my own deal and get it fully up and going before i turned 40 and i did it and looks like my timing was right on! The new car side has it's plus's but there seem to be less of them. On the big picture i do want to have a new car dealership in future but will have to be a sweet deal for me to get into that!
