There's more than a little fact-glossing in a USA Today article on disappearing domestic-tied car dealers. "Having shuttered factories and eliminated hundreds of thousands of automaking jobs, Ford Motor (F), General Motors (GM) and Chrysler are now turning their attention to weeding out weaker dealers in bigger metro markets. They make fewer vehicles, so they don't need as many places to sell them." Translation: "weeding out weaker dealers" = paying off some of their dealers before the franchisees starve to death. "They make fewer vehicles" = losing market share like an hourglass loses sand. Although it's a tough job making people feel sorry for a car dealer, Chris Woodyard's tale of Keystone Ford's terminal illness gits 'er done– without dwelling overmuch on Detroit's culpability. Thankfully, there's some good old fashioned hard news here: the paper's [unattributed] Big 2.8 domestic dealer tally. "GM has reduced its dealerships by 229 to 6,807 in the past year; Ford had shrunk by 139 to fewer than 4,140 as of July; and Chrysler had eliminated 142 to 3,607 as of October." Compared to Toyota's roughly 1500-store U.S. dealer network, Detroit's numbers indicate Motown's still wearing a bloated albatross around its neck. So to speak.
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The excess dealer problem will take care of itself with weaker dealers closing shop. The excess brands is the real problem.
Many dealerships represent both domestic and import manufacturers. Our Chevy dealer also carries Hyundai and our Ford dealer also carries Toyota.
I wonder if these dealers can weather the loss of their domestic franchise by leaning on their import franchise.
I think all the USA dealers are lucky in that they can Sell makes other than the main ones, like a Ford dealer selling Toyota, this is not allowed here in Canada, not sure why either, but I do know that in the GTA around Toronto there are really too many dealers all together, Chrysler being the largest is my estimation.
A big Ford dealer in Carson, CA packed it in recently — I’ve never seen such a big dealership shut down. Normally I wouldn’t care, but they have this giant lit sign towering over the 405 freeway that became a navigational landmark in my brain, and it’s gone dark.
Then again, there are at least 5 other Ford dealerships next to the 405: Galpin Motors, Airport Marina Ford, South Bay Ford, Cal Worthington Ford, and Sunset Ford. I’m sure there are others nearby.
Another dealership in Claremont, CA located next to the 10 freeway closed on December 31. There were still trucks on the lot when I drove by the dealership on New Year’s Day.
I wonder if some dealers are counting on a buyout.
EG, the Team Hyundai/Mazda/Pontiac/Buick/GMC dealership near me last february moved from an old location to shiny new digs in the shiny new Vallejor automall.
Well, Hyundai/Mazda got a shiny new showroom. The GM cars, on the other hand, are on the lot next door with a shiny new porta-trailer serving as the office, looking quite like the cheap used car lot. Groundbreaking is supposed to occur this summer, a year and a half AFTER the move was completed!
I suspect the Team corporate owners are hoping for a buyout of the franchise before they bother to build a new dealership.
I have a friend of mine who was awarded a Ford dealership near Dallas. A great guy. He spent much of his time in Ford’s dealer training program closing out dealerships. I know he closed two of them. It may have been three.
Team is a very interesting organization. There is a remarkable level of divergency in quality within their dealer network. Some are world class operations. Others have owners who only survived because they were the only game in town for a long time.
It always interested me how GM hasn’t been too prejudiced against offering the larger dealer networks multiple franchises, while outfits like Toyota or Honda typically try very hard to avoid them. I believe the later strategy is the better one. But Toyota and Honda had the luxury of building up while the domestics had to cut their networks down to reflect the market shift.
One other thing… I actually thought about becoming a Subaru dealer with another fellow who was bought out by Team many, many years back. If Toyota really did want to pursue Subaru as a new division, I could see the potentiality of selling Subarus and Scions together in the same dealership. There’s a lot of demographic crossover between the two and virtually no cannibalization. I’m not sure if stand alone Subaru dealerships will remain viable in my neck of the woods over the next few years.
A lot of dealers, believe it or not, still see the latest sales downturn as a temporary situation. They are spending their savings keeping the lights on. Others are turning to used cars to keep the money rolling in.
Ford seems to be following the “starve the dealers” strategy. We have the cars, but Ford is being very stingy on the rebates and cheap financing. Ford really seems to putting it on the dealers to sell the product and seems content to sell only to those customers who want to buy Fords. I can’t imagine 3 or 4 nearby Ford dealers lasting through 2008.
Steven,
All of the Subaru dealerships near me share facilities with other brands. Actually they all share with Nissan surprisingly enough. How are the demographics between Subaru and Nissan?
Subaru/Ford/Nissan
Subaru/Chrysler/Nissan
Subaru/Isuzu/Nissan
Continental Auto Group in Anchorage, Alaska has a stand alone dealership for Subaru. I’m guessing that they sell quite a few because they’ve now doubled the lot size. They also have excellent service and support–as a Subaru owner, I like that a lot!
CAG does have dealerships for Nissan, Honda, Mazda, Volvo and Suzuki. Only the latter three sharing showrooms.
Subaru and Nissan have a long history together from when Nissan was a stakeholder. Their partnership only ended when Nissan fell on hard times in the 90s. Subaru works with Nissan on various part sharing initiatives. That may not last with the new Toyota partnership.
With Subaru I think it depends on the area. Where I am on the west side of Portland (Oregon) the three nearest Subaru dealers have standalone buildings but are owned by multi-franchise dealers. Interestingly two are large Chevy dealers and all three have a Buick/Pontiac/GMC franchise, although some are in different cities.
I don’t think the 2.8 are very actively pruning the dealer network. It is shrinking though as 2.8 sales continue their long, long slide. I know that in the Silicon Valley area at least one long time Lincoln Mercury dealer and another long time Ford dealer both simply called it quits. Both of them had been around for many, many decades and were sitting on land which was worth plenty while running businesses that were worth little.
My Mercury dealership opened as a Nash dealership back in the 30’s. He became a Mercury dealer in 1954, and Lincoln in 1958 – over 50 years with Ford. It is guys like this that Ford is killing with their clueless product development.
It is an old-school dealership – the owner doesn’t sell, but if you want to talk to him, he is on-site. I absolutely hate those overwrought dealerships with the trendy showrooms, etc. – Lexus dealerships remind me of a shopping mall.
Keep the overhead low, and provide good service – it works for me.