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Automotive News & Views Dude, where did all the dealerships go?
654 messages, Last post on Nov 23, 2009 at 7:56 PM
You are in the Automotive News & Views Forum. Your Hosts are steve_ & claires
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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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Credit crisis is closing GM, Chrysler stores at a fast clip April 20, 2009 - 12:01 am ET DETROIT — The credit crisis and other financial problems are accelerating General Motors and Chrysler LLC dealership closings. This year GM has lost 165 dealerships, Mark LaNeve, GM North America vice president of vehicle sales, service and marketing, told Automotive News last week. "Normal attrition is about 175 to 200 for a full year, so we're at a much higher acceleration," he said. Steven Landry, Chrysler's executive vice president of sales and marketing, said 35 dealerships closed in March. In early 2008, about 20 dealerships were closing a month, the company said. "Dealership terminations have increased 35 percent in the last six months due to stress in the financial markets," Landry said in an interview this month at the New York auto show. .....Chrysler's Landry said many undercapitalized Chrysler dealers need help with retail loans, wholesale loans, loans for capital expenditures and real estate. "Some third-party financial institutions have said to some dealers, 'We're getting out of the floorplan business,' " Landry said. In some cases, the institutions are giving dealers 90 to 120 days to find another floorplan provider, he said. Normally, those dealers would approach Chrysler Financial for floorplanning, Landry said, but "Chrysler Financial says we don't have any money right now." ......While GM and Chrysler executives think they need smaller dealership networks, a brutal recession has made the consolidation chaotic and unpredictable. Dealers are running out of cash, and they are starting to panic. "I'm selling this place," one GM dealer who declined to be identified said last week. "I'm giving it away just to get out of it. I have to get rid of everything." The dealer has fewer than 100 total used and new cars on his lot, about half of normal. And he has just one technician in his service department. "My dad bought this dealership in the early '80s, and I washed cars for him," the dealer said. "He's had it for 30 years. This is my retirement, and it's gone." http://www.autonews.com/article/20090420/ANA06/304209972/1178 (registration link) And how many more will go if this pair DOES declare bankruptcy, as is looking increasingly likely? These dealers aren't far away in Detroit, these are businesses in our communities! 
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Bankruptcy fears rattle dealers Retailers get ready for GM and Chrysler filings April 20, 2009 - 12:01 am ET DETROIT — The growing likelihood that General Motors and Chrysler LLC will land in Bankruptcy Court has sent a wave of fear through U.S. auto dealers. Many GM and Chrysler dealers are protecting themselves by cutting inventory and factory orders. GM and Chrysler desperately need orders, but dealers are holding back because the automakers are in such bad shape. "We're SOL if GM goes BK," said Chevrolet dealer Larry Dimmitt. Dimmitt, who owns Dimmitt Chevrolet in Clearwater, Fla., ordered some GM vehicles in February because he wanted the cash incentives of up to $1,250 per vehicle. Now he regrets it. Dimmitt said he thought the market would open up but "it hasn't — it's gotten worse." He estimates his days' supply is five to six months at his current sales rate of about 15 a month. He has stopped ordering new vehicles from GM. As of April 13 Dimmitt had sold only seven new vehicles this month. He was hoping for 20 sales by midmonth. Early in this decade, he said, he would sell about 65 new vehicles by midmonth. If a manufacturer files for Chapter 11 protection from creditors, the value of inventory will plummet. With an automaker in Bankruptcy Court, floorplan lenders want their dealer customers to have minimal inventory to reduce their risk. Chrysler dealer Troy Allen, said, "I didn't order one vehicle for most of October, November, December, January." Then he participated in Chrysler's wholesale allocation program in March and April, meaning he got up to $1,000 a vehicle on most vehicles. He owns Allen Motors, a Chrysler-Dodge-Jeep dealership in Derry, N.H. In December, he hired a bankruptcy lawyer to prepare his dealership for a possible Chrysler bankruptcy http://www.autonews.com/apps/pbcs.dll/article?AID=/20090420/ANA06/304209968/1197- (registration link) It also mentions that because dealers have to wait to get reimbursed from the manufacturer for cash rebates, some are asking their customers to hold off on that now, until they get the money from GM or Chrysler, at which point they turn around and cut a check to the customer. No way would I rely on that. I feel really bad for these dealers, but on the flip side I have to say that even if GM or Chrysler were my #1 choice for a new car and I needed one right now, I wouldn't go near a GM or Chrysler dealer right now. I would be really afraid of getting burned in some aspect of the purchase. 
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Automotive News & Views Dude, where did all the dealerships go?
