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Dude, where did all the dealerships go?

in General
One thing that seems certain to happen whether or not the domestics get their bailout is that we will lose a lot of dealerships this year and next, and almost all will be domestic dealers. Indeed, this seems to be almost fortuitous for all three U.S. automakers, who need so desperately for their dealer networks to shrink.
On the news tonight, they announced that here in California in October alone, 70 new car dealerships went out of business. That makes 97 for the year through October 31 in California. The latest here in the Bay Area was San Francisco Chrysler Dodge Jeep, which went belly up today. I bet the count for California is over 100 by now.
But it's certainly not limited to California. A quick Google search gets you hundreds of hits of news reports on dealerships closing all over the country. Here are just a couple....
Midlothian (Illinois?): http://www.suntimes.com/business/1286854,111908sunrise.article
Leonardtown, MD: http://www.newsweek.com/id/165378
And of course, the famous Bill Heard Chevrolet: http://jalopnik.com/5056225/exclusive-inside-the-fall-of-bill-heard-chevrolet-th- - - - - e-worlds-largest-chevy-dealership
NADA is initially estimating that some 700 will close this year, which would be 50% higher than last year, yet still seems to be underestimating the loss. Some think it might be much much higher...
Michael Jackson, CEO of the nation's largest dealer group, AutoNation Inc., estimates nearly 1,000 stores will close this year with another 1,000 closing in 2009.
Mark Rikess, an automotive retail consultant and analyst believes the industry will lose close to 2,500 dealerships by the end of 2009.
A study by Grant Thornton LLP Corporate Advisory and Restructuring Services concludes nearly 3,800 stores will have to close just for dealerships to maintain the industry's 2007 average of selling 750 units per dealership in 2009.
Some dealers tell Ward's they think nearly 8,000 dealerships could be wiped out. Watching that many dealerships disappear is unlikely, but the fact some dealers are thinking it describes the uncertainty many of them have regarding their survival.
http://wardsdealer.com/ar/auto_dying_dealerships/
So the question I have is whether this was ultimately inevitable, given that the ones closing up shop are almost exclusively domestic brands. GM has 7000 dealers and a market share of 22%. Toyota has 1200 dealers and a market share of what, high teens? Toyota has always said publicly that one of the keys to the strong health of its dealer body was the high per-store sales rate, and that it takes great pains not to allow stores to be too close together or infringe on each other.
Is this wave of dealership failures a favor in disguise for the domestic automakers? Or should these dealers be getting a taste of all this bailout money floating around? There were 20,700 dealers in this country at the start of the year, according to NADA. There may be 2000-4000 less by the end of 2009. Or perhaps we could lose even more than 4000. Should something be done, can something be done? Or do we sit back and let free market principles do their job, and add thousands and thousands of people to the unemployment rolls? What do you think?
On the news tonight, they announced that here in California in October alone, 70 new car dealerships went out of business. That makes 97 for the year through October 31 in California. The latest here in the Bay Area was San Francisco Chrysler Dodge Jeep, which went belly up today. I bet the count for California is over 100 by now.
But it's certainly not limited to California. A quick Google search gets you hundreds of hits of news reports on dealerships closing all over the country. Here are just a couple....
Midlothian (Illinois?): http://www.suntimes.com/business/1286854,111908sunrise.article
Leonardtown, MD: http://www.newsweek.com/id/165378
And of course, the famous Bill Heard Chevrolet: http://jalopnik.com/5056225/exclusive-inside-the-fall-of-bill-heard-chevrolet-th- - - - - e-worlds-largest-chevy-dealership
NADA is initially estimating that some 700 will close this year, which would be 50% higher than last year, yet still seems to be underestimating the loss. Some think it might be much much higher...
Michael Jackson, CEO of the nation's largest dealer group, AutoNation Inc., estimates nearly 1,000 stores will close this year with another 1,000 closing in 2009.
Mark Rikess, an automotive retail consultant and analyst believes the industry will lose close to 2,500 dealerships by the end of 2009.
A study by Grant Thornton LLP Corporate Advisory and Restructuring Services concludes nearly 3,800 stores will have to close just for dealerships to maintain the industry's 2007 average of selling 750 units per dealership in 2009.
Some dealers tell Ward's they think nearly 8,000 dealerships could be wiped out. Watching that many dealerships disappear is unlikely, but the fact some dealers are thinking it describes the uncertainty many of them have regarding their survival.
http://wardsdealer.com/ar/auto_dying_dealerships/
So the question I have is whether this was ultimately inevitable, given that the ones closing up shop are almost exclusively domestic brands. GM has 7000 dealers and a market share of 22%. Toyota has 1200 dealers and a market share of what, high teens? Toyota has always said publicly that one of the keys to the strong health of its dealer body was the high per-store sales rate, and that it takes great pains not to allow stores to be too close together or infringe on each other.
Is this wave of dealership failures a favor in disguise for the domestic automakers? Or should these dealers be getting a taste of all this bailout money floating around? There were 20,700 dealers in this country at the start of the year, according to NADA. There may be 2000-4000 less by the end of 2009. Or perhaps we could lose even more than 4000. Should something be done, can something be done? Or do we sit back and let free market principles do their job, and add thousands and thousands of people to the unemployment rolls? What do you think?
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
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Comments
Maxine Waters is pushing for dealer financing support if the big 2.8 get a credit line from the government. If passed (that's extremely iffy), that won't help the domestics (don't throttle me for using the term) rightsize themselves into companies that can compete in the US market.
I do not like unemployment. I spent most of my 20s out of work, and without health benefits. But what is happening with the domestics now was written a long time ago (you can boost sales using passenger trucks, fleet sales and rebates for only so long).
I have been in towns with populations as small as 1000 that have their own Chevy and Ford dealer. In many cases, those towns are within 40 miles of a city with a population over 100,000, which has its own dealers, both domestic and import. What can really be the future of these tiny-town dealers?
OTOH, if as one is led to believe the service and used car sales are the main profit engines for dealerships, then I guess their future may yet be bright. People will always need service for their vehicles, and used car sales are much less dependent on captive financing from the manufacturers.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
I don't know what the details are, but the land under the dealership has been sold, so they're bailing out.
Edit....Wow, it happened quicker than I thought. I went to their website and see that they're already closed! http://www.saturnofbowie.com/
There's also a Chevy dealer behind them, and a Toyota dealer next door. Last time I was at the Chevy dealer was a few years ago when I had to get a power window switch for my truck. They were so dead that the $41.40 I spent on that switch was probably the most profit they made all day! :sick:
I don't know the Chevy dealer's story, but I wonder if the Toyota dealer is expanding?
The dealers I have been seeing going under are mostly Chevy, Ford, Chrysler/Jeep/Dodge, and Pontiac-Buick-GMC. I would have thought the Saturn dealers would have gone already that were going to go, back when they had no product to sell....
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
I think more of them will survive than you might expect. A car dealership can be run with no more than maybe half a dozen people on staff, and most of those small dealers don't have any debt to carry. The local Chevy dealer (where I bought the S2000) is more of a used-car dealership these days. They have a Prius on the main line in front of the building today.
Our local Caddy dealership has closed after maybe 30 years. They are still in business but only sell Chevrolets in their new car department. Meanwhile, down the road maybe a mile a new Hyundai dealership will be opening.
Up the road at the nearest big town the Chrysler dealership is gone. The Mitsubishi dealer has been gone for a while but that's been tried at least twice in the area and just never supported enough business even in the good times.
Should those dealers that are struggling get a piece of the bailout pie?
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
When a business doesn't plan for a downturn, it deserves to be swallowed up.
The other local dealers seem to be surviving in their locations. There are small startup highline used car dealers that seem to appear and fail every year or two.
But I think the big news is outright dealer atttrition, and certainly that is mostly what we have had in the Bay Area - dealers going away and NOT being picked up by a different dealer elsewhere.
In California Big 2 market share is only like 22% between the both of them, so it makes sense that there shouldn't be 3 Chevy and 3 Ford dealers for every Toyota dealer.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
It has happened here, one Metro point closed in the spring. Ford and the surrounding Metro Points participated in the buy out. The closer your store was to the closing point the more you paid.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
My money would be on the Chrysler dealership. He's got Chrysler and Dodge which leaves him with nothing new of interest to me. He does have a fair number of used cars but they are overwhelmingly Chrysler products as well.
The other dealers in town are a Pontiac-Buick-GMC and a big "family of dealerships" that sells Ford, Lincoln, Mercury, Jeep, Suzuki, Nissan and Honda. Maybe at one point he'll replace the Suzuki dealership with something else but he does seem to sell enough of the things.
Oh, and 8 Saturn dealers. Well, 7, as the finder included the now-closed Saturn of Bowie.
andre: you sure about those numbers? That sounds awfully high. A 25-mile radius is an area of 1962 square miles, or roughly 40x50. And as a for instance, I would be VERY surprised if Toyota allowed an area that size to have more than 10-12 dealers, even if it were very densely populated.
There is only one Cadillac dealership in my county, which also sells about five other brands including Hummer and Hyundai. They WERE making big plans last year for a major expansion of teh Hyundai portion, but those seem to have fizzled out. They are still selling the Hyundais out of a shack on wheels out past the end of the lot for the other brands. it's no wonder they don't sell very many - Hyundai is obviously the redheaded stepchild over there!
In the next county over, all of the Buick and GMC dealers have gone in the last 2 years, although one of those dealers continues to sell Cadillac and Mazda and appears to have very recently picked up Pontiac. How about THAT for a mix? Pontiac-Mazda-Cadillac.
I think I would rather see bailout money for these dealerships than for the automakers: half of these dealerships are small family businesses and all of them provide other services that they could continue in order to be viable (especially service and repair including manufacturer warranty work). These are local businesses that impact my friends and neighbors and are being strained through no fault of their own.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Just for the heck of it I checked and there are two Ford dealers within 25 miles of me. If you expand it to 28 miles you get three more including one that's just Lincoln Mercury.
Well, that's what the internet said, and it wouldn't lie, would it? :P One thing though, the way these mapping things work, it's 25 miles as the crow flies. For instance, it plotted the dealership I bought my Intrepid from at around 12 miles away. It's more like 16-17. So I'd say that some of these places that the mapping features thought were only 25 miles could really be more like 30 or even 35 to drive them.
Still, a 25 mile radius from my zipcode, 20769, basically encompasses my whole county. Also everything within the Washington DC Beltway, which includes parts of Virginia. About half of Baltimore also fell into that swoop. Going into southern Maryland, it just swallows up Waldorf, which I think is the biggest town down there. And going east, it just reaches across the Chesapeake Bay. So I'd imagine there's about 2 million residents, if not more, within the boundaries of that radius.
Also, some of them are paired up. For instance, the dealer I bought my Intrepid from also sells Chevies. Interestingly, just a few years ago, a disproportionate amount of their business was Dodge. So now with Chrysler's fallout, I wonder how they're faring?
Even so, there were (in the Baltimore area) four long-standing, new-car dealerships or dealership chains went bust over the past three years. No new Ford/Lincoln/Mercury, Kia, VW, or Suzuki products can be bought in the city. If you're a young 'un in the city who wants a new car, the bus can be taken to the local Toyota (1) or Chevy/Pontiac/Buick/Honda (1) dealer.
One thing I DO expect to disappear is Lincoln Mercury dealers - I expect they will mostly be consolidated into Ford dealerships. None of the new Lincolns has really hit the sales sweet spot including the very latest ones.
Dealers that WANT to consolidate and are not being assisted in doing so by the manufacturer would be another group I think should be eligible for some bailout money, before we hand billions to corporate execs at the automakers.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
20 miles isn't far. I would think Toyota likes it that way.
Some of the luxury brands aren't even in te county - Lexus, Infiniti, Acura. We used to have BMW, Mercedes, Porsche and Audi franchises up by the Toyota dealer is but they've been gone for years.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
"At least nine Orange County auto dealers – selling Chevrolets, Chryslers, Dodges, Nissans, Saturns and other brands – have closed since January, brought down by sluggish sales and tight credit."
It isn't likely to get better anytime soon and I wouldn't be surprised if more dealerships close. But the used car market should blossom.
Imported vehicles piling up at ports of entry
I would think that Toyota would want to get those Priuses out of the port and into dealers...
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
I'm sure they are well protected with Cosmoline. :P
Every tire is probably pumped up to 60 psi too.
Hahaha. They do put a plastic cover of some kind on the hood and trunk I believe. But the roof is pretty much unprotected. We used to live in the area and the air is a killer on paint jobs. After a week you would have thought we had been off road in our car. I used to wash my car at least once a week.
But it is a strange site to see those lots so full. The article pretty much indicates that the manufacturers are trying to rent space form the container yards. US lines, Matson, Meserk, Sea Train are all down there. There is just no space to store all of those cars and the dealers don't want them. Like the one truck driver said they can't even take them out of state because those dealers no longer want them.
in the detroit area, it seemed like every available previously open lot was filled with chryslers.
Stick some T-111 siding on the containers and you can sell every car complete with its own garage.
Honda and Toyota are both running extra incentive programs right now that are unusual in their timing (Honda in particular is usually as regular as clockwork). I wonder if it is helping their dealers at all. Will GM be able to continue doing the same thing for its dealers if the money doesn't come through from Congress in December?
I wish there were an easy way to look up the mix of import vs domestic dealers that are disappearing. We lost our Nissan dealer in my county about two years ago, another one that just went in the middle of the night. But the one in the next county over actually ended up expanding his business as a result. Aside from that, I can't think of any import dealers we have lost locally.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
I think the dealers should be ahead of the Big 3 corporate for handouts. After all they are stuck with what ever crap the automaker sends them. They can't sell what no one wants. They are the first to lose money. They probably are not even considered because they don't have a large voting block.
Could be some of both. At 90 days some of them got there late August. But I would imagine the same thing will happen with these cars as the Chryslers you talked about, big discounts when they start flowing. At least they should be discounted after sitting that long.
I am wondering if such dealer consolidation (diversification?) will help protect the companies and help them weather the storm. Is this type of situation common elsewhere? I notice it in the nearby cities. We haven't lost a new car dealer in a while locally. Just last week though, a Dodge dealer announced their closing after 40 years in business. They were one of the few remaining stand alone Dodge dealers left anywhere, so I guess the writing has been on the wall for a while for them.
Yes, I have been thinking it would do just that, and that is one thing I think some bailout money could be put towards - helping them to do that.
With the $20 billion we gave Citibank yesterday, their total is now at $45 billion. Just think how many struggling dealers you could help with a sum of money like that. And that would still be less than they are proposing to give to automakers, who will take the money and make it disappear, only to be back at our door asking for more next year....
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Again, I think Ford realized a couple of years ago that business as usual was not going to work and is making the necessary changes. Wagoner should be talking to Mulally more.
So the gentleman mentions that they are planning to move to a better location closer to my house, but plans are on hold "for a few months" as the credit situation shakes out.
Still they are producing more cars than we are buying and I don't believe we can see the end of the tunnel yet. Right now there is just about no deal they could offer me to get me into the showroom and I know I am not alone. Zero interest sounds good but loans can be a bear to get.
That being said if they started selling some of these sub compacts for under 9 or 10k and I could drop cash on the hood maybe I would think about it. But in truth most of the Small cars simply aren't worth more than 9k considering what they offer and at $2.00 a gallon they aren't as interesting.
Damn. I wonder if they ended up getting the Chevy dealer, too? :surprise:
Saturn dealers might have a brighter future if GM manages the sale of the brand as the new turnaround plan envisions. Apparently there are about 500 of them across the country, not a whole lot when you think about it.....
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)