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Automotive News & Views Dude, where did all the dealerships go?
650 messages, Last post on Nov 08, 2009 at 5:47 PM
You are in the Automotive News & Views Forum. Your Hosts are steve_ & claires
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Developer Dan Schmidt has placed six of his auto dealerships into receivership amid a dispute with KeyBank .....The dispute with KeyBank centers on the Nashville and Denver dealerships. Schmidt in January voluntarily placed his five Nashville-area dealerships and a Denver-area dealership into receivership at Franklin County Common Pleas Court. All were financed by KeyBank, which sued Schmidt in the same court on Feb. 18 to foreclose on the properties, arguing he had defaulted on nearly $30 million in loans. Franklin County Common Pleas Judge John P. Bessey granted immediate foreclosure the same day. “This is all collateral damage from the credit crisis,” Schmidt said. http://columbus.bizjournals.com/columbus/stories/2009/03/09/story3.html
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Replying to: nippononly (Apr 14, 2009 7:45 am) For the longest time, it was the only Infiniti dealership in metro Denver. Now there is a second, on the other side of town. I'll have to see if there is anything about this in the local papers. |
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...there is a buyer for every seller: Dealin' Doug is back!
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Replying to: michaell (Apr 15, 2009 5:51 am) 
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Replying to: carthell (Apr 15, 2009 3:06 pm) 
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Replying to: gagrice (Apr 15, 2009 3:13 pm) |
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the 1008 dealerships that closed in 2008 represented the steepest decline in the dealer count in the U.S. since 1980. Bad times chop dealership count April 13, 2009 - 12:01 am ET On May 1, 30 years after joining his father's dealership, Carl Shetler plans to call it quits. Shetler Lincoln-Mercury in Lake Charles, La., will close. The property's new owners will sell generators. The past two years have been tough for Shetler. The dealership's new-vehicle sales tumbled by more than a third, to 12 to 15 units a month in 2009. "There are so few stand-alone Lincoln-Mercury stores, says Shetler, 61. "In the future, they'll merge Lincoln-Mercury with Ford." Shetler's departure is part of a trend. According to Automotive News' annual census, 1,008 U.S. dealerships closed last year, the biggest decline in three decades. Last year, collapsing light-vehicle sales propelled a dealer exodus that has accelerated the Detroit 3's dealership consolidation. Dealers are deciding on their own to exit the business. This month, Wisconsin megadealer John Bergstrom will close four of his six Saturn stores, a sign that even GM's biggest retailers see little hope for the brand. And dealers who overextended their retail empires, such as Minnesota mogul Denny Hecker in Minneapolis, are being forced out of business as credit dries up. Last fall, Chrysler Financial abruptly cut off Hecker's credit lines, forcing him to shut down at least nine dealerships, plus exit the car rental business. And it IS very much the domestic-brand dealers taking it on the nose: According to Automotive News' census, there were 20,453 stores as of Jan. 1, down 1,008 dealerships from a year earlier. It was the steepest loss since 1980. The Detroit 3 bore the brunt of the loss, shedding 979 retailers. Import brands, which saw sales collectively fall 12.0 percent last year, lost 29 stores. To be sure, the lousy market ravaged the ranks of some second-tier import brands. Suzuki lost 78 franchises; Mitsubishi, 67; and Volvo, 25. By contrast, stable top-tier brands such as Toyota, Honda and Mercedes experienced almost no change in their franchise count. And for them it's going to be even harder to stay in business in the future: For the Detroit 3, the carnage is only beginning. Deeper cuts are in the works as part of the bailout strictures demanded by the U.S. government. For example, General Motors opened 2009 with 6,273 dealerships, down 380 from a year earlier. Its target is to cut the number to 4,100 by about 2014. http://www.autonews.com/article/20090413/ANA06/904130347/1078 (registration link) Apparently Chrysler is attempting to consolidate its dealers so all of them carry all 3 brands, but it is only at 61% as of now, and has slowed its attempts to do this because the economy is causing so much dealer attrition. And Ford won't announce specific numbers at all, either of its consolidation effort or of the target number of dealers it wants to have. Tough times for dealers. Their bailout is where, again? |
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They are already sharing tips for how to handle a bankruptcy filing by one of the domestics! WARNING: CHAPTER 11 Here's how dealers can prepare Chapter 11 filing by General Motors or Chrysler LLC would create many hazards for dealers. For example, the value of inventory would drop, and franchise agreements could be worthless. But dealers can prepare, some dealers and attorneys say. Here is a summary of the advice we collected. -- Trim inventory. Dealers should keep stocks of new vehicles and replacement parts to a minimum. Otherwise, they could get stuck with vastly depreciated vehicles and parts they can't sell if the manufacturer goes bankrupt, says Michael Charapp, a dealer attorney in McLean, Va. -- Bill the factory now. Dealers must push the factory to pay money due the dealership — such as sales incentives and warranty claims. -- Prepare Plan B. If GM and Chrysler restructure in Chapter 11, quick, deep cuts to dealer networks are likely. A bankruptcy court could allow such cuts, negating the legal protections provided by state franchise laws. Attorney Bellavia says dealers should prepare to find an alternative use for their dealership buildings — such as a used-car lot. "Dealers need a contingency plan in the event the factory terminates the dealer agreement," he says. -- Talk to your lender. Attorney Charapp says: "Dealers should sit down with their accountants and develop a presentation" they can give their lenders. "Banks will get spooked by a manufacturer bankruptcy. The dealers have to tell their lenders why they continue to be a viable credit risk. -- As a last resort, file for Chapter 11 first. Attorney Bellavia says dealers who feel slated for elimination and who can retain floorplanning might be better off beating the factory to bankruptcy court. He says a pre-emptive bankruptcy would protect the dealer's franchise agreement, which otherwise could be thrown out by a bankruptcy judge. http://www.autonews.com/article/20090413/ANA06/904130353 (registration link) Geez, what a bleak little list. And just eyeballing it quickly, many of these suggestions seem fairly weak as ways for dealers to protect themselves. One that does seem viable is becoming used car dealers, and perhaps keeping the service department as well. Just because the manufacturer goes bankrupt doesn't mean they can't continue to service the cars, and they could even branch out to service other makes. They have the facilities, they have the mechanics, why throw all that away. Still, I would be very worried if I were a GM or Chrysler dealer right now.....
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Replying to: nippononly (Apr 16, 2009 6:56 am) http://motorintelligence.com/m_frameset.html Even Subaru lost sales last month even if it wasn't as bad as everyone else. Suzuki wasn't even on the radar. And the strange thing is, in social gatherings people I talk to just don't care. It just could be the best thing to happen to GM would be if they went Bankrupt. They would get rid of the legacy cost and the government would have to pick up the retirement costs, as they have indicated they would. Ford would still have the UAW contracts but GM would be free to reduce costs and be on a much more even footing with the imports. Most people simply don't care because the dealers were never part of our communities. Sales might not have been the only complaint people had the cost of service and parts was so much higher of you had to go to the dealer that many people simply went to an independent. As you know California had to pass a law so people could service their vehicles by following the warentee booklet and they could preform much of the service themselves and simply keep the receipts to keep the warentee up. Things you couldn't do you could get a private mechanic to do. And why did people and the State go to all that trouble? Because the dealers charged too much compared to independents. It is time for a change even if we get stuck with dealerships when it is all over. At least maybe we will get treated as customers and not sheep to be sheared. I don't know if that will happen but I have hope. But you are correct the dealers have been in a position to not have to worry about giving your money back like a big box store would for a big screen TV. And that is the problem, if the vehicles was worth what they charged in the first place it would take such a big hit the minute it gets off of the lot. I have bought returned equipment from places before that had the very same warentee as any other new product and the people didn't take as big a hit as a car does just driving it home. The dealers have a lot to answer for in how they have treated customers and they just may be feeling the pain they caused now. If they remember it maybe we will be better for it in the future. even if we have fewer dealers to deal with.
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Replying to: boaz47 (Apr 19, 2009 8:11 pm) Be careful what you wish for, fewer companies (dealers) competing with each other "usually" drives up prices, not drives them down. |
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