Chrysler / GM to close dealerships.

One of the main reasons I chose the dealer I did for my PT Cruiser was
for convenience of service.
If they're closed, the reason is moot.
Why can't they can turn themselves into service centers?

http://www.latimes.com/business/la-f...,1180804.story

On Sun, 10 May 2009 08:45:37 -0700, Pete E. Kruzer wrote:

> One of the main reasons I chose the dealer I did for my PT Cruiser was
> for convenience of service.
> If they're closed, the reason is moot. Why can't they can turn
> themselves into service centers?
>
> http://www.latimes.com/business/la-fi-gm-
dealers8-2009may08,0,1180804.story

They can become independent service centers they just can't call
themselves Chrysler dealers. They also won't be able to do warranty work
but they are free to do after warranty or third party service just like
any other independent repair shop.

GM and Chrysler have way to many dealers and they don't appear to be
cutting nearly as many as they should. Toyota has 1100 dealers, GM has
7000 and Chrysler has 3200. The huge dealer networks are a vestige of the
time when people did their shopping at the little stores on main street.
There is no such thing as a corner Radio/TV shop anymore, if you want a
TV you go to a huge Best Buy or Costco warehouse store. The only reason
that all of those car dealerships weren't replaced by superstores years
ago is because of state franchise laws which gave a unique protection to
car dealers.

Frankly I don't see why Chrysler doesn't take advantage of bankruptcy to
completely reorganize the way they sell cars. If I were in charge I would
eliminate dealers altogether and sell the cars through Costco or directly
online. I'd create a few hundred company owned test drive centers by
buying out some of the larger dealers. I'd also allow the dealer
franchises to become authorized warranty repair centers although I'd
structure things so that nothing would interfere with a consolidation in
the service industry.

In article >,
General Schvantzkoph > wrote:

> Frankly I don't see why Chrysler doesn't take advantage of bankruptcy to
> completely reorganize the way they sell cars. If I were in charge I would
> eliminate dealers altogether and sell the cars through Costco or directly
> online. I'd create a few hundred company owned test drive centers by
> buying out some of the larger dealers. I'd also allow the dealer
> franchises to become authorized warranty repair centers although I'd
> structure things so that nothing would interfere with a consolidation in
> the service industry.

You forgot the very successful bottom end seller: Wal-Mart.

General Schvantzkoph wrote:

> GM and Chrysler have way to many dealers

Please explain how the number of dealerships impacts the financial
health or bottom line of a car manufacturer.

Dealerships do not suck money, time, or resources from the
manufacturer. Any dealership that can't operate in the black will not
operate for long and will go out of business just like any other retail
operation.

It could be argued that like shelf space at your grocery store, the more
dealerships you have the more impact or visibility your brands have
compared to others.

The only argument for reducing the number of dealerships could be that
by having fewer of them, that they can (or presumably will) reduce the
profit margin per-car, but will make it up with more volume. Whether or
not this would shift higher the total sales numbers for Chrysler is not
clear. There is no benefit for Chrysler if in the end the same number
of cars gets sold by fewer dealers.

Then there is the up-front costs of terminating franchise agreements,
which under bankruptcy protection might not be too high. But then
again, don't you have to make the case to a judge that any given
franchisee is a liability to you in order to terminate the agreement?

On Sun, 17 May 2009 10:32:33 -0400, MoPar Man wrote:

> General Schvantzkoph wrote:
>
>> GM and Chrysler have way to many dealers
>
> Please explain how the number of dealerships impacts the financial
> health or bottom line of a car manufacturer.
>
> Dealerships do not suck money, time, or resources from the manufacturer.
> Any dealership that can't operate in the black will not operate for
> long and will go out of business just like any other retail operation.
>
> It could be argued that like shelf space at your grocery store, the more
> dealerships you have the more impact or visibility your brands have
> compared to others.
>
> The only argument for reducing the number of dealerships could be that
> by having fewer of them, that they can (or presumably will) reduce the
> profit margin per-car, but will make it up with more volume. Whether or
> not this would shift higher the total sales numbers for Chrysler is not
> clear. There is no benefit for Chrysler if in the end the same number
> of cars gets sold by fewer dealers.
>
> Then there is the up-front costs of terminating franchise agreements,
> which under bankruptcy protection might not be too high. But then
> again, don't you have to make the case to a judge that any given
> franchisee is a liability to you in order to terminate the agreement?

Having large numbers of small dealerships depresses the demand for their
product in a number of ways. I'll give some examples. I live near Nashua
NH, most of the car dealers are clustered together on Marmon Dr (Marmon
went out of business in 1933 which gives you an idea how long they have
been there). There is a Chrysler dealer next store to a Dodge dealer,
there is a Chevy dealer, a Cadillac dealer and a Buick dealer. In nearby
Lowell there is also a Dodge and a Chrysler Dealer, and there were also
dealers in nearby small towns. There is only one Toyota and one Honda
dealer in the area. The American dealers are small and have tiny
inventories, the Japanese dealers are much larger and as a result have
much larger inventories. If you buy a Japanese car you have your pick
right off of the lot, if you buy an American car you either have to buy
the one that's stripped to the bones, the one that's loaded to the gills
with features that you don't want, or wait 8 weeks for one that you order
from the factory. When you walk into the American dealers they are empty,
when you walk into the Japanese dealers they are full, this gives you the
impression that absolutely nobody wants the American cars and everyone
wants the Japanese cars. The effect gets exaggerated by the desperation
of the salesmen who are living on the edge of starvation. At the Japanese
dealer they are polite and helpful, at the American dealers they descend
on you like beggars in a 3rd world country. On those rare occasions when
they have a hit like the 300C was several years ago their attitude turns
to arrogance which is even more obnoxious then their attitude of
desperation. Meanwhile the Toyota and Honda salesman remain
professional. So even though you might have to wait a few minutes in the
Japanese dealer you'll have a much better experience than you do at an
American dealer. To combat the perceived lack of demand the American
companies have had to rely on huge discounts to get people to consider
their products, that comes directly from their bottom lines. Before the
crash GM and Toyota had the same volume, but Toyota with 1/7th the number
of dealers was able to sell at full price where as GM had to sell at a
discount. If GM had the same number of dealers as Toyota their showrooms
would have been just as full and they wouldn't have had to resort to
constant incentives.

BTW both the Dodge dealer and the next door Chrysler Jeep dealer survived
the cuts as did the Lowell dealers, the cuts came from the ranks of the
small town dealers. Why didn't they pick the more successful dealer and
cut the other one. It would have had zero effect on consumer convenience,
they are latterly right next door to each other, but it would have left
one healthier and more efficient dealer instead of two marginal dealers.

General Schvantzkoph wrote:
> On Sun, 17 May 2009 10:32:33 -0400, MoPar Man wrote:
>
>> General Schvantzkoph wrote:
>>
>>> GM and Chrysler have way to many dealers
>> Please explain how the number of dealerships impacts the financial
>> health or bottom line of a car manufacturer.
>>
>> Dealerships do not suck money, time, or resources from the manufacturer.
>> Any dealership that can't operate in the black will not operate for
>> long and will go out of business just like any other retail operation.
>>
>> It could be argued that like shelf space at your grocery store, the more
>> dealerships you have the more impact or visibility your brands have
>> compared to others.
>>
>> The only argument for reducing the number of dealerships could be that
>> by having fewer of them, that they can (or presumably will) reduce the
>> profit margin per-car, but will make it up with more volume. Whether or
>> not this would shift higher the total sales numbers for Chrysler is not
>> clear. There is no benefit for Chrysler if in the end the same number
>> of cars gets sold by fewer dealers.
>>
>> Then there is the up-front costs of terminating franchise agreements,
>> which under bankruptcy protection might not be too high. But then
>> again, don't you have to make the case to a judge that any given
>> franchisee is a liability to you in order to terminate the agreement?
>
> Having large numbers of small dealerships depresses the demand for their
> product in a number of ways. I'll give some examples. I live near Nashua
> NH, most of the car dealers are clustered together on Marmon Dr (Marmon
> went out of business in 1933 which gives you an idea how long they have
> been there). There is a Chrysler dealer next store to a Dodge dealer,
> there is a Chevy dealer, a Cadillac dealer and a Buick dealer. In nearby
> Lowell there is also a Dodge and a Chrysler Dealer, and there were also
> dealers in nearby small towns. There is only one Toyota and one Honda
> dealer in the area. The American dealers are small and have tiny
> inventories, the Japanese dealers are much larger and as a result have
> much larger inventories. If you buy a Japanese car you have your pick
> right off of the lot, if you buy an American car you either have to buy
> the one that's stripped to the bones, the one that's loaded to the gills
> with features that you don't want, or wait 8 weeks for one that you order
> from the factory. When you walk into the American dealers they are empty,
> when you walk into the Japanese dealers they are full, this gives you the
> impression that absolutely nobody wants the American cars and everyone
> wants the Japanese cars. The effect gets exaggerated by the desperation
> of the salesmen who are living on the edge of starvation. At the Japanese
> dealer they are polite and helpful, at the American dealers they descend
> on you like beggars in a 3rd world country. On those rare occasions when
> they have a hit like the 300C was several years ago their attitude turns
> to arrogance which is even more obnoxious then their attitude of
> desperation. Meanwhile the Toyota and Honda salesman remain
> professional. So even though you might have to wait a few minutes in the
> Japanese dealer you'll have a much better experience than you do at an
> American dealer. To combat the perceived lack of demand the American
> companies have had to rely on huge discounts to get people to consider
> their products, that comes directly from their bottom lines. Before the
> crash GM and Toyota had the same volume, but Toyota with 1/7th the number
> of dealers was able to sell at full price where as GM had to sell at a
> discount. If GM had the same number of dealers as Toyota their showrooms
> would have been just as full and they wouldn't have had to resort to
> constant incentives.
>
> BTW both the Dodge dealer and the next door Chrysler Jeep dealer survived
> the cuts as did the Lowell dealers, the cuts came from the ranks of the
> small town dealers. Why didn't they pick the more successful dealer and
> cut the other one. It would have had zero effect on consumer convenience,
> they are latterly right next door to each other, but it would have left
> one healthier and more efficient dealer instead of two marginal dealers.

I don't think you addressed this specific point, but I think it relates
to and ties together a couple of points that you did make:
If you have several dealers for the same brand within driving distance
of each other, that allows the consumer to go back and forth
between/among them and get them down on price just from the direct
competition standpoint - and it may be over the identical vehicle - two
Chryslers - not Chrysler vs. Toyota.

Though Chrysler doesn't feel the lower resulting retail price the way
the dealer did, anything that results in a lower retail price is huge
pressure back to Chrysler (from the dealers) to lower their price to the
dealer.

My wife was telling me that she heard an interview on Fox and Friends
yesterday morning with the owner of a dealership (I think she said in
Milwaukee) that is among the top 2% volume Chrysler dealers in the
country - his dealer is on the closure list. That seems strange.

--
Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')

The manufacture cost will be reduce by having to deal with less dealerships
in terms of support. Less factory reps wil be needed, less support as far
as schools that salesman have to attend, Less tech support will be needed.

On Sun, 17 May 2009 13:14:02 -0400, Bill Putney wrote:

> General Schvantzkoph wrote:
>> On Sun, 17 May 2009 10:32:33 -0400, MoPar Man wrote:
>>
>>> General Schvantzkoph wrote:
>>>
>>>> GM and Chrysler have way to many dealers
>>> Please explain how the number of dealerships impacts the financial
>>> health or bottom line of a car manufacturer.
>>>
>>> Dealerships do not suck money, time, or resources from the
>>> manufacturer.
>>> Any dealership that can't operate in the black will not operate for
>>> long and will go out of business just like any other retail operation.
>>>
>>> It could be argued that like shelf space at your grocery store, the
>>> more dealerships you have the more impact or visibility your brands
>>> have compared to others.
>>>
>>> The only argument for reducing the number of dealerships could be that
>>> by having fewer of them, that they can (or presumably will) reduce the
>>> profit margin per-car, but will make it up with more volume. Whether
>>> or not this would shift higher the total sales numbers for Chrysler is
>>> not clear. There is no benefit for Chrysler if in the end the same
>>> number of cars gets sold by fewer dealers.
>>>
>>> Then there is the up-front costs of terminating franchise agreements,
>>> which under bankruptcy protection might not be too high. But then
>>> again, don't you have to make the case to a judge that any given
>>> franchisee is a liability to you in order to terminate the agreement?
>>
>> Having large numbers of small dealerships depresses the demand for
>> their product in a number of ways. I'll give some examples. I live near
>> Nashua NH, most of the car dealers are clustered together on Marmon Dr
>> (Marmon went out of business in 1933 which gives you an idea how long
>> they have been there). There is a Chrysler dealer next store to a Dodge
>> dealer, there is a Chevy dealer, a Cadillac dealer and a Buick dealer.
>> In nearby Lowell there is also a Dodge and a Chrysler Dealer, and there
>> were also dealers in nearby small towns. There is only one Toyota and
>> one Honda dealer in the area. The American dealers are small and have
>> tiny inventories, the Japanese dealers are much larger and as a result
>> have much larger inventories. If you buy a Japanese car you have your
>> pick right off of the lot, if you buy an American car you either have
>> to buy the one that's stripped to the bones, the one that's loaded to
>> the gills with features that you don't want, or wait 8 weeks for one
>> that you order from the factory. When you walk into the American
>> dealers they are empty, when you walk into the Japanese dealers they
>> are full, this gives you the impression that absolutely nobody wants
>> the American cars and everyone wants the Japanese cars. The effect gets
>> exaggerated by the desperation of the salesmen who are living on the
>> edge of starvation. At the Japanese dealer they are polite and helpful,
>> at the American dealers they descend on you like beggars in a 3rd world
>> country. On those rare occasions when they have a hit like the 300C was
>> several years ago their attitude turns to arrogance which is even more
>> obnoxious then their attitude of desperation. Meanwhile the Toyota and
>> Honda salesman remain professional. So even though you might have to
>> wait a few minutes in the Japanese dealer you'll have a much better
>> experience than you do at an American dealer. To combat the perceived
>> lack of demand the American companies have had to rely on huge
>> discounts to get people to consider their products, that comes directly
>> from their bottom lines. Before the crash GM and Toyota had the same
>> volume, but Toyota with 1/7th the number of dealers was able to sell at
>> full price where as GM had to sell at a discount. If GM had the same
>> number of dealers as Toyota their showrooms would have been just as
>> full and they wouldn't have had to resort to constant incentives.
>>
>> BTW both the Dodge dealer and the next door Chrysler Jeep dealer
>> survived the cuts as did the Lowell dealers, the cuts came from the
>> ranks of the small town dealers. Why didn't they pick the more
>> successful dealer and cut the other one. It would have had zero effect
>> on consumer convenience, they are latterly right next door to each
>> other, but it would have left one healthier and more efficient dealer
>> instead of two marginal dealers.
>
> I don't think you addressed this specific point, but I think it relates
> to and ties together a couple of points that you did make: If you have
> several dealers for the same brand within driving distance of each
> other, that allows the consumer to go back and forth between/among them
> and get them down on price just from the direct competition standpoint -
> and it may be over the identical vehicle - two Chryslers - not Chrysler
> vs. Toyota.
>
> Though Chrysler doesn't feel the lower resulting retail price the way
> the dealer did, anything that results in a lower retail price is huge
> pressure back to Chrysler (from the dealers) to lower their price to the
> dealer.
>
> My wife was telling me that she heard an interview on Fox and Friends
> yesterday morning with the owner of a dealership (I think she said in
> Milwaukee) that is among the top 2% volume Chrysler dealers in the
> country - his dealer is on the closure list. That seems strange.

This was even worse when the were putting two badges on the same car.
When I bought my Concord in 94 I was able to get the deal I wanted by
threatening to walk next door and get an Intrepid, it wasn't an idle
threat because I only had to walk 50 feet to the Dodge dealer. I wasn't
able to do the same thing with the 300C AWD in 2005 because they were in
very short supply, I called lots of dealers and even tried the Costco
program but no one was willing to budge on price on the 300C back then.
Chrysler made a real profit on those and so did their dealers. That's
what you can do when you have a hot product and a shortage (probably
artificially created). However to succeed long term with that strategy
you need to have a new hit every year, Apple knows how to do that but
there is no auto company that has ever been able to do it, their product
cycles are way to long. BTW if I feel the way I feel about Chrysler
dealers why did I buy a 300C? Well I'm a middle aged baby boomer, the
salesman didn't sell me that car, Big Daddy Don Garlits did. I only buy
one car per decade so this was my last chance to own a Hemi, I suspect
most of the buyers for the 300C were 50 something guys who were in high
school in the 60s and think Swamp Rat when they hear the word Hemi. After
this one I'm only going to have two more cars in my life, the sensible
car that I buy for my 60s and early 70s, and the car that I'm going to
own at the time when they take my license away from me in my 80s.

Curious. In Europe we don't get new models every year. That's only what
American car companies do, but we know that. Change the fins, maybe fiddle
with the lights and call the Next Year's Model in late summer of the
previous year....

DAS

To send an e-mail directly replace "spam" with "schmetterling"
---
"General Schvantzkoph" > wrote in message
...
[...]
> However to succeed long term with that strategy
> you need to have a new hit every year, Apple knows how to do that but
> there is no auto company that has ever been able to do it, their product
> cycles are way to long. BTW if I feel the way I feel about Chrysler
[...]

Fins!!??

--
Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')


Dori A Schmetterling wrote:
> Curious. In Europe we don't get new models every year. That's only what
> American car companies do, but we know that. Change the fins, maybe fiddle
> with the lights and call the Next Year's Model in late summer of the
> previous year....
>
> DAS
>
> To send an e-mail directly replace "spam" with "schmetterling"
> ---
> "General Schvantzkoph" > wrote in message
> ...
> [...]
>> However to succeed long term with that strategy
>> you need to have a new hit every year, Apple knows how to do that but
>> there is no auto company that has ever been able to do it, their product
>> cycles are way to long. BTW if I feel the way I feel about Chrysler
> [...]