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Old 03-23-2011, 09:55 AM   #1
XDCX
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Default Are 15% of Hyundai's Dealers losing money?

There was an interesting article in Automotive News concerning the profitability of the Hyundai dealers in the U.S. According to the report, Hyundai's U.S. Sales Manager, Dave Zuchowski, indicated approximately 15% of the dealerships are losing money. (He stated about 85% were in the black)

I was amazed at that statistic, I would have thought almost 100% of the dealers would be profitable.

The reasons cited in the article included a relatively low absorption rate and a low used/new sales ratio. There were also comments that many customers don't think to shop a Hyundai dealer for a used car.

The report also indicated Hyundai has about 800 dealers in the U.S.
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Old 03-23-2011, 03:11 PM   #2
crowe
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I would be surprised if 15% are losing money. However I would love to compare the unprofitable dealers numbers this year to just a few years ago.

Both Hyundai & Kia have added several big hitter stores in the last year. With sales increases at existing stores, the addition of new stores & little increase in production inventory shortages have become a problem. Which dealers do you think are getting the short end of the stick on allocation the new big hitters or the smaller existing stores?

Yes, all OMEs have the same mother.
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Old 03-24-2011, 05:24 AM   #3
rd3311
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HMA has known about service asorption issues since the late 80's, the free scheduled maintenance programs offered on and off since then were intended to address that issue. Used car sales are a different issue altogether, what has worked for us is stocking non Hyundai speciality type units (sports cars, loaded Ford trucks, accords, camrys etc) the certified pre-owned is good for gross deals, but Hyundai buyers are more interested in a new vehicle.

Kia is similar for us (at a different location where many retirees live) many lower end Rio 4drs auto a/c, Optima auto a/c, Soul all move, Sorrento all sell, Sportage same all move well, lot of cash deals due to local demographic. Service absorption for Kia is issue, you have to sell the maintenance, tires, etc like a Firestone store, not many big warranty r.o.'s.
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Old 03-24-2011, 09:16 AM   #4
XDCX
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Quote:
Originally Posted by crowe View Post
I would be surprised if 15% are losing money. However I would love to compare the unprofitable dealers numbers this year to just a few years ago.
The article made the same point and indicated that Hyundai's dealer profitability was hovering between 50% and 70% not too long ago.

Quote:
Originally Posted by crowe View Post
Both Hyundai & Kia have added several big hitter stores in the last year. With sales increases at existing stores, the addition of new stores & little increase in production inventory shortages have become a problem. Which dealers do you think are getting the short end of the stick on allocation the new big hitters or the smaller existing stores?
Interesting comment. The article also mentioned inventory shortages but didn't highlight your point concerning the big hitter stores. It's got to be frustrating watching some of the big stores hitting home runs by selling cars you can't get.
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Old 03-24-2011, 09:53 AM   #5
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Quote:
Originally Posted by rd3311 View Post
HMA has known about service asorption issues since the late 80's, the free scheduled maintenance programs offered on and off since then were intended to address that issue. Used car sales are a different issue altogether, what has worked for us is stocking non Hyundai speciality type units (sports cars, loaded Ford trucks, accords, camrys etc) the certified pre-owned is good for gross deals, but Hyundai buyers are more interested in a new vehicle.

Kia is similar for us (at a different location where many retirees live) many lower end Rio 4drs auto a/c, Optima auto a/c, Soul all move, Sorrento all sell, Sportage same all move well, lot of cash deals due to local demographic. Service absorption for Kia is issue, you have to sell the maintenance, tires, etc like a Firestone store, not many big warranty r.o.'s.
Great post - thanks for the information.

I wish we had more Hyundai/KIA dealers on the forum - it appears the products are great and dealer/factory relations are mostly positive too.

I like your used car strategy - that makes a lot of sense. I remember one of our members, I think it was crowe, used to keep a late model Camry in inventory and feature it in his advertising with a cheap price. The customers who shopped the used Camry discovered they could often drive a new KIA for less money.

Interesting comment about the retirees who are purchasing lower end KIAs with auto and AC. In the past that used to be a demographic which was very loyal to the Detroit OEMs.
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