Educate me about closing the auto dealers

[floridablue]

Say the one down the street turns half the average volume, and a very marginal profit. Yet, it makes a profit, pays its bills, and employees 40 people providing maintenance service and parts to the neighborhood. Why close this ?????"

[pkdu]

1. Maybe the one across the street (across town etc.) does better

and the projected overall volume for that market doesn't support two dealers.

Cheers
P

[Egalitariat]

2. Not only that, but they compete with each other driving the price down

taking the total profitability of all the dealers down.

Now, there is less competition which means higher pricing and higher margins. And, supposedly, the remaining dealer network has the capacity to service what sales, warranty, and maintenance volume is still out there.

[brendan120678]

3. They probably donate to Republicans ;-) (nt)

[MicaelS]

4. Ask yourself these questions

If the number of dealers was what was important, then why wouldn't Toyota and Honda would have many more dealers than they do in a given geographical area?

http://online.wsj.com/article/SB122688631448632421.html

GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000. These fewer and larger dealers are better able to advertise, stock and service the cars they sell. GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive. It would cost GM billions of dollars and many years to reduce the number of dealers it has to a number near Toyota's.

Who is in better shape financially? It's certainly not GM with all those dealers, it's Toyota and Honda, who COMBINED have only 1/3 of the number of GM's dealers.

Who is supposed to be the real customer? Is it the car dealer or the car buyer?

The Big 3 have for too long has had a business model predicated on pleasing dealers at the expense of the real customer, which is the car buyer.

[havocmom]

5. Thank you for posting this. We will be hearing a lotta gop inspired whining about this issue

and this tidbit is a gem to shut them up with. They want to talk closures and the political donations they made. They do not want to talk the ones that stay open and the political dontaions they make because most all of them donate GOP.

Having info about how many dealerships failing companies have in comparison with how many dealerships preforming companies have will be a nice way to put the 'closed for donations' propaganda to rest.

[MicaelS]

6. Thank you so much

I really hate to see all these working people lose their jobs with the closings, but the fact is GM should have downsized their dealerships a looooong time ago. Or they should have never opened so many in the first place.

[havocmom]

7. GM should have done a lot of things differently, obviously

Putting change off until you crash and burn is not a good business model.