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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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Replying to: lemko (Dec 10, 2008 8:58 am) This part caught my eye: Some remaining employees declined to be interviewed, saying they were so angry about GM and GMAC, they feared what they might say and the trouble that might cause. Ken Keiffer was willing to talk. He can't say enough about a family that gave him work when he needed something to keep him busy after he retired as a mechanic 13 years ago and his wife died five years ago. As a "lot man," his job was to move cars around the dealership. When the layoffs started earlier this fall, the 75-year-old widower insisted the Weeds stop paying him. But he continues to show up every day, not so much to move displays, but "because I like the people," he said. "I just can't see why the government doesn't bail these people out." It would seem there are folks even at GM dealerships that blame GM for the mess the dealers are in, rather than hard economic times. I would agree with them - boneheaded management is the majority cause of GM's current woes. AND there seem to be folks besides me that think that some of the bailout money should be trickled down to dealers, not just to the fat cats in Detroit. But if you are willing to bail out dealers, the question then becomes: dealers of which brands? Because if it is inevitable that some manufacturers are on the road to bankruptcy in the next 12-18 months, what good does it do to bail out their dealers now? That is precisely why there are unemployment funds in the first place. Another question I have is this: do the Weed brothers also perform factory service at their dealership, and sell used cars as well as new? Because I thought used sales and the service department are where new car dealers make all their profits anyway, and those are much less impacted by the frozen nature of the credit markets and the unavailability of GMAC loans in particular.
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Replying to: nippononly (Dec 10, 2008 10:08 pm) I'd always heard that too, that the bulk of profits came from used cars and the repair shop. New car sales are often lucky to break even. However, with new car sales dried up, I guess that would reduce the supply of used cars? Fewer new car sales would also equal fewer trade-ins, as people hang onto their old cars longer. And even people who might trade in their old car on a newer used car, might still hold onto their car longer. As for servicing, well fewer sales will mean fewer cars to get serviced, but there could also be other factors at play. Perhaps people are driving less in this economy, so scheduled maintenance comes up less often. And with money being tighter, I'm sure some people are skimping on maintenance, pushing their intervals out further. Could be penny-wise and pound-foolish, but most people just think short-term. This economy could also be pushing people to seek out a cheaper independent mechanic, bypassing the dealer. And like skimping on service, maybe people are also skimping on repairs, putting things off longer than they should? While the GMAC thing might not impact used car loans, there are other factors. People can't tap into their home equity as easily as in the past. I'm sure that was the cash source for a lot of purchases. And aren't regular banks, credit unions, etc, tightening their standards as well? A couple months ago, I actually got declined for a Shell Mastercard! I wanted to get it because they were offering 5% off on Shell gas purchases. I dunno what my FICO score is these days, but the last time I checked, 2006, I think it was around 759. I gotta say, I was actually offended that they declined my application! It was a new experience to me. Maybe auto loans are different from credit cards, though? |
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Replying to: andre1969 (Dec 11, 2008 7:45 am) I plan to get an Acura TSX. $355 a month lease. Not bad! |
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Replying to: bvdj84 (Dec 13, 2008 4:37 am)
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Replying to: lemko (Dec 13, 2008 10:06 am) |
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Replying to: lemko (Dec 13, 2008 10:06 am) |
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Replying to: lemko (Dec 13, 2008 10:06 am) Yeah.. Lease shoppers are most likely not going to be leasing from GMAC, Ford, or Chrysler as the specials have basically all dried up. $349/month for a G35 though isn't too bad (current lease special) |
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About 2,000 U.S. new-vehicle dealerships — nearly one of every 10 — will close in 2008 and 2009, the National Automobile Dealers Association projects. And that's the best-case scenario, under which no automaker files for bankruptcy or dies next year. A bankruptcy would accelerate dealership shutdowns. The Detroit 3 are trying to consolidate and shrink their dealer networks. But many of the closings so far do not involve the metro-area stores the automakers want to eliminate. Peter Welch, president of the California Motor Car Dealers Association, offers even a more dire forecast than NADA. He said California lost 116 dealerships in the first 11 months of 2008 and has just over 1,500 new-vehicle dealerships left. He believes closures will total 150 by year end and predicts as many as 500 closings in 2009. ......For much of 2008, Detroit 3 dealerships accounted for about two-thirds of store closures, NADA chief economist Paul Taylor says. That share will rise to more than 80 percent next year, Taylor predicts. ......Next year, Taylor predicts 1,100 dealerships will close and 200 will open, for a net loss of 900. "The new dealership openings will be largely offshore brands, including Mahindra and Mahindra of India," he said. ..........Joe Pfeffer's Chrysler dealership has operated in Belleville, N.J., an urban area next to Newark, for nearly 67 years. In October, Pfeffer had to close the dealership and give up the franchise. His bank stopped financing all auto dealer inventory several months ago. Pfeffer contacted other lenders to finance the store's vehicle inventory, but none was willing to take on another domestic dealer account, he said. Two years ago he was selling 50 new vehicles and 15 to 20 used vehicles per month. In September, his last month in business, Pfeffer sold seven new vehicles and about five used. Apparently, in the recession of 1980 there was a net loss of 1550 dealerships out of 28,000. Even if the Treasury secretary hands the domestics a bunch of money now it will not stop the inevitable continuing sales slide and the loss of more of these dealers. And unlike what I thought MIGHT be the case, it is no "blessing in disguise" for the domestics because the WRONG dealers are closing. What an odd thing it is that there are RIGHT and WRONG dealers to be going out of business for Ford GM and Chrysler. http://www.autonews.com/article/20081215/ANA06/812150361/1203 (registration link) |
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| It is also service and parts at those dealers suffering. Many of the independents that I talk to seem to be feeling pretty good as people seem more willing to spend the money to keep their old cars running. But at the same time people aren't servicing their new cars as much as they used to. Maybe they just aren't using the dealers to service the cars I don't know. But I have a few friends who are in the business of servicing corporate fleets and as budgets are decreased so is the call for preemptive servicing. It is more than cars it is also work trucks and equipment. Two of the larger equipment companies that service forklifts and other equipment for the School district in the Inland Empire may be going out of business. If not they at least are cutting back staff to the bone. This may end up being a good thing as it might teach people that they don't need a new car every three years and the imports will have to start making parts for cars past the ten or fifteen year mark. However this could also be a boon to the after market industry. | |
I have often wondered whether there are more cars owned and driven or parked on new and used car lots. Frankly, I would rather buy a house than an automobile from GM. Untrained salespeople, overpriced repairs, warranty resistant service departments. Who needs it?
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