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10-28-2015, 04:04 PM | #1 |
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Automotive News story - The slow, steady demise of the small-town dealership
I finally had a chance to get caught up and read the following story that appeared in Automotive News: The slow, steady demise of the small-town dealership
Anyone who has followed the forum for a length of time knows that I've always had a "soft-spot" for the small-town rural dealers. As I've mentioned in the past some of the best people I've ever met in the car business were either running or owned small sized dealerships. As memory serves, I think Lee Iacocca even mentioned in one of his books that it was the small-town dealerships that kept Chrysler alive in the dark times of the late 70s and early 80s. While the metro stores were dropping like flies due to their higher rent factors and maxed-out floor lines the rural dealers were still supporting Chrysler by selling and ordering more cars. Here's a recap of the list detailed in the Automotive News story explaining the reasons for the decline: - Manufacturers' pricy facility improvements force small stores to close or sell.If you get a chance I'd encourage you to read the article and share your thoughts. |
10-28-2015, 04:14 PM | #2 |
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Two major factors were never reported....
While I enjoyed the Automotive News article and appreciated that they devoted resources to covering the story about the demise of the small-town dealership I think their coverage missed two MAJOR factors that are responsible for the trend and will likely cause it to continue or accelerate.
That said, I don't care how smart or resourceful a Dealer is, I believe that the two factors I listed above are 100% in the OEM's control and they alone will dictate whether small-town dealerships live or die. |
10-29-2015, 10:30 AM | #3 |
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you covered most of it.
two tier pricing based on arbitrary sales targets are the worst. struggle to get in the money, and all gross potential goes out the window to hit a goal. one gm dealer in the Midwest has blown up a two state mkt. using maximum gm money spiffs every month from unit one to keep the cash flowing. the area consumers are now discussing how stupid this is for gm to allow their programs to manipulated,, as they go there to buy their vehicles!! |
10-29-2015, 02:42 PM | #4 | |
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Quote:
Last edited by XDCX; 11-02-2015 at 09:57 AM. Reason: Fix quote tag to make the post easier to read |
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10-29-2015, 02:47 PM | #5 | |
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Quote:
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11-02-2015, 09:56 AM | #6 | |
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It reminds me of a time when a Dealer told me "Yeah, the customers love all of the benefits Five Star provides; they're just not willing to pay for it." Back to your example, the customers can see that a Factory originated program is hurting their local dealers but when it comes time to open their wallets they'll drive past their local dealer and support the store that's benefiting from a two-tier incentive. |
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11-02-2015, 10:05 AM | #7 | |
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I think Dealer/Factory relations changed a lot when Chrysler eliminated the Zone Offices and went to the Business Center concept. And to your point, almost 100% of the goodwill a Dealer has generated with the Factory can disappear when just a few of the Factory Guys either retire or leave the company. |
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11-02-2015, 10:12 AM | #8 | |
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While I think a smart Dealer can overcome the majority of the challenges that face small/rural Dealerships the one challenge that I think is insurmountable is two-tier pricing. I recall one thread on the forum (you may have been the author) that discussed the amount of trust that is lost when a local customer goes to their local dealership and asks for their best price. If the customer then takes that same deal to another store that's chasing their stair-step incentive the other dealer might beat the local dealer's "best price" by $1,000 or more. Customers don't understand two-tier pricing and they really don't care. In the above example the only logical conclusion the customer would reach is that their local dealer was trying to screw them over. |
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11-02-2015, 02:35 PM | #9 |
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your best friends shop,
your current customers shop, your family shops, everybody's trained to shop, two tier pricing potentially makes liars out of us all, and it most definitely confirms that all dealers cant be trusted. what seemingly all the mfgrs. don't get is that the customers bad feelings generated from two tier pricing experiences rub off on the perceived quality of their product and the "brand". |
11-02-2015, 04:31 PM | #10 |
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Yes, but remember, it "does not make LIARS of the FACTORY!"
Just who gets the blame when the customer calls the factory 800 # and complains?? |
11-03-2015, 09:26 AM | #11 | |
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I love how you identify the reality that almost every shops - regardless of how loyal they might be to their dealer. You also affirm that two tier pricing can make even the most honest dealer look like a thief and the bad feelings that follow impact the OEM and the brand too. |
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11-03-2015, 09:34 AM | #12 | |
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An exmaple of how allocation can hurt small/rural dealers
I was thinking of allocation issues and how they can have a detrimental effect on small/rural dealer and I remembered this post from the Challenger Hellcat thread:
Quote:
Essentially, why would a customer choose to support their local store if the factory doesn't even think enough of the dealer to provide the store with hot products? |
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