For example, Chrysler and GM are closing some dealerships. Like 30% of their dealers. That's a bone-headed move. You see, guys like me don't buy cars from Chrysler or GM. We buy our cars from dealerships. If the dealerships close, we can't buy any cars from them. They can't buy cars from GM, and sales lag.
Hell, if I was the president of GM, I'd want a dealership on every corner. Surely you can see that I jest, but the idea is to have enough dealers to cover the market. If you've ever been in the vehicle business, you know about floor-planning, which is a finance plan for dealerships. Basically, if a dealer doesn't sell a vehicle in some reasonable time, they have to make payments on it. Say, if a vehicle doesn't sell in 30 days, then the payments come due. That provides an incentive for the dealer to move the cars that have been sitting on the lot the longest. And, a good dealer with a strong floor plan is making regular payments to the parent company. That's a good thing with good cash flows. If you close the dealer, that cash flow dries up.
This article explains it.
In 1998 when Daimler merged with Chrysler, not a word was said about the excess dealership millstone around Chrysler’s neck. In the eleven years since then the problems with Chrysler have boiled down to a series of botched new products. Dealers didn’t create that problem and nuking dealers will do nothing to solve it.The problem isn't with the dealers. The problem is that the industry doesn't listen to the customer. The problem is that the industry is now beholden to government. The problem is that government is lousy at business and just bought GM and Chrysler.
Books and articles will be written about how even with greatly reduced dealer numbers, GM and Chrysler will continue to loose sales at an accelerating rate as the remaining dealers do not in fact pick up the slack from their slain comrades. The real reason the dealer slaughter is going on is to offer blood sacrifice to the gods of Washington and Wall Street. God help us.No, God help GM and Chrysler. I've owned GM and I seriously thought about a Dodge truck, but no more. When it's time to get another vehicle, I'll either buy a Ford or one of the Japanese vehicles.
I won't buy a vehicle from the government.
6 comments:
If one auto plant closes, and 200 UAW assembly line workers get laid off, it's national news.
I STILL have not seen a total of the number of people laid off in these almost-2,000 dealerships closing, but at just 40 employees per dealership, that's 80,000 "family-wage" jobs.
They get unemployment insurance for a while, which amounts to what, 40% of their previous pay? When the UAW worker gets laid off, they get up to 95% of their pay for at least a year. Union contract. Then that same contract adds them to the payroll of another plant, where they are allowed to sit and watch TV in the breakroom for their whole shifts, and draw full pay and benefits.
Those dealerships are closing because Government Motors won't lay off any union workers.
The dealerships are sacrificial goats.
I've bought Chrysler corp products all my life (current car is a Jeep).
I'd love an '09 Challenger but if I had to buy a new car now I'd be visiting Ford, simply because they haven't bent over for Obama. Or look at foreign brands.
Second City Cop had a post today about political connections and the decisions on which dealerships were being selected by the Obama task force to close... I don't know how to link a single post there but it was posted on 5/27.
Not that you'll likely hear about it on CNN or the networks.
So, if I think about buying GM or Chrysler, I also have to think about the fact that dealer service is now much farther away, will be more crowded, will take longer to get to my problem vehicle, and will have a higher requirement for loaners/rentals.
Bottom line is that over the warranty life of the car I can expect dramatically lower quality service and further "adjustments" will be made by politicos.
No thank you.
The best of those closed dealerships will switch to Toyota, etc. The rest will do just fine as used car dealerships.
IMHO, this is all the fault of the UAW and greed.
In Stillwater, OK BOTH dealerships were canned. Next closest is 60+ miles. That sure makes sense. One of two was closed in Bartlesville, OK. Not so bad until you find out that he also had a Pontiac dealership.
So, you'll either buy a Ford or one of the Japanese vehicles? You won't buy a vehicle from the government?
Wait until you see the incentive and disincentive (tariff) packages.
Just like Chevys in Japan in the 60's, foreign cars will be import-taxed out of the US market to boost sales of Government Motors cars.
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