Hundreds Of Car Dealerships Are Apparently Doomed
After the failure of the nation's largest Chevy dealerships brought the plight of the car dealer to everyone's attention, the bleeding hasn't stopped. The California New Car Dealers Association says dozens of dealerships in CA have also closed.
"I've been doing this for 25 years in some form or another, and I have never seen consolidation like this going on," said Peter Welch, association president.
The National Automobile Dealers Association says that they expect 600 dealerships to close this year, and domestic dealerships are going to be the hardest hit. There are just too many dealerships and not enough market share for domestic cars:
There were just too many GM dealers chasing dwindling market share, he said. GM commanded 40 percent of the market in the 1980s, selling cars through 7,000 dealerships. But while GM's slice of the market tumbled by 40 percent or more, the number of dealers has declined by 1 or 2 percent, Mattia said.
"The dealers will have to suck it up and go away," said Mattia, who now leads Auto Engage, a consulting firm for dealers and manufacturers. "It wouldn't surprise me if we didn't have a nationwide loss of 10 percent of the dealers."
Economy forcing more car dealers to close [SFGate] (Thanks, Big Keytee!)
(Photo: amanjo )
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I'm not sure how I am going to get through the day after hearing this horible news.
We've got to move past the paradigm whereby vehicles can only be sold via dealerships. Allow manufactures to sell directly to consumers, where consumers can pick the specific features they want, without greasy salesmen upselling worthless crap.
This surely will hit the giant inflatable promotional balloon business hard.
Los Gatos Chevy closed yesterday...
Not that I am shedding any tears. Sunnyvale Jeep closed a month ago. Good. Both were high pressure joints. Maybe the car sales industry will work to improve service.
Wow, this would be a great time to buy a car, if GM sold anything worth buying.
oh noes! Fewer places to buy shitty American cars. Whatever shall I do?
Wait, I know. I'll snicker as I drive by in my gas-sipping foreign car.
This doesn't seem to have deterred crazy deals to try and move inventory as fast as possible. A couple weekends ago in the San Antonio, TX area a dealership was having a literal buy one get one free sale. Buy a Truck and get a free PT cruiser with it!
@GMFish:
Made to order car? That would be fantastic, though a purchase like a car really requires a place for you to see what you're buying in person. It would be an interesting model for dealerships just to be showrooms, where you walk in, poke around at the cars there, make your purchase, and a week or two later a big truck pulls up and your car arrives at your front door. No need for inventory storage, or a bunch of crazy sales people, cuz now the people there can be paid a salary and just be there to help the consumer, while the automaker deals with the money aspect. It doesn't look like import dealerships are being hit as hard however... hmm...
Weirdly enough, I think GM's sales are up a little. Or at least not down nearly as much as they anticipated.
I'd like to be able to purchase a car online and have shipped to my house. Cut out the middle man, dealers are not needed. Just have a GM/FORD/CHRYSLER showroom where you can kick the tires, sit in the car and test drive and then go home and order it.
@B: I know. Ever since they re-absorbed Saturn, I've been less-than-enchanted with the selection of vehicles and their sales pitch.
Of course, it would be nice to buy a car by any manufacturer if the banks would be willing to loan the money. Even that's drying up.
Chevy dealer near us went belly up. Several other dealers have lots choked with cars. Makes me wish I had the cash for a heft down-payment.
Woohoo, if this continues it might save the domestic auto-makers. Dealers and automakers are often at odds with each other, and this has resulted in quite a bit of brand engineering over the years (recent examples include Pontiac G3 / G5 - Chevy Aveo / Cobalt, Ford Escape - Mercury Mariner - Mazda Tribute, etc...). Even if it doesn't save them, I'm still glad to see this scummy, parasitic organizations disappearing. It would be great if this created a new paradigm in car sales with factory owned show-rooms and internet / showroom ordering. To the one honest car dealership that I'm sure exists somewhere - sorry you're falling on hard times, but it's for a greater cause.
@VA_White: I'm curious, what's your gas sipping foreign car? A new Corolla? Not bad with 26 / 35 mpg rating. Wait, a Chevy Cobalt is rated 25 / 37? A Ford Focus is 24 / 35? Why don't you head on over to fueleconomy.gov, and you can dispel some of your ignorant anti-domestic sentiments.
GM and Ford have simply not kept up with design and consumer expectations. Save for their trucks and the Corvette, and that's even a stretch, there isn't a single american car I would even consider buying as a 25 year old male. The designs are nowhere near what the european and japanese companies have done, and their fuel efficiency and reliability is generally lower. While some of the American cars appeal to the older generation, they are, in my opinion, less likely to be buying cars frequently. Just compare a high-end Chrysler 300M to even a low end Lexus or Audi. The American cars are full of big, clunky buttons and dials. The Euro and Jap. cars have nice clean lines, better features for less money (generally) and better economy. In my experience, they are also more reliable. I just can't see how most of the American cars appeal to anyone who is younger and has the income to make a choice (i.e. buying new). I'm not surprised at all that the dealers are failing. They depend on the manufacturers to produce a salable product to survive. They manufacturers aren't keeping up their end, and all are paying the price.
@Pylon83: My parents in law recently traded their Chevy for a Toyota after it was totaled in an accident. They took it as an opportunity to price shop, and they found a drastic difference in American vehicles and the Toyota they ended up buying. It's true, it's really just a matter of offering better quality and keeping up with the times.
@rpm773: and don't forget about those poor souls who own the wacky waving inflatable arms flailing tube men.
all of you talking about going home and ordering a car, what would you then do with your trade???
Grammar police here:
"It wouldn't surprise me if we didn't have a nationwide loss of 10 percent of the dealers."
Does that mean it would surprise him if we did lose 10 percent? That seems to be the opposite of his point! Maybe he's expecting more?
This problem isnt entirely because of the car dealerships. The problem is that because of the economic crisis, credit markets are drying up. Consumers are having difficulty getting credit to buy the vehicles.
@Onion_Volcano: try carsdirect.com
We bought a Nissan Murano a few years back from that website - got exactly what we wanted and had a very nice older couple deliver it to us. We signed a few documents while sitting in OUR dining room - no "finance manager" to consult, etc.
The best part? Test driving at dealerships and then walking away...
@IHaveAFreezeRay:
Speaking of accidents, many Euro and Jap. cars are much safer. My Audi A4 had a ton of safety features that most American cars don't have. Beyond that, many foreign countries have much stricter standards on car safety, in part because some of them have Autobahn type roads where people drive 100+ on a regular basis.
@nataku83: Isn't that what Saturn was supposed to be about when it started? A car with no hassle pricing -- either take it or leave it.
Sorry, but I don't see the auto industry as capable in creating a flat distribution system. Not the US auto industry anyway.
Remember Nissan lost more in terms of % sale last month than any domestic and Toyota was neck and neck with Ford and Chrysler. The economy isn't just hurting american brands. This is a different trend than the high gas prices from the summer.
(cross-posted from the Jalopnik thread)
In the last few months we've had the following happen in Auburn, CA (a small town just outside of Sacramento):
-Auburn Nissan moved into a much larger building, then closed for good a few weeks later.
-Maita Ford shut its doors without warning last week, putting nearly four dozen people out of work, including my father-in-law. The Maita group is still operating in Sacramento.
-After dumping Mazda a few years ago, the Crossroads Auto Center suddenly stopped selling Volkswagens. They only peddle Pontiac and GMC now, so it's probably just a matter of time before they close as well.
@GMFish: While I love this idea, I'm not sure how feasible it would be. The biggest problem comes in the delivery of the vehicle. I think it would be cost prohibitive to deliver a vehicle directly to your home. I can't see a cost effective model where a car manufacturer is driving a semi-truck to your house to deliver a vehicle.
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Dealerships are the armpits of the auto industry. I liked to watch "King of Cars" because I love reality TV, but inevitability in every episode they would pressure people into buying with excessive interest rates. Bait and switch, you name it. Dealerships just suck! All they do is take advantage of the weak and un-savvy consumer. Before anyone starts up, don't even try and blame the consumer! Why can't buying a car be like buying an iPod? With very little fluctuation in the price.
@MattO:
Gee MattO...how about selling the car yourself? That way you can make even more money than if you trade it in to a dealer thats just going to turn around and sell your trade it for 20% more.
@jwissick: I used to live in Los gatos... if the Ferrari dealership closes, then I know we're in for serious trouble.
@NefariousNewt: The new Malibu is supposed to be easily as good as any foreign car and you can count the Corvette, their pickups and SUVs as being as good as anybody else's for the price.
@Meggers: They can always take the arms off and paint them pink and rent them to adult video stores. God knows there are enough of those where I live.
I don't understand why they are closing. Am I the only person who enjoys dealing with a scum of the earth salesman and his scum bag manager so that I can pay $20,000+ for something that will drop in value by $2,000+ the second I drive off the lot?
If there's any higher power worth believing in, Kia of Greer and Toyota of Greer (South Carolina) will both die a horrible, fiery death. The consumers of the upstate deserve a break from their reign of terror and horrible TV/radio advertisements.
Regardless of how shitty car dealerships and salesmen are (and yes, they are shitty) the fact remains that there are too many dealerships selling too many cars. GM wants to retain its "leadership" role of being the world's largest manufacturer, but that's a fool's errand. They should have put a cap/limit on the # of dealerships years ago and ironically they would likely be selling more cars today.
@MattO:
Let it rust on the lawn with the last 9 cars I didn't know what to do with because apparently I'm too stupid to craigslist or classified?
@GMFish: You don't like the TruCoat? The nice dealer told me if I don't get it, I'll get oxidation problems! Then again, we did have a deal at nineteen-five, but that sealant is installed at the factory, nothing they could do...
Let's all observe a moment of silence so we can reflect on all the out of work foursquares across the nation.
@djsyndrome: In other news, without the auto mall industry, Auburn must turn to its burgeoning "extract money from people going to more important places via I-80" industry.
(*written as someone who grew up in Nevada City, a far less important place than auburn :) ).
@DeborahJackal: So? I mean, a PT Cruiser is like getting a free keychain...fuckin' weak-ass tin can of a car...I only drive cars built like tanks
but what happens to all the used-car salespeople? they can't go into 'financial services', like they used to...
When does their bailout bill come?
Oh wait, didnt we already give the automakers a 25 billion dollar bailout?