Scary trend with domestic dealers...giving up and/or sabotaging franchises?

In the last 30 days, as business has been slow in Western MA, I've noticed an interesting trend. 2 Lincoln Mercury dealers voluntarily gave up their stores...one to make more room for his Toyota inventory, the other just closed up and went home. This leaves 1 Lincoln/Mercury store in a 60 mile radius...not such a bad thing, probably...

My closest same-brand competitor, a Chrysler/Jeep store (I have all DCX), just forfeited his franchise to make more room for his Kia and Toyota franchises that occupy the same space. He simply had no interest in selling DCX products anymore. This same dealer owns the local Ford store right down the street from my own store. He has said in the local paper that "unless Ford proves to me that they can have competitive products, I will HAPPILY ask them to take the franchise back. I'd like to take this point, demolish it, and move my Toyota store to this location." :mad:

The Ford store he wants to mow over is a historic building in a prime downtown area, and his Toyota store is buried on a hill outside of town. According to sources around here, they sold SEVEN cars all month this past month. It would appear the idiot is sabotaging his Ford store so Ford will yank it back based on poor performance!

Another Chevrolet/Buick/Cadillac point about 80 miles from here just closed itself after being around for over 50 years. There is now no Chevrolet store within a 100 mile radius of where that point was. I understand there are too many domestic dealers in general, but out here it seems that the mega dealers want little, if anything, to do with domestic franchises. Meanwhile, those that are left are fighting to stay alive because they're fighting amongst each other for the sales they do get, or closing entirely.

Its getting a little scary out here...

A while back I posted this chart for a different reason, but it also applies nicely to this discussion IMO.

http://www.automotivedigest.com/images/sigstats/AvgSlsperMnfDlr_03.jpg

There is no question we need fewer dealers. What scares me is that the big mega stores couldn't care less about domestics, and during the ongoing downsizing its hard for us smaller ones to stay afloat while Darwinism takes hold of the weakest.

I am confident we'll be perfectly fine, as I've already been able to increase sales here based on a better mix of new and more used cars. DCX will hopefully keep the new product rolling for us. We sell about 45-50 a month...my goal is at least 60 by the end of the year, and to maintain that level year round.

But there's a lot of domestic dealers owned by older folks (like the one I started at) who are using 30 year old sales tactics, and simply aren't getting the job done. Meanwhile, the "new age" dealers want Toyota and Honda, not domestic. Less DCX dealers is better for me (I'm already seeing more traffic, and the aforementioned Chrysler dealer that closed has been gone only a week!), but it scares me for the industry what the long-term affects will be of less points that have been weakened from years of being forced to give cars away, more or less...

If the Domestic auto makers get really appealing products out, people will find them.

No ones gonna drive an hour for a Civic... Mustang? probably.

Now fewer domestic dealers also gives them room to screw you, and gives the imports some advantage, but I really think product is the equalizer.

That's what happens with declining market share.

All it would take is for GM to hit a homerun with a future product and we'll
start seeing people ask why is the closest chevy dealer 50 miles away??? The multi-brand mega dealers will just adjust their inventories to carry the hot product.

In Canada, dealers can only carry 1 manufacturer's product. You can't sell Honda + Chevy so I'd imagine a lot of dealers here could be in trouble.

Does anybody else find it friggin' crazy that the average Lexus dealer is bringing in 9-10 TIMES the gross sales than Caddy is - and you know they're most likely making a bigger profit margin on those sales too. Sounds like if you wanted to open a car dealership up right now - Lexus would be the way to go!:eek:

Does anybody else find it friggin' crazy that the average Lexus dealer is bringing in 9-10 TIMES the gross sales than Caddy is - and you know they're most likely making a bigger profit margin on those sales too. Sounds like if you wanted to open a car dealership up right now - Lexus would be the way to go!:eek:


Some people are willing to pay whatever Lexus asks for a model without consideration for interest rates or the competition. These customers have unmatched brand loyalty and that's what happens when you bring out hit after hit and amazing quality and resale value.

GM just never had that with Caddy and even the German automakers are losing customers to Lexus.

Lexus, the company that can't do wrong. :(

Hopefully the new models will close that gap.

A while back I posted this chart for a different reason, but it also applies nicely to this discussion IMO.

http://www.automotivedigest.com/images/sigstats/AvgSlsperMnfDlr_03.jpg

Intresting chart there Threxx. You added a new dimension I never thought about outside Mustang vs Camaro sales. Really stunning. :shock:

If I were a car dealer. I'd look at those figures and see that I can sell more Toyotas, Lexus, and Hondas by a massive margin over domestic brands.

Looking at it from strictly from a business standpoint, I too would look at moving out of selling domestic brands, and move to one of the 3 Japanese brands, or even a foreign nameplate. If I'm selling just 146 Cadillacs per year, and I can not only sell more than 5 times as many BMWs, but clear more on each car I sell, let alone the choice of selling 635 Chevys or selling over 1300 Toyotas, that's a pretty fat temptation.

I'm sure back when GM owned 50% of the auto market and domestics had 90%, the numbers were far more in our favor. But this shows a new dimension of how the reduction of domestic sales can snowball into a self feeding destruction at a level I've never imagined... dealers bailing despite how good domestics are. :think:

That chart is slightly scewed though as it at first glance you see that Lexus/Toyota/Honda have more annual sales. But that chart doesn't take into account that there are lots more Chevrolet/Ford dealers then Lexus/Toyota/Honda.

That chart is slightly scewed though as it at first glance you see that Lexus/Toyota/Honda have more annual sales. But that chart doesn't take into account that there are lots more Chevrolet/Ford dealers then Lexus/Toyota/Honda.

This is true. And when they open more import dealers and close more domestic dealers the numbers will shift down and up, respectively.

That is definitely a scary trend. I haven't noticed any of the domestic dealers shutting their doors around my area, but alot more luxary car dealers like Audi, BMW, and Mercedes are popping up. On a side note, how do you like your third-gen Jason? Have you posted pics. of it in any other threads?

That chart is slightly scewed though as it at first glance you see that Lexus/Toyota/Honda have more annual sales. But that chart doesn't take into account that there are lots more Chevrolet/Ford dealers then Lexus/Toyota/Honda.You mean to say that the chart makes a strong business case for Jason's original argument?;)

...and move to one of the 3 Japanese brands, or even a foreign nameplate...

:lol:

On a side note, how do you like your third-gen Jason? Have you posted pics. of it in any other threads?

I don't have any digital pics of it yet, but I absolutely friggen love it :D Its at my uncle's shop right now for about a week, getting new shocks & struts, and a full tune-up (I just don't have time to do my own work anymore). It had the OEM struts, the steering is loose, the distributor cap was all coroded inside, the plugs were shot, the EGR valve wasn't working (EGR solenoid was dead), the A/C doesn't work, and the O2 sensor is completely shot. So about $800 later between parts and labor later, I'll have it back next Thursday. She ran solid before despite being rough around the edges...now I can't wait :D

More importantly, the body is completely solid with NO ROT, it was resprayed 3 years ago and is a great 5 foot car (save for a scuffed LF corner...the nose is being resprayed next week), the t-tops don't leak, and the interior is in awesome shape...I'll replace the carpet and headliner eventually. It is what it is...a shiny red RS that looks completely original :) At some point I will swap in an LT-1 cam, open element air cleaner and some Vortec heads...otherwise, she'll stay as she is now. Eventually, I will do a complete cosmetic restoration on it and keep it as a 5,000 mile a year summer driver to keep miles off my Z and my 5th gen :D Don't ask where I'll put them all...I need to get a bigger house with a 3 car garage before the 5th gen shows up ;)

Sorry to derail my own thread...I just love this friggen car :) I bombed around in the Z earlier, and can't get over how much tighter a 4th gen is. However, with some chassis upgrades like an STB, SFCs, a Wonderbar and the new struts and tires, I think it will perk up. Hey, do you want some nice chrome rims for the GTP? I have some lying around ;)

I don't have any digital pics of it yet, but I absolutely friggen love it :D Its at my uncle's shop right now for about a week, getting new shocks & struts, and a full tune-up (I just don't have time to do my own work anymore). It had the OEM struts, the steering is loose, the distributor cap was all coroded inside, the plugs were shot, the EGR valve wasn't working (EGR solenoid was dead), the A/C doesn't work, and the O2 sensor is completely shot. So about $800 later between parts and labor later, I'll have it back next Thursday. She ran solid before despite being rough around the edges...now I can't wait :D

More importantly, the body is completely solid with NO ROT, it was resprayed 3 years ago and is a great 5 foot car (save for a scuffed LF corner...the nose is being resprayed next week), the t-tops don't leak, and the interior is in awesome shape...I'll replace the carpet and headliner eventually. It is what it is...a shiny red RS that looks completely original :) At some point I will swap in an LT-1 cam, open element air cleaner and some Vortec heads...otherwise, she'll stay as she is now. Eventually, I will do a complete cosmetic restoration on it and keep it as a 5,000 mile a year summer driver to keep miles off my Z and my 5th gen :D Don't ask where I'll put them all...I need to get a bigger house with a 3 car garage before the 5th gen shows up ;)

Sorry to derail my own thread...I just love this friggen car :) I bombed around in the Z earlier, and can't get over how much tighter a 4th gen is. However, with some chassis upgrades like an STB, SFCs, a Wonderbar and the new struts and tires, I think it will perk up. Hey, do you want some nice chrome rims for the GTP? I have some lying around ;)

Not to help you derail your own thread Jason, but I'd be interested in your impressions when you get the car back. But, you'll have to better disguise the thread as "Automotive News", so we can talk about it here and not have it moved to the lounge. ;)

Does anybody else find it friggin' crazy that the average Lexus dealer is bringing in 9-10 TIMES the gross sales than Caddy is - and you know they're most likely making a bigger profit margin on those sales too. Sounds like if you wanted to open a car dealership up right now - Lexus would be the way to go!:eek:

Added to that chart, you need to know how many dealers are in each category. How many Cadillac dealers are there compared to Lexus dealers. If there are a lot more Cadillac dealers, which I suspect there are, then it would obviously lead to the results in the chart. The chart means nothing without # of dealers in the US tied to each Make listed.

Edit. I looked this up. It's a few years old, but there were 1600 Cadillac dealerships compared to 180 Lexus dealerships. Hmm... suddenly your point has gone poof... up in smoke because they are about equal in total sales, with Cadillac having a light edge. :)
http://answers.google.com/answers/threadview?id=212692
Dan

Added to that chart, you need to know how many dealers are in each category. How many Cadillac dealers are there compared to Lexus dealers. If there are a lot more Cadillac dealers, which I suspect there are, then it would obviously lead to the results in the chart. The chart means nothing without # of dealers in the US tied to each Make listed.

Edit. I looked this up. It's a few years old, but there were 1600 Cadillac dealerships compared to 180 Lexus dealerships. Hmm... suddenly your point has gone poof... up in smoke because they are about equal in total sales, with Cadillac having a light edge. :)
http://answers.google.com/answers/threadview?id=212692
Dan

:rolleyes:

Learn to read before you go to such trouble. My point was the point of this entire f*cking thread: there are too many domestic dealers per volume. It is far more profitable to run a high volume dealer, and obviously looking at that chart, the brands at the charts are on average allowing far higher volume per dealer.

This thread is about dealers. Comprende? Not total sales. Nobody said a damn thing about total sales.

So *poof*, right back at you.;)

PS - not sure how your numbers are working but Lexus sells a good margin more vehicles in the US than Cadillac. The only arguement people here have every made for Caddy is that Caddy sells more vehicles with an MSRP of 42 thousand or greater - but that's a whole nother ballgame including the question of does MSRP really matter, or does the actual sales price after negotiating and rebate matter? I bet know which one the manufacturer and dealers would answer to that (hint: it's the one that actually puts money in their pockets)

:rolleyes:

Learn to read before you go to such trouble. My point was the point of this entire f*cking thread: there are too many domestic dealers per volume. It is far more profitable to run a high volume dealer, and obviously looking at that chart, the brands at the charts are on average allowing far higher volume per dealer.

This thread is about dealers. Comprende? Not total sales. Nobody said a damn thing about total sales.

So *poof*, right back at you.;)

PS - not sure how your numbers are working but Lexus sells a good margin more vehicles in the US than Cadillac. The only arguement people here have every made for Caddy is that Caddy sells more vehicles with an MSRP of 42 thousand or greater - but that's a whole nother ballgame including the question of does MSRP really matter, or does the actual sales price after negotiating and rebate matter? I bet know which one the manufacturer and dealers would answer to that (hint: it's the one that actually puts money in their pockets)

Testy, testy aren't we. :cry:

I addressed your original point, and added another. Is there something wrong with that? It's only natural that DOMESTICs are going to have more dealerships, but I agree that there are too many.

And by the way, no I don't think it's friggin crazy that Lexus sells 9-10 times the # of cars per dealership than Cadillac, per the reasons I already stated. The total sales was just another point.

Dan

I don't have any digital pics of it yet, but I absolutely friggen love it :D Its at my uncle's shop right now for about a week, getting new shocks & struts, and a full tune-up (I just don't have time to do my own work anymore). It had the OEM struts, the steering is loose, the distributor cap was all coroded inside, the plugs were shot, the EGR valve wasn't working (EGR solenoid was dead), the A/C doesn't work, and the O2 sensor is completely shot. So about $800 later between parts and labor later, I'll have it back next Thursday. She ran solid before despite being rough around the edges...now I can't wait :D

That is about the same list of things that I needed done to my third gen when I first got it. Sorry, I don't need rims for the Grand Prix as of now. I sold off all of my performance parts for it and I'm just going to keep it stock and focus my funds on the Camaro. Thanks anyway though. Did you try the classifieds in www.clubgp.com?? I sold all of my stuff there, just beware, all of the teenagers will try to low-ball you, they did it to me.:mad:

Testy, testy aren't we. :cry:

I addressed your original point, and added another. Is there something wrong with that? It's only natural that DOMESTICs are going to have more dealerships, but I agree that there are too many.

You said
The chart means nothing without # of dealers in the US tied to each Make listed.

You were 100% wrong in the context of this thread.:shrug:

You acted like the entire basis of this discussion was invalidated by the # of dealers when that was in fact the underlying issue of the discussion itself.

Please, do me a favor. Tell me exactly what my point was. Spell it out for me. And then tell me how total vehicle sales being considering my point went 'poof'. As you said:
suddenly your point has gone poof... up in smoke because they are about equal in total sales

I'm waiting.;)

And by the way, no I don't think it's friggin crazy that Lexus sells 9-10 times the # of cars per dealership than Cadillac, per the reasons I already stated. The total sales was just another point.
OK, that's great. I also think it's crazy how many McDonalds there are in the world. Now any economist could sit there and explain to you exactly why it happened - but that doesn't make it any less stunning to think about.

When the average of one dealer brand sells almost 10 times the number of cars than the other - that seems extremely unbalanced to me. What I found amazing is why that hasn't 'equalized' more through the years. Here in Memphis we have one Lexus dealer and three Caddy dealers that I know of. The closest Lexus dealer to here is 200+ miles away in Nashville. There are quite a few Caddy dealers within 200 miles of here.

Did you try the classifieds in www.clubgp.com?? I sold all of my stuff there, just beware, all of the teenagers will try to low-ball you, they did it to me.:mad:

Well, I posted them and the tires up there for $800 (went for $1,400 a year ago, only have 8,000 miles on them!!!), and linked to a pic of them on the car, as it was for sale on my dealer's lot. Because I didn't have an 8x10 glossy of every friggen wheel (exaggerating I know, but still...) I had interest but everyone wants more pics, like I'm trying to screw someone. I understand that, but I don't have a digital camera, and have no idea how to post pics...yes, I know how sad that is! I just have to get on the ball...I know they'll sell.

Charlie,
I'll let you know...I can't wait to see how it runs and drives all tuned up with the steering tightened up and fresh shocks and struts :D

A while back I posted this chart for a different reason, but it also applies nicely to this discussion IMO.

http://www.automotivedigest.com/images/sigstats/AvgSlsperMnfDlr_03.jpg


This all goes back to my point in the other thread. GM has the dealer network to suport probaly 40% market share...which sucks when you have 25% market share.

Unfortunalty, reducing the number of dealer is one of the hardest things for a manufactuer due to the way contracts are structured. On a lower level, it is bad for GM as a whole because then you have dealers that are too close, fighting over too few sales. In the the end this causes the average sales price for the brand to go down. If a Lexus dealer won't cut you a break, the odds are another one is quite far away. A Chevy dealer though...you just go down the street.

You said


You were 100% wrong in the context of this thread.:shrug:

You acted like the entire basis of this discussion was invalidated by the # of dealers when that was in fact the underlying issue of the discussion itself.

Please, do me a favor. Tell me exactly what my point was. Spell it out for me. And then tell me how total vehicle sales being considering my point went 'poof'. As you said:


I'm waiting.;)


OK, that's great. I also think it's crazy how many McDonalds there are in the world. Now any economist could sit there and explain to you exactly why it happened - but that doesn't make it any less stunning to think about.

When the average of one dealer brand sells almost 10 times the number of cars than the other - that seems extremely unbalanced to me. What I found amazing is why that hasn't 'equalized' more through the years. Here in Memphis we have one Lexus dealer and three Caddy dealers that I know of. The closest Lexus dealer to here is 200+ miles away in Nashville. There are quite a few Caddy dealers within 200 miles of here.


Are Lexus dealers normally tied to other makes, like Cadillac is? I don't know, since I don't follow Lexus, but you probably know. We have a lot of Buick/Cadillac dealerships, or Cadillac/* dealerships around here. Maybe that's why there are so many, because they piggy-back on each other so much.

Dan

Are Lexus dealers normally tied to other makes, like Cadillac is? I don't know, since I don't follow Lexus, but you probably know. We have a lot of Buick/Cadillac dealerships, or Cadillac/* dealerships around here. Maybe that's why there are so many, because they piggy-back on each other so much.

Dan

The Cadillac dealer here was formerly an Oldsmobile-Cadillac dealer. When Olds died, it became a single franchise dealer.

The Mopar dealers have slowly been combining, such that a single dealer sells Chrysler, Dodge, and Jeep. But the process is incomplete with a standalone Dodge dealer, a Jeep-Lincoln-Mercury dealer, and a standalone Chrysler dealer still to be found in the area.

Pontiac Buick and GMC have been combined at two dealers.

Toyota, Lexus, Infiniti, and Nissan are all standalone, as are BMW and Mercedes.

FYI Lexus and Toyota are the same company like Dodge and Chrylser.
So really toyota is #1 and #4.
Year after year after year Lexus has the fewest problems reported per car too so they have loyalty for a reason. I don't see this changing anytime soon no matter how many or few dealships anyone has.

Thanks Aaron91RS, but I already knew that. I do give Toyota respect for producing such a quiet refined vehicle.( I used to do competivitve analysis as an engineer for GM).

I have always preferred the feel of GM vehicles above all others however.

I just wasn't sure how Lexus was selling their cars, as stand-alone dealers, or like Cadillac dealers-tied to other makes.

Dan