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."

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.

 

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!

 

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.

 

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

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.

 

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?

 

You mean to say that the chart makes a strong business case for Jason's original argument?

 

 

I don't have any digital pics of it yet, but I absolutely friggen love it 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

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 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