[caddiedrummer]

What a sad day. Some of the best Dodge dealers in the country got shut down including my dealer who was number 104 out of thousands in sales. 2 of the best Viper techs on the east coast are out of work. A friend of mine whose grandfather started the oldest Dodge dealership in the US--over 90 years got the pink slip.

Why do I post this here? Because we are next. I guess Barry and and his boys don't understand that dealers are not a cost factor to the manufacturer. First he would not approve an advertising budget they needed during bankruptcy and now he makes it impossible to sell cars. Both our Dodge dealers got nailed so now we can't even get cars or service --this is insane.

 

[Cadillac Tony]

GM will be ending their Dealer agreement with approximately 1,200 Dealers starting tomorrow. Many will be standalone Pontiac and Saturn stores, but many will be Cadillac and Chevy Dealers in places where there's too many Dealers fighting for the same customers or stores that under perform in Customer Satisfaction and Sales. The UPS guy will not be popular tomorrow.

There will be plenty of news stories tomorrow afternoon about some BIG Dealers going down. It's terrible, but some of it will be justified. The average import Dealership sells 1,000 cars a year due to the small number of Dealers competing for the same clients, while many areas have 5 Chevy stores all trying to undercut each other, and only selling 200 cars a year. The ones who survive will be much more profitable.

 

[caddiedrummer]

If they follow the Chrysler model it won't matter how many Caddys you sell if you are a standalone Caddy dealer. My Dodge dealer was number 1 in the state in sales and got bounced.

 

[Razorecko]

Hey Tony, do you know what dealers will be cut through GM or is that something we will all find out tomorrow ?

 

[rjoffe]

Can someone explain to me how the number of dealerships affects the bottom line of the manufacturer?

 

[NormV]

Obummer! You know he runs these two companies especially GM where his admin is shuffling GM's hierarchy. The operational changes at GM were in the works in the next couple of years bumped up to a matter of months.

The money is made in used cars as they are more difficult to cross shop compared to new Cars.

Norm

 

[Krug Ford]

hopefully its not us Tony..

 

[proexpert]

Sad times for all car people including suppliers and dealers.

Good luck to Scott and Tony, hope you guys make big money selling Cadillac's for a long time.

 

[Vrocks]

At least with GM they said they'd base it off of quantifiable data i.e. capitalization, customer satisfaction index, a new facility...

I also think it depends on what franchise it is that you own. If it's Cadillac; being standalone to me is a positive, because you don't want to mix in the other brands. If you're a standalone Buick, Pontiac, or GMC franchise I think you're in a bad situation (especially Pontiac).

Having said all that... I have a close relationship with my dealer (who happens to be in the top 50 nationwide, top in CSI, etc...) and if they arbitrarily terminate their franchise agreement, I'll definitely think twice about buying American. I won't just go to another Cadillac store that's close by.

 

[Formula57]

hopefully its not us Tony..

It just can't be either of you two. The forum would revolt and good luck to GM to try to sell any more CTS-V's!

Can someone explain to me how the number of dealerships affects the bottom line of the manufacturer?

Cadillac Tony pretty much addressed this above. More dealers in an area keeps the prices down. That means the manufacturer has a harder time to raise prices to keep up with the inflation (root caused to our expanding monetary supply - thanks for debasing my US Dollar, Federal Reserve!).

I guess Barry and and his boys don't understand that dealers are not a cost factor to the manufacturer.

I'm not defending Barry, but isn't this inevitable without it being "forced?" Let's assume the number of dealers was just about right for the number of cars sold a couple years ago. With less cars being manufactured today and going forward, doesn't that mean we suddenly have too many dealers for an "optimal" market?

 

[neuronbob]

What proexpert said, I 100% agree.

And jeez, cutting dealers is not Obama's fault. This is the endgame of what began in the 1970s, and those blaming Obama simply have short memories or a political agenda. It is the prior GM and Chrysler executives' collective fault for not following the lead of what made the foreign makers successful years ago.....good product at a reasonable price.

Why do you think I'm in a CTS-V? It's the BEST car in its class on the market, and I know, I've driven much of the competition, and it's reasonably priced for what it is. No, it's a STEAL at MSRP. I mean, the CTS-V is BRILLIANT. It even undercut its stablemate, the STS-V in price and OVERCUT it in performance. This car tells me what GM is capable of at its best. This is the same thing Acura and Lexus did when they started....great product at a reasonable price.

 

[Razorecko]

Agreed, This is not the administrations fault. I blame the :want: union

 

[rjoffe]

Sorry guys, I'm just not getting the economics here, I've never been anywhere near the auto business other then a consumer, so maybe some of you may enlighten me.

What I'm getting hung up on is this:

GM sells dealer A a car for $20,000.
GM sells dealer B same model for $20,000.
My assumption is that GM sells all dealers the same cars at the same price (maybe some difference in delivery costs).
If there are 10 people who are looking for that model, why does GM care if they buy it from one dealer or from 2+ dealers ?

What's the advantage to GM for selling all 10 cars to 1 dealer vs 2+ (other then the slightly higher delivery costs)

 

[4gear70]

Can someone explain to me how the number of dealerships affects the bottom line of the manufacturer?

According to some recent news articles, the manufacturer provides/provided the financing as well as continued dealership training (mechanical/sales etc). I guess there must be a substantial cost savings of not having to do this for ~1/4 of the dealers now.

 

[Cadillac Tony]

According to some recent news articles, the manufacturer provides/provided the financing as well as continued dealership training (mechanical/sales etc). I guess there must be a substantial cost savings of not having to do this for ~1/4 of the dealers now.

That's part of it. Part of it is also that when 5 Dealers are on top of each other and vying for the same customers, they have to slash their prices down to nothing in an effort to beat the guy up the road. When you can flip through the paper and find $10,000 off a car before you've even opened your mouth to start negotiating, this drives down perceived quality and resale value before the first car leaves the lot. Once the herd is culled to a reasonable number, GM dealers won't need to resort to firehouse sales to draw in the customers since the next Dealer is an hour or two away.

That's just one of the many "not so obvious" reasons that cars like Honda hold a higher % of resale. It's not because they're that much better- it's partially because the Dealers are spaced so far apart, they don't compete with themselves and they can hold their ground on their prices. In most cases, the GM Dealer in town isn't trying to undercut the competition from Ford, Honda or Toyota- he's trying to beat the other GM Dealer two blocks over.

 

[4gear70]

Those are just some of the sort of things that the average person will never realize. Thanks for that insight Tony! Hoping you guys stay in business for many years to come!

 

[commander112]

According to some recent news articles, the manufacturer provides/provided the financing as well as continued dealership training (mechanical/sales etc). I guess there must be a substantial cost savings of not having to do this for ~1/4 of the dealers now.

Also, shipping and delivery costs go down as you ship more product to one location instead of partial shipments to many. The reality is that the dealer networks were based on a time when the domestic manufacturers ruled the land and there were about 16-18 million cars sold per year. That is no longer the case.

 

[NormV]

And not to add not all dealerships are created equal. Reputation spreads quick. Maybe there is just more GM dealerships but there are plenty that their reputation precedes them and not in good light.

Norm

 

[Kadonny]

I'm actually all for this. I said early on in this mess that the number of dealers needed to be pared down. I have a friend who owns a Ford dealership. 2 years ago he was ready to close his doors, but a dealership maybe 4 miles away decided to close first. From that point on, his sales went up, his service went through the roof, and he is doing fairly well right now. It's all economy of locations.

That being said, I love my Caddy dealership and I hope they survive this cut....although I feel they will.

Scott, Tony, good luck to you guys.

 

[Cadillac Tony]

Thanks man. They're supposedly considering several factors when choosing Dealers to eliminate, including sales, market capitalization and CSI scores. This leads me to believe that part of this whole move is to retain only the Dealers who take good care of their customers and maintain high satisfaction ratings, which would help GM shed some of its reputation for bad service during and after the sale.

Considering where our CSI and market capitalization stand, I feel pretty secure about our part in the "New GM".