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How does closing dealers save money?
Jgreen
Member Posts: 2,579 ✭✭✭✭✭
I don't understand, and I'm not being sarcastic here.
If an auto dealership is independantly owned, and they buy the vehicles from the manufacturer, then how does it benefit the manufacturer to close the dealership? So what if they dealership doesn't sell a lot of the vehicles, how does this cost the manufacturer money?
If an auto dealership is independantly owned, and they buy the vehicles from the manufacturer, then how does it benefit the manufacturer to close the dealership? So what if they dealership doesn't sell a lot of the vehicles, how does this cost the manufacturer money?
Comments
Margaret Thatcher
"There are three kinds of lies: lies, damned lies and statistics."
Mark Twain
Their wont be much of a market for them this year, and unless they do something, their never will be.
Toyota dealers sell 1292.
Stronger dealers with more volume are better for the company and the dealer.
Any business has both fixed and variable costs. What do you think the total overhead is to run say, a finance department? Now spread that over 3 cars a week.
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Think about how the market changed... when may F-GM-C dealers started there was no competition except each other. Then comes Datsun, VW, Toyota, Subaru, Korean, Audi, BMW, Honda, Mercedes.
I don't understand, and I'm not being sarcastic here.
If an auto dealership is independantly owned, and they buy the vehicles from the manufacturer, then how does it benefit the manufacturer to close the dealership? So what if they dealership doesn't sell a lot of the vehicles, how does this cost the manufacturer money?
I posted something very similar to this yeasterday. I too do not understand, because most dealerships are privately owned. and are only under a contract with the car manufacturer to sell their particular brand.
I think that there is more to this story than is being told.
Hey, you asked[:D]
Less dealer competition means higher selling prices to customer.
Only to those that are BRAND loyal.
Chrysler screwed the pooch on this one. They are going to lose even MORE market share.
I heard this from a car dealer, so I don't know how much to trust it. [;)] [:D]
dealer floor plan. GM considered its vehicles sold when they leave
the factory. So the more dealers the more auto's could be manufactured.
This was a huge part of the problems GM management brought on itself
Its Dealers forced to take stock of inventory Americans didn't want.
They have there love affair with the foreign manufacturing company's.
The demographics of having dealers on every street corner is costly
and hurts every one in the game. Soon Americans will pay similar
cost for automobiles like the Europeans and the rest of the world.
Buying imports is the same mentality as depending on foreign oil.
But you can teach those home grown manufactures a good lesson and
send your money over seas. That will learn them good..
Chrysler still gets the money.
Now, if Chrysler financial is out too much money, can't it just say "We won't extend that much credit to the dealer?"
Really really uncool. That dealership wasn't costing GM a red cent.
There might be one good thing come out of this. Here in Dallas, corporations have been buying dealerships the past 5 or 6 years. There are a couple of family owned dealers anymore. So maybe some of these corporations can take one up the tailpipe for a change. After a dealer goes corporate, you cant get a good deal. They have a min price set and you pay it or you don't. I don't. I always look for the family owned places.
Plus, Dealerships often finance their franschise thru GMAC, with another arrangement to pay their rent or morgage on the store. If they aren't making their payments the franchise is "repossesed" any cars floored by GMAC are sold off to other dealers and the cars they own or that are floored elsewhere are sold off or returned to those banks. Same with specialized shop equipment.
Job uncertainty, skyrocketing unemployment and the credit crunch is what has made cars that don't sell.
Even Toyota, (who was number 1 last year) is in trouble and has asked the Japanese government for a "Bail-Out" ... but the media doesn't report that they lost 437 billion yen last year. (4.5 billion dollars)
quote:On a consolidated basis, net revenues for the fiscal year ended March 31, 2009 totaled 20.53 trillion yen, a decrease of 21.9 percent compared to the last fiscal year. Operating income decreased from 2.27 trillion yen to a loss of 461 billion yen, and income before income taxes, minority interest and equity in earnings of affiliated companies was a loss of 560.4 billion yen. Net income decreased from 1.72 trillion yen to a loss of 437 billion yen.
Source: http://www.toyota.com/about/news/corporate/2009/05/08-1-FinResults.html
That is a $4,584,172,541 loss in US Dollar's
So does that mean Toyota is also building cars no one wants to buy?
One of the biggest problems is that over the last few years, insurance companies have had to make big pay-outs over natural disasters ... hurricanes Frances, Rita, Katrina and Ike cost hundreds of billions of dollars ... California fires and landslides, another big chunk ... Tornadoes across the Midwest ... it goes on and on.
This leads to a Credit Crunch.
Banks tighten lending practices-es to like that of the 70's ... when you couldn't buy a car or a house unless you had 20% down, and it had been in the bank for at least a year ... then you were glad to get a 10% rate!
I guarantee you, there may be a glut of cars on the market now, but in a few months ... after the factories have been shut down for a while people will be screaming that they can't get a car ... those that still have jobs anyway.
This country is built on the housing and auto industry.
There are a some, but "Factory Stores" don't work and that was proven back in the 70's. Management teams don't have the investment at risk that owners do.
99% of car/truck dealerships are privately owned and shutting them down is going to nothing but help the big dealers survive the storm ... because the little small town dealers will be gone.
? otherwise, you'll find an excuse.
Or so they think.
I see less new cars sold because of the high prices. People will just hold onto and keep repairing their old cars.
New cars will see one hell of a reduction in value as soon as it leaves the dealers lot. Making used cars seem like a real deal.
They are cutting their own throats.
Whom do these UAW workers plan to ship these cars to? If the dealerships aren't getting the orders, then what happens to the cars?
The manufacturers think there are too many dealers. They have to give big incentives to sell vehicles.
In other words, if you have to include a $8,000 incentive to sell a $30,000 vehicle, that vehicle is ACTUALLY WORTH $22,000 in the open market.
What the manufacturers need to do is figure out how to sell it for $22K and make a profit. Instead, they are going to close businesses, lay people off, and engage in PRICE-FIXING, which is supposed to be illegal.
When they are finished, that $30,000 vehicle will sell for $30,000, because there won't be 8 dealers within easy driving distance. That vehicle will be available from ONE dealer situated less than 100 miles from your house. That dealer will have only a few of those vehicles to choose from, and people coming from 100 miles around to look and buy.
The surviving dealers will have no reason to bargain anymore. Buying a GM or Chrysler will be like buying a Toyota in the 1970s.
Sticker plus pack plus dealer prep plus dealer expense plus anything else they can think of to add on..
I have toi laugh at all who say "buy American". Which one would that be? Toyota typically has more "made in America" content than any of the three "Americam" car companies.
When I think "Buy American" I think of where the money goes.
So if GM were to move its "Home Office" to Canada or Mexico ... they too are an "import"
? otherwise, you'll find an excuse.