About two-thirds of 15,000 dealers who sell Big Three vehicles need to close, says an
02-05-07, 07:35 AM
#1
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About two-thirds of 15,000 dealers who sell Big Three vehicles need to close, says an
LAS VEGAS -- The number of auto dealers selling American cars is shrinking, but not nearly fast enough, a top industry analyst and former General Motors Corp. adviser said Friday.
About two-thirds of the more than 15,000 dealers who sell Detroit-made cars and trucks need to get out of the business in order to create a healthy dealer body that can compete with Toyota and Honda, said Stephen Girsky, speaking at an auto industry roundtable hosted by J.D. Power and Associates in conjunction with the National Automobile Dealers Association's annual convention.
The domestic dealer network is shrinking by about 3 to 4 percent a year. And while that's been painful for dealers, the market remains oversaturated. "Three to 4 percent a year just isn't cutting it," Girsky said, who was an adviser to GM CEO Rick Wagoner and Chief Financial Officer Fritz Henderson until he resigned last year.
Automakers prefer a smaller number of large and modern dealerships over many smaller, marginally profitable dealerships. Large, healthy dealers tend to invest in new showrooms with modern amenities and well-trained staffs, which leads to more sales and better customer satisfaction.
The glut of dealers selling American cars is a side-effect of the Big 3's huge loss of market share in the recent years.
The average Chevrolet dealer now sells 583 cars a year. Ford dealers sell 631 vehicles a year on average, while Dodge dealers sell 375 on average, according to J.D. Power and Associates Power Information Network. All three are sharply down from previous years.
By contrast, the average Toyota dealer sells 1,685 vehicles, while Honda dealers close 1,289 sales on average. Despite the imbalance, domestic dealers outnumber foreign-car shops more than 5 to 1.
"There's that idea of more is better," said Gary Dilts, J.D. Power senior vice president and former Chrysler Group sales executive, "which isn't working particularly well in the U.S. car business."
Detroit's automakers are pushing for more dealer consolidation. And while dealers largely agree consolidation is needed, few are willing to close.
Buying out dealers is a costly move for the carmakers, as GM found out when it killed its Oldsmobile brand in 2004.
GM isn't considering a major dealer buyout at the moment, instead looking to spend its cash on new vehicles, says Troy Clarke, head of GM North American.
Ford Motor Co. and Chrysler have been more actively consolidating dealerships. Some dealerships are going out of business due to reduced volumes.
"Every day there are dealers closing their doors and not being replaced by other dealers," said Michelle Van Vorst, executive director of the Ford Dealer Alliance, which represents 1,200 dealers.
http://www.detnews.com/apps/pb.../1148
About two-thirds of the more than 15,000 dealers who sell Detroit-made cars and trucks need to get out of the business in order to create a healthy dealer body that can compete with Toyota and Honda, said Stephen Girsky, speaking at an auto industry roundtable hosted by J.D. Power and Associates in conjunction with the National Automobile Dealers Association's annual convention.
The domestic dealer network is shrinking by about 3 to 4 percent a year. And while that's been painful for dealers, the market remains oversaturated. "Three to 4 percent a year just isn't cutting it," Girsky said, who was an adviser to GM CEO Rick Wagoner and Chief Financial Officer Fritz Henderson until he resigned last year.
Automakers prefer a smaller number of large and modern dealerships over many smaller, marginally profitable dealerships. Large, healthy dealers tend to invest in new showrooms with modern amenities and well-trained staffs, which leads to more sales and better customer satisfaction.
The glut of dealers selling American cars is a side-effect of the Big 3's huge loss of market share in the recent years.
The average Chevrolet dealer now sells 583 cars a year. Ford dealers sell 631 vehicles a year on average, while Dodge dealers sell 375 on average, according to J.D. Power and Associates Power Information Network. All three are sharply down from previous years.
By contrast, the average Toyota dealer sells 1,685 vehicles, while Honda dealers close 1,289 sales on average. Despite the imbalance, domestic dealers outnumber foreign-car shops more than 5 to 1.
"There's that idea of more is better," said Gary Dilts, J.D. Power senior vice president and former Chrysler Group sales executive, "which isn't working particularly well in the U.S. car business."
Detroit's automakers are pushing for more dealer consolidation. And while dealers largely agree consolidation is needed, few are willing to close.
Buying out dealers is a costly move for the carmakers, as GM found out when it killed its Oldsmobile brand in 2004.
GM isn't considering a major dealer buyout at the moment, instead looking to spend its cash on new vehicles, says Troy Clarke, head of GM North American.
Ford Motor Co. and Chrysler have been more actively consolidating dealerships. Some dealerships are going out of business due to reduced volumes.
"Every day there are dealers closing their doors and not being replaced by other dealers," said Michelle Van Vorst, executive director of the Ford Dealer Alliance, which represents 1,200 dealers.
http://www.detnews.com/apps/pb.../1148
02-05-07, 08:25 AM
#4
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Down here we have so many big three dealers. Honda and Toyota dealers are far and few, and from what I see Toyota is just trying to match up to Honda (which has been here just a little longer).
02-05-07, 03:48 PM
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It can't help when you've got a Chevy/Buick/GMC/Cadillac dealer or a Ford/Lincoln/Mercury dealer selling a bunch of nearly identical vehicles with different badges on them. In addition to consolidating the number of dealerships, I think they need to slash some brands as well.
02-06-07, 09:52 AM
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its like watching a train wreck in slow motion. They need to stop the bleeding.
Axe about 1/2 of their duplicate models, stop building junk, flush out the unions. Make money on their products instead of losing $4000 for every model they sell.
The American's are too tied to tradition. They build crappy cars like the Mustang, Camaro, and others that are so out of date, **** poor suspension, push rod gas guzzling, unreliable crap.
They need someone to come in, start killing off all the garbage lines no matter how much of an out cry there would be. Can't axe the Mustang? Well then you can't save the company. Why not return to profitability and then in 10 years re-release a high tech Mustang to compete on the world stage. I'm sorry but no one, I know who knows anything about cars would take a Mustang over a Civic, its not about displacement anymore you coots, its about technology, reliablity, gas savings, and sportiness.
Look at GM, they are FINALLY getting it and importing Holdens and Opels and selling them as American and those countries make nice looking cars with good motors (Turbo 2.0 liters, V6 turbos).
Axe about 1/2 of their duplicate models, stop building junk, flush out the unions. Make money on their products instead of losing $4000 for every model they sell.
The American's are too tied to tradition. They build crappy cars like the Mustang, Camaro, and others that are so out of date, **** poor suspension, push rod gas guzzling, unreliable crap.
They need someone to come in, start killing off all the garbage lines no matter how much of an out cry there would be. Can't axe the Mustang? Well then you can't save the company. Why not return to profitability and then in 10 years re-release a high tech Mustang to compete on the world stage. I'm sorry but no one, I know who knows anything about cars would take a Mustang over a Civic, its not about displacement anymore you coots, its about technology, reliablity, gas savings, and sportiness.
Look at GM, they are FINALLY getting it and importing Holdens and Opels and selling them as American and those countries make nice looking cars with good motors (Turbo 2.0 liters, V6 turbos).
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02-06-07, 10:35 AM
#8
Lexus Fanatic
I disagree with the idea of a sharp reduction in the number of domestic-nameplate dealerships.
First of all, those dealerships will still be needed to service the huge number of domestic full-sized pickups sold every year...FAR more of which are sold than even Accords and Camrys. Who wants to drive a couple of hundred miles just to get factory or warranty service?
Second, I'm sure that tow-truck drivers don't want to spend all day towing just ONE vehicle back to a far-away dealership for work or accident repair.
( And, Third, I sure don't want to have to drive a couple of hundred miles every time I review a domestic vehicle
)
First of all, those dealerships will still be needed to service the huge number of domestic full-sized pickups sold every year...FAR more of which are sold than even Accords and Camrys. Who wants to drive a couple of hundred miles just to get factory or warranty service?
Second, I'm sure that tow-truck drivers don't want to spend all day towing just ONE vehicle back to a far-away dealership for work or accident repair.
( And, Third, I sure don't want to have to drive a couple of hundred miles every time I review a domestic vehicle
)
Last edited by mmarshall; 02-06-07 at 10:38 AM.
02-06-07, 10:42 AM
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I disagree with the idea of a sharp reduction in the number of domestic-nameplate dealerships. First of all, those dealerships will still be needed to service the huge number of domestic full-sized pickups sold every year...FAR more of which are sold than even Accords and Camrys. Who wants to drive a couple of hundred miles just to get factory or warranty service? and Second, I'm sure that tow-truck drivers don't want to spend all day towing just ONE vehicle back to a far-away dealership for work or accident repair.
( And, Third, I sure don't want to have to drive a couple of hundred miles every time I review a domestic vehicle )
( And, Third, I sure don't want to have to drive a couple of hundred miles every time I review a domestic vehicle
)In my county alone there is roughly about 3 GM dealerships and thats about a 50 mile range. Sorry, GM is not like Wal-Mart we don't need 3 to trip over. There is one Toyota dealership on the coast where I am and these guys can never keep cars in stock! I love the fact that the GM place is huge with a beautiful show room but their staff isn't that intelligent.
What I think car companies need to work on is their staffing. If I walk up to any sales person, reguardless of company.. point to a car and say "Whats the horse power on that?" They should know immediately! Seriously, I went to a Ford dealership and the sales men tried to tell me there was a turbo on the Mustang GT! I laughed and told him to get a clue!
Instead of saturating the market have a few dealerships that know their line up!
02-06-07, 04:29 PM
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I have seen Honda opening service departments in busy markets. This satisfies mmarshall's (and thousands of Honda buyers, apparently) desire for close-by service without adding all the expense and overhead of unnecessary sales locations.
02-06-07, 06:08 PM
#12
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I'm not thinking of me so much as all the millions of F-150 and Silverado owners..the Rocky Mountain West, where many of these trucks are located, is rather sparsely populated as it is, and dealerships are often many miles apart. This proposal might only make it worse.
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