NewsTalk

Welcome to the archives for NewsTalk, an IBJ blog published from November 2007 through December 2010.

The plethora of car dealers

December 3, 2008
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Open a local phone book or punch in a Google search on car dealers, and itâ??s immediately apparent Detroit companies have many, many more dealers than their foreign competitors.

Chevrolet and Ford, for instance, each have more than a dozen dealers in the Indianapolis area. Honda and Toyota have only four each.

Thatâ??s a problem for the domestics as they struggle to return to profitability.

Too many choices put consumers in the driverâ??s seat as they play dealers against each other on price. Cheapened products erode not only profits but also cachet, which forces even deeper discounts. General Motors had so debased itself several years ago that the Wall Street Journal pronounced it the Wal-Mart of the auto industry.

The Detroit carmakers plan to cut dealer numbers as part of the emergency turnaround plans theyâ??re shopping to Congress. GM alone says it will shed at least 1,700, or about a fourth of the current number.

When the dust settles, where should the Detroit companies position themselves? Should they meet the foreign competitors with only one big dealership on each side of town? Should they have more, and if so, how many more?
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