Go Back   DealershipForum.com > Dealer Talk > Automotive Discussions

Notices

Automotive Discussions Car People talking about the Car Business – This is the place where it happens

View Poll Results: What's the future look like for the Rural New Car Dealer?
Great - There will always be a need for a rural New Car Dealer 0 0%
Good - Rural Dealers will face the same challenges/opportunities as their Metro counterparts 1 5.26%
Fair - It will become harder for rural dealers to compete and some will eventually fail 6 31.58%
Poor - Rural dealers will slowly be wiped out by the OEM's two-tier pricing programs and facility demands 12 63.16%
Voters: 19. You may not vote on this poll

Reply
 
Thread Tools Display Modes
Old 04-18-2012, 10:21 AM   #1
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default What's the future look like for the Rural New Car Dealer?

What's the future look like for the Rural New Car Dealer?

With news that two Ford Dealerships recently closed in rural Georgia I wanted to create a thread and discuss what the future looks like for the New Car Dealers in rural America.

While there are clearly challenges for the rural dealers there are also advantages too - often real estate costs are lower, employees demand less pay, customers are more loyal and the overall quality of life for the Dealer Principal and the employees is much better.

What are your thoughts regarding the future for the rural New Car Dealer? Please take our poll and share your thoughts.
XDCX is offline   Reply With Quote
Old 04-18-2012, 10:21 AM   #2
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default What's the future look like for the Rural New Car Dealer?

News reports indicate that Dawson Motor Company, a Ford Dealer in Dawson, GA, will close down after being in business for 85 years. Here's a link to the news report - click here

This is the second Ford Dealer in rural Georgia to close in as many weeks. Last week Culpepper Ford in Thompson, GA announced they were closing after more than 60 years in business.

In the case of Culpepper Ford it appeared the closure was the dealer's decision as he grew tired of fighting a tough economy. In the case of Dawson Motor Company the report indicated the bank has taken control of the dealership and the employees are hopeful a larger dealership will buy the assets and keep the dealership operational.
XDCX is offline   Reply With Quote
Old 04-23-2012, 09:04 AM   #3
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default What's the future look like for the Rural New Car Dealer?

Quote:
Originally Posted by Lakeshow View Post
Unfortunately a sign of the times to come in my opinion. I'm surprised that both of these recent closures were Ford Dealers. Most of the Ford dealers I know closely have been cashing in on new sales since the Chrysler and GM debacle. It did sound like the local economy and poor management may have played a part.
Great comments - I'm inclined to agree that it may be a sign of the times but there may be other issues involved too.

It the reports were about two Suzuki dealers going out of business it would be understandable but Ford's such a strong franchise right now that I'm still somewhat surprised.

I wonder if there are any allocation issues or two tier pricing programs at Ford that make it harder for the smaller rural dealers to compete?

On a different note, one of the dealers commented that the Internet made it more difficult for him to compete with larger dealers. I do think that many customers search dealer inventories for the vehicle they like and then go to the dealer who has the vehicle they want in stock. I wonder if most customers know their local dealer can do a dealer locate/trade to get the customer the exact vehicle they want?
XDCX is offline   Reply With Quote
Old 04-24-2012, 08:55 AM   #4
DealerEx
Senior Member
 
Join Date: May 2009
Posts: 548
Unhappy

Quote:
Originally Posted by XDCX View Post
Great comments - I'm inclined to agree that it may be a sign of the times but there may be other issues involved too.


On a different note, one of the dealers commented that the Internet made it more difficult for him to compete with larger dealers. I do think that many customers search dealer inventories for the vehicle they like and then go to the dealer who has the vehicle they want in stock. I wonder if most customers know their local dealer can do a dealer locate/trade to get the customer the exact vehicle they want?
Myself, Possum and most all smaller, rural dealers understand his situation exactly. We could see the problem developing in our area 15 years ago, with the advent of a dealer chain operation that purchased stores from 50 to 100 miles from us. I was friends with the dealer principal, and was amazed to watch him take a very small rural store that had been selling less than 10 new per month for years, to 100 new per month in 6 months time.
They bought full page ads in every one of the weekly "shopper" papers within a 200 mile radius, and advertised prices far below invoice on every vehicle. In the fine print at the bottom of the ads (which was in reverse type and being printed on the cheapest newsprint was very hard to read) the disclosure said the prices listed did not include "mandatory dealer ads"... with no explanation as to what that entailed. I went up there (100 miles) one day and ate lunch with the dealer and asked him just what they were doing to produce such an increase almost overnight. He explained their strategy, which they had used sucessfully in a number of other stores, consisting of using price ads to get the customers to come to them, then relying on what he said were" the best closers and F&I people that money can buy" to make the deal. He had the former showroom crammed with desks end to end with about 15 salespeople working the phone lines.They pre-loaded every vehicle with aftermarket items such as bedliners, security systems, glass etching, paint and fabric sealant, etc...at big markups, and once they got the customer in the dealership, they were able to overcome the objections to the greatly increased price. He said that buyer psychology played a big part in being able to do that, because in most cases the buyer had already told his family and friends he was going there to get his new truck, and the salesperson would point out that they HAD driven a long way, and they DID have exactly the color and options they were wanting, the extra equipment was going to protect their "investment", etc...and they'd wind up driving it home. I told him , I'd get run out of town if tried to do that to my customers, and he said "sure YOU would...they all know you personally, they call you at home at night if they have a problem, and you have to live with'em and see'em everyday...I don't". He said we draw in buyers from as far as 300 miles away...we sell'em and we'll never see'em again. I experienced first hand the mindset of the customers who would come in with their ad, and ask me if I could sell them that 1 ton 4x4 diesel for that price. I would explain to them that no, I couldn't, but that they were not going to be able to purchase it at the ADVERTISED price there either, and explained to them about the "extras" they would have to pay for. They would insist that they had specifically asked the salesperson on the phone if they could buy THAT truck for THAT price and were assured they could, and that if they couldn't, they'd walk out. They drove home in a new truck instead. The big problem was that when they got back home, they couldn't admit to their friends that it was exactly like I'd told them it would be, so when their buddy said "see you got you a new truck from (local dealer ), huh? The buyer would say "uh, well no...I got it up at (chain dealer)". Buddy says "how come you didn't buy it here?". He can't say because I'm a dummy and I let'em screw me, so he says "well, I tried, but they sold me that truck for $1500 less than they could here"...without mentioning that he also purchased a service contract for $1500 more than I sold it for, along with the other inflated markups on the aftermarket stuff that grossed another $2500. That creates a viscious circle where the next time his buddy, who has always bought locally, gets ready to buy, he thinks, "hmmm, Ol' Joe said he saved a bunch of money up at that other dealer, maybe I should give'em a call and just see what they can do...and it all repeats itself. All of us watched our former customers driving up to our service depatments, in vehicles they bought from the chain store, to get US to fix their problems, because it was a 2 hour drive up there, and they were told they'd have to schedule an appointment a month in advance (because they still only had a couple of techs, who spent all there time doing make ready and adding aftermarket stuff). Over a period of 5 years, we all saw our sales numbers shrinking by 30-40% directly attribitable to those lost sales, and I started looking to get out because I knew I didn't want to do business that way, but would be unable to compete if I didn't.
DealerEx is offline   Reply With Quote
Old 04-24-2012, 01:01 PM   #5
lsx only
Senior Member
 
Join Date: Nov 2008
Posts: 371
Default

awesome post dealerx really good read
lsx only is offline   Reply With Quote
Old 04-24-2012, 01:26 PM   #6
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by lsx only View Post
awesome post dealerx really good read
I agree 100%.

In fact, I liked DealerEx's post so much I'm going to split this thread and create a new thread pondering what the future is for the rural new car dealer.

I think DealerEx has identified some key issues that are likely impacting rural new car dealers across the country.
XDCX is offline   Reply With Quote
Old 04-24-2012, 03:32 PM   #7
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by XDCX View Post
In fact, I liked DealerEx's post so much I'm going to split this thread and create a new thread pondering what the future is for the rural new car dealer.
Here's the new thread - Please take our poll and share your thoughts.
XDCX is offline   Reply With Quote
Old 04-24-2012, 05:37 PM   #8
ohiobuckeyes
Senior Member
 
Join Date: Oct 2009
Posts: 606
Default

This comment really to me hits the ball out of the park "As the retail world changes, small rural car dealerships are fast becoming extinct. The massive capital requirements, facility requirements of the car companies, and the customer demand for large inventory have pushed out the small local businesses. Take a close look at those left for they have a very uncertain future." This was left on my local newspaper's website when it was announced that Mull Motors was closing. And it's so true....
ohiobuckeyes is offline   Reply With Quote
Old 04-24-2012, 06:02 PM   #9
The StraightShooter
Senior Member
 
Join Date: Aug 2009
Posts: 518
Default

It's not just small dealers. It may take 20 years or more but the oem's will eventually take complete control of the retail process. Amazon.com has changed the world of retail forever.
The StraightShooter is offline   Reply With Quote
Old 04-24-2012, 06:21 PM   #10
Txflyer
Senior Member
 
Join Date: Jan 2009
Posts: 953
Default

DealerEX hit the nail on the head. Exactly why I'm in the insurance business now.
Txflyer is offline   Reply With Quote
Old 04-25-2012, 06:02 AM   #11
steve_biegler
Senior Member
 
Join Date: May 2010
Posts: 1,497
Default

The car business is not the only industry to have this sort of thing going on. Our local bookstore just closed, granted our population is 25,000 and should be able to support a bookstore, we obviously couldn't. The difference there is you CAN save money on Amazon, the rub is that Amazon does not employ the 3 or 4 part time high school students that the bookstore did. The dealership that DealerEx was talking about saved the customer NOTHING. Not really a bait and switch but very close. In the motorcycle business we have the BS (bait and switch) whores too. I had a customer quote me a price on a 900 custom Kawasaki, my cost, from Chicago Cycle, a 600 mile one way drive. He said if I wouldn't match the price he would get it from there. I gave him my price but told him to call and get the total price because he had to have ALL the money in a bank check. He walked out saying I was just upset because I couldn't compete with a large dealer. 3 days later he walked in and bought the bike. After the paperwork was done I asked why he didnt make the 1200 mile trip? After a 2 hour conversation with Chicago Cycle he finally got his final price.........I was 13 dollars cheaper! He would not give me the 13 bucks. He now has become a good customer and has send several friends in. BUT if he would have made the trip regardless of the distance he would have bought there and told his buddies how much he saved, just like DealerEx said. People are funny and the guys that have figured out how to feed the ego of the customer have made lots of money, I would just rather not have to do business that way.
steve_biegler is offline   Reply With Quote
Old 04-25-2012, 08:35 AM   #12
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by ohiobuckeyes View Post
This comment really to me hits the ball out of the park "As the retail world changes, small rural car dealerships are fast becoming extinct. The massive capital requirements, facility requirements of the car companies, and the customer demand for large inventory have pushed out the small local businesses. Take a close look at those left for they have a very uncertain future." This was left on my local newspaper's website when it was announced that Mull Motors was closing. And it's so true....
The emotional side of my personality wants to dismiss the above comment because I know a lot of rural dealers, I like them and I think they provide a valuable service to their communities.

The logical side of my personality reaches the same conclusion you did - the above comment is chilling because it's so likely to be true.
XDCX is offline   Reply With Quote
Old 04-25-2012, 08:48 AM   #13
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by The StraightShooter View Post
It's not just small dealers. It may take 20 years or more but the oem's will eventually take complete control of the retail process. Amazon.com has changed the world of retail forever.
I do think the car business will look a lot different in 20 years but I'm not sure the OEMs will ever be able to get control of the process. (State franchise laws and the OEMs historic failures to run dealerships will be the biggest obstacles.)

My bet is the OEMs will try to emulate the McDonald's approach where one operator will have dozens of different dealerships. I think the OEMs want large operators with lots of capital who are willing to follow the OEMs demands for facilities, inventories, training, etc.

That said, I also think the OEMs will limit the number of dealerships any Dealer Group or Public Corporation can own because they don't want to give too much power to the dealers and be vulnerable to their demands.

Concerning Amazon, great comment. It amazes me how Amazon keeps adapting their business model to prosper.
XDCX is offline   Reply With Quote
Old 04-25-2012, 09:18 AM   #14
Lakeshow
Senior Member
 
Join Date: Oct 2010
Posts: 217
Default

Great post DealerEx, couldn't have said it better myself.

It's amazing how far people will go and how much they will spend just so they don't have to come back and tell you that you were right.
Lakeshow is offline   Reply With Quote
Old 04-25-2012, 10:13 AM   #15
XDCX
Administrator
 
Join Date: Nov 2007
Posts: 14,869
Default

Quote:
Originally Posted by steve_biegler View Post
BUT if he would have made the trip regardless of the distance he would have bought there and told his buddies how much he saved, just like DealerEx said. People are funny and the guys that have figured out how to feed the ego of the customer have made lots of money, I would just rather not have to do business that way.
I think the brilliance in DealerEx's post is he identified the buyer's psychology and how easily it can be manipulated. I'm sure there are executives with MBAs at the factory who can't relate to what DealerEx described but anyone who has actually sold a car at retail is in full agreement.

The irony is that even though the customer ultimately figures out he's going to get screwed over with a higher price at the "discount" dealer, most don't have the courage to walk away and do a deal with their local dealer. They'd rather pay too much and then lie to their buddies about the great deal they got.

If you have ethics and you believe in Karma, that's a tough business model for a rural dealer to compete against.
XDCX is offline   Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
How often does your Dealership do a Dealer Trade to sell a Car? XDCX Automotive Discussions 30 03-07-2013 09:50 AM
Arizona car dealer killed in a plane crash Moshe @ Performance Brokerage Services Automotive Discussions 1 02-08-2012 01:38 PM
Chrysler Dealer ponders his future.... John Schutz Sales 14 04-16-2011 12:25 PM
Future Dealer Had a Question????? ohiobuckeyes Automotive Discussions 24 07-22-2010 09:26 PM
Used Car Dealer sentenced to 53 years in Prison XDCX Sales 5 06-25-2010 05:48 PM


All times are GMT -7. The time now is 01:53 AM.


Powered by vBulletin® Version 3.8.5
Copyright ©2000 - 2024, Jelsoft Enterprises Ltd.
Copyright DealershipForum.com - 2008 - 2016