DealershipForum.com - View Single Post - Virginia Chevrolet Dealer to close due to GM's Facility Demands

Lakeshow · 05-09-2013, 04:26 PM

I had an interesting conversation with a long time dealer friend yesterday as I was having some warranty issues taken care of at his dealership. They are a smaller dealer like us, averaging 120-150 new GM units per year in a town of 10k people. Since BK they have averaged 180-200 new units, most of the increase is due to the new deliveries we are doing through their dealership; and also because three smaller dealers within 60 miles were closed during BK or quit within the last couple years.

They recently completed a $1,000,000 remodel per GM's EBE program, so recent that the grand reopening isn't until next week. As we discussed the remodel, GM, and the current state of the industry he pulls out a large three ring binder he's compiled. The man has been in the business 60 years next week, a former NADA President, and a former CPA. According to his figures with the new car margins where they are at now, running a profitable service and parts dept; a dealer meeting GM's standards will have to sell a minimum of 200 new vehicles per year to stay viable. Or as he put it, "to make enough money to put up with the bull****." He estimates at 200 new units per year from 2010 to 2016 they can recoup approximately 60% of the remodel costs through the EBE program.

Obviously this number is based off his dealership and their overhead/profits, and variable for every dealer. The building they remodeled was 20 years old and fully paid for. But after looking through his binder I could see exactly how he came up with this figure, and how it's a pretty good number across the board.

So you smaller guys still with GM, is 200 units really the new magic number for a small rural dealer? Or is that high due to his cost of this "optional" program? If it is the new magic number, these closure threads will be more common every day, at least for dealers in our area.

05-09-2013, 04:26 PM	#31
Lakeshow Senior Member Join Date: Oct 2010 Posts: 217	I had an interesting conversation with a long time dealer friend yesterday as I was having some warranty issues taken care of at his dealership. They are a smaller dealer like us, averaging 120-150 new GM units per year in a town of 10k people. Since BK they have averaged 180-200 new units, most of the increase is due to the new deliveries we are doing through their dealership; and also because three smaller dealers within 60 miles were closed during BK or quit within the last couple years. They recently completed a $1,000,000 remodel per GM's EBE program, so recent that the grand reopening isn't until next week. As we discussed the remodel, GM, and the current state of the industry he pulls out a large three ring binder he's compiled. The man has been in the business 60 years next week, a former NADA President, and a former CPA. According to his figures with the new car margins where they are at now, running a profitable service and parts dept; a dealer meeting GM's standards will have to sell a minimum of 200 new vehicles per year to stay viable. Or as he put it, "to make enough money to put up with the bull****." He estimates at 200 new units per year from 2010 to 2016 they can recoup approximately 60% of the remodel costs through the EBE program. Obviously this number is based off his dealership and their overhead/profits, and variable for every dealer. The building they remodeled was 20 years old and fully paid for. But after looking through his binder I could see exactly how he came up with this figure, and how it's a pretty good number across the board. So you smaller guys still with GM, is 200 units really the new magic number for a small rural dealer? Or is that high due to his cost of this "optional" program? If it is the new magic number, these closure threads will be more common every day, at least for dealers in our area.