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?
  • With apologies to Seth Godin, to paraphrase a recent blog entry he made started me thinking. Know how many car companies there were at the start of the century..? Over a thousand..

    His philosophy, in which I agree, make it easy for Big 3 to declare bankruptcy..and make it easy for new companies to start, spin off divisions etc. Let that industry be remade like dot-com companies, let individuals, small companies figure out new ways to go to market, manufacture etc.

    Then you say..what about the dot-com bust..Yes, but that's what we have right now, and do you really think 25 billion takes care of all the archaic, ancient ways of doing business..?

    Yes, it's painful, but we will have several companies come out where it's not just the Big 3 with their family inherited dealerships.

    A recent poll said people would rather go to the dentist than go to dealership.!! There has to be a change, painful, yes but also inevitable and necessary.
  • Let the unions buy the companies. Nothing is better than being your own boss.
  • As a buyer, more dealers is better as it drives down price and improves service, and also makes access easier for repairs. Of course, if the manufacturers did not make warranty issues a pain, then taking it to a non-dealer for repair would make more sense. Maybe manufacturers should take a lesson from health insurance--develop a network of non dealers who agree to fix warranty issues and get paid a pre-set amount. (I can hear the dealer service manager gasp right about now.)

    As a manufacturer, fewer dealers is better because the manufacturer can control more and pricing will be higher at the dealer level, which is good for the manufacturer because dealers will require less support.

    Gotta comment on letting the unions buy the dealers. The unions will hopefully be gone after this, so they need a new place to take advantage of members and increase the cost of business until they are forced out of business by their own greed. Maybe the reason imports are popular is a problem of the unions' own creation.
  • GM has too many dealerships, and they don't cater to the customer. Ever taken a car in for warranty work....what a joke. Need a ride, or a free a Lexus.
    The bottom line is this, up until just the last year or so, they had too many car names for the same car, too many dealers selling the same cars under different monikers....and the worst was they used some of the same parts in the Cadillac they used in the chevy....Bail them out, how about kick their ass's out.
  • Al, are you comparing Chevy to Lexus? Really? Compare Cadillac to Lexus, and yes they do offer free loaners, they do offer free rides, they do have luxury lounges and they do deliver cars to customers homes. Of course some Chevy dealers offer the same things.
  • It still stinks that Sharp Ford closed. Thank God my car is out of warranty now, and I can take it anywhere for repairs. I hated driving 25 miles out of my way for warranty service. Certainly the Big 3 need to certify some non-dealer car care centers around town to do warranty work.

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