Dealership consolidation

[kaks]

Well September 2010 has come and gone and doesn't look like Chrysler is sticking to their guns about stand alone Dodge, Jeep, or Chrysler dealers. What's up with that???

[steve_biegler]

Originally Posted by kaks

Well September 2010 has come and gone and doesn't look like Chrysler is sticking to their guns about stand alone Dodge, Jeep, or Chrysler dealers. What's up with that???

State franchise laws are back in effect....thats whats up! Makes it hard for them to steal businesses from people.

[XDCX]

Originally Posted by kaks

Well September 2010 has come and gone and doesn't look like Chrysler is sticking to their guns about stand alone Dodge, Jeep, or Chrysler dealers. What's up with that???

As I recall, Grady's indicated in the past that 100% of Chrysler's U.S. Dealer Network will be full-line CJDR by the end of 2011. When you think about it, it's really not too far away and I haven't heard much chatter about any consolidation efforts.

Originally Posted by steve_biegler

State franchise laws are back in effect....thats whats up! Makes it hard for them to steal businesses from people.

Exactly.

I think it will be interesting to see what happens with Ford's plans to reduce 40% of their Lincoln stores in the metro markets. Without the total control that bankruptcy provides Ford may find it's hard to convince dealers to walk away and take a buy-out check.

In fact, I've been thinking about writing a Press Release and inviting the Lincoln Dealers to the forum. I think there's a lot they could learn from the 789 terminated Chrysler dealers - mostly that it's more difficult to run a stand-alone used car operation than it appears.

[Noah]

A minor (but crucial) adjustment to your comment above:

"I think that there's a lot they could learn from the 789 terminated Chrysler dealers - mostly that it's more difficult to run a stand-alone used car operation than it appears" ...particularly given the size of facility that these dealers operate from, and the fixed costs associated with the square-footage associated with stores sized as mainline new car retail operations.

Respectfully:
It's not any harder to sell used cars than it is to sell new ones. People are people, if you can sell you can sell; the rejected 789 were/are smart dealers who know how to move metal. But it is exponentially more diffult to make money doing so, when your fixed cost nut is associated with the revenue stream of a new car franchise. Particularly, the high-gross revenue that flows though the service dept as a result of a 'captive' customer base coming in for warranty service.

[CL Pgh]

Originally Posted by kaks

Well September 2010 has come and gone and doesn't look like Chrysler is sticking to their guns about stand alone Dodge, Jeep, or Chrysler dealers. What's up with that???

On the bright side... you won't be signing the new Dealer Agreement... and let me tell you... It Is Not Nice!!!

[XDCX]

Originally Posted by Noah

A minor (but crucial) adjustment to your comment above:

"I think that there's a lot they could learn from the 789 terminated Chrysler dealers - mostly that it's more difficult to run a stand-alone used car operation than it appears" ...particularly given the size of facility that these dealers operate from, and the fixed costs associated with the square-footage associated with stores sized as mainline new car retail operations.

Respectfully:
It's not any harder to sell used cars than it is to sell new ones. People are people, if you can sell you can sell; the rejected 789 were/are smart dealers who know how to move metal. But it is exponentially more diffult to make money doing so, when your fixed cost nut is associated with the revenue stream of a new car franchise. Particularly, the high-gross revenue that flows though the service dept as a result of a 'captive' customer base coming in for warranty service.

Excellent comment - I agree 100%.

I know there were a lot of companies that wanted to help the OLDCO dealers fill the void in the service department - NAPA, Midas, Sears, Autostar, etc. but I don't know how successful they've been.

I've also heard from dealers who kept their service department open that it was hard to offset the loss of warranty work. Many of their loyal customers would go to a franchised dealer because they wanted to get warranty and retial repairs addressed at the same time.