The amount of automotive dealerships in the United states is staggering. Domestic dealerships alone number over 15,000 in the US. For perspective, there are less than 13,000 McDonald's restaurants in the US. At the current rate, the Detroit three's dealerships are shrinking at a three- to four-percent rate, much slower than share declines that are crippling the domestic automakers.
The sales number gaps between the domestics and Asians is equally astonishing. Your average Dodge dealer sells only 375 vehicles per month year. In stark contrast, your average Toyota dealership hits nearly 1700 sales in the same time period. Steven Girsky, an industry analyst and former GM adviser, placed the desired amount of downsizing at two-thirds of the entire domestic dealer-body.
While most domestic auto dealers will tell you that there are too many dealerships out there, they are understandably inclined to think the other guy should shut down instead of them. Others are looking for corporate buyouts from the Big Three, but Ford, GM, and Chrysler just can't afford to foot the bill for a combined 10,000 closures, many of which would cost well over $1 Million dollars. Ford and Chrysler are actively trying to buy out dealers, but GM is saving its money for more new product. The targeted dealer buyouts from Ford and Chrysler will likely be far fewer than what is needed. Overall, this means little to you the customer. If you're in the mood for a new car and don't want to spend all day waiting to be assisted, it may be a good idea to hit your neighborhood Dodge dealer. You can walk in the door and have no trouble finding a salesman that's willing to deal to get a sale.
[Source: Detroit News]
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Reader Comments (Page 1 of 2)
CJ @ Feb 5th 2007 9:15AM
Really?! 1700 units per month out of the 'average' Toyota dealer? Thats something like 77 deliveries each day, assuming 22 days. Seems hard to believe
EnviroBob @ Feb 5th 2007 9:24AM
In 2006, Toyota sold 2,047,057 vehicles under the Toyota brand. Sales of 1,700 units per month per store would equal a grand total of roughly 100 Toyota dealerships in the US. I don't think so.
DanTheDodgeDealer @ Feb 5th 2007 9:29AM
Oh, how I wish I sold 375 dodges a month! Where are you getting your facts?
ispeakenglish @ Feb 5th 2007 9:31AM
"there are less than 13,000 McDonald's restaurants in the US."
I think you mean "there are fewer than 13,000 McDonald's restaurants in the US."
Learn how to use the English language if you report to be any type of serious journalist or editor. The difference in usage between 'fewer than' and 'less than' is pretty clear.
Dan from Delaware @ Feb 5th 2007 9:36AM
There may be less than 13,000 MacDonalds, but the amount of automotive dealerships in the United states is staggering.
AZMike @ Feb 5th 2007 9:47AM
the author might try to reread the article he is quoting from. those numbers are YEARLY sales, not MONTHLY.
having this many domestic dealers is not costing the manufacturers a single cent. the real winner here is the customer, for two reasons:
1) service, when necessary, will be much more accessible.
2) there will be more competition, resulting in a better deal for the customer. fewer dealers result in colusion, NOT competition. the customer is never the winner here.
it's always interesting to see manufacturers like Toyota trying to be successful in selling their newly redesigned Tundra in the heartland. this article only stresses why they WON'T be successful.
there are few people who would drive hundreds of miles to buy a vehicle, especially when they will pass many domestic dealers on the way.
I wouldn't believe anything J. D. Power says. Mr. Power's intense dislike of domestic dealers is legendary; very few months pass without him spouting his venom on the editiorial pages of Automotive News.
for those who aren't aware, he went to domestic manufacturers in 1980, trying to pitch the idea of a customer satisfaction index. they laughed him out of their offices. he found more receptive ears at the import companies.
he's still returning the favor.
automobile dealerships are all independent businesses, and manufacturers have absolutely no right to close a single one just because they feel there are "too many". they granted the franchises in the first place, and have no right to remove them. thankfully, all states have very strong franchise laws to protect ALL dealers from strong-arm tactics by manufacturers.
Mike
Ross @ Feb 5th 2007 9:54AM
I've been critical of the quality of Autoblog writing in the past, but this item is truly awful. Even apart from the mixup over monthly and yearly sales figures, almost every sentence is a grammatical embarrassment. Please, guys - hire an editor.
Chris Shunk @ Feb 5th 2007 10:09AM
Sorry: all of you are correct. The correct statement should have read "per year" instead of "per month". Bad mistake.
Richard Warren @ Feb 5th 2007 11:41AM
AzMike,
You're 100% correct
And how many folks here know this?
"I wouldn't believe anything J. D. Power says. Mr. Power's intense dislike of domestic dealers is legendary; very few months pass without him spouting his venom on the editiorial pages of Automotive News.
for those who aren't aware, he went to domestic manufacturers in 1980, trying to pitch the idea of a customer satisfaction index. they laughed him out of their offices. he found more receptive ears at the import companies.
he's still returning the favor."
You had to be in the business at the time to know just exactly what was happening with J.D.
The number of points is not the problem at all, many businesses are in competition with themselves. If someone is willing to put up the money to open any franchise, that's their decision. The other part is, you never know which dealership, might just turn into "golden dealership" the more the merrier.
ORoad @ Feb 5th 2007 11:57AM
The dealership plays an important role in perception of the company and product.
It is no surprise that foreign sales are higher. I've noticed that most foreign dealerships are open 7 days, and have longer hours. The domestics closed early, and usually took Sunday off. Any dealerships that are open are packed on Sundays.
How the customer is treated during the sale, and subsequently, the service life of the vehicle plays a crucial role.
Jim @ Feb 5th 2007 12:33PM
"hit your neighborhood Dodge dealer. You can walk in the door and have no trouble finding a salesman that's willing to deal to get a sale"
You would think so, but my father in law tried to buy a Jeep Liberty in central Ohio back in November and December, when they had a $3000 sale and $500 military discount advertised on their web site. He went to four Jeep dealerships before he found a sales person willing to admit that these discounts existed and confirm he would not be negotiating from sticker price. The terms he used to describe these sales people I can't post here.
Compare that with my recent Honda buying experience, at a farily small volume dealer. Four emails, two visits of about 40 minutes each (one to sign papers, one to pick up the car that came from another dealer due to color choice) and I was done, and got it for $1000 less than most websites said I should try to pay for it.
And finally to comment on ispeakenglish's post, saying "Learn how to use the English language if you report to be any type of serious journalist", I believe the word he intended to use was purport, not report.
Purport - to have the often specious appearance of being, intending, or claiming; "The letter purports to express people's opinion"
AZMike @ Feb 5th 2007 12:47PM
Jim,
you might want to try comparing apples and apples. what similarities do these two experiences have with each other? was there a $3,000 rebate and a $500 military discount on that Honda? didn't think so.
a military discount is not something that most salespeople deal with on a regular basis, unless the dealership is near a military base. a quick conversation with a manager in ANY dealership will always answer any questions you may have. they are the ones who are aware of any special programs that the manufacturers have. many programs change on a daily or weekly basis.
auto dealers are in the business to sell cars, not to tell you no.
Mike
Phil @ Feb 5th 2007 12:58PM
It's amazing just how stupid most people IN the automotive industry are today, not to mention how badly this effects buyers!
When the internet was new, Keith Crain at Automotive News conspired with internet pushers to create a HOAX about a Dodge dealership selling THOUSANDS of trucks online, and sent ignorant dealership owners into a panic of selling because, 'they couldn't compete'.
Even with an editorial rebuttal by the DEALER PRINCIPAL, the NADA Convention was a chaotic frenzy of selling to intenet companies and megadealers, much of which resulted in BUSTS, we all know now.
All of it based on lies, stupid customers bought cars sight unseen, only to realize a week later that they bought uncomfortable cars, or that some other big flaw was there that they never looked at because they BOUGHT INTO THE HYPE!!!
You just do preliminary research on-line, you gotta DRIVE THE CAR to see if it's right for you!!
JD POWER is an asshole if he thinks such a reduction is in any way logical, like he said dealers took a 30% MARKUP TO STICKER, THE SINGLE STUPIDEST STATEMENT EVER MADE BY ANYONE EVER IN THE AUTOMOTIVE INDUSTRY PERIOD.
Take him out behind the wood shed!!!
By the way, a 30% reduction would be good for most major markets. We'll see this in about a decade, anyway. In queens, 4 Ford dealers were within a 5 mile stretch along Queens Boulevard or one of those streets!! I thought it funny, and I think two of them sold out. That's how it should work. Invest in something with a strong future, you know!!
Sandy @ Feb 5th 2007 1:18PM
The author of this piece would do better to stick with a Betty Crocker cook book! #s are all wrong, facts are greatly distorted and overall, it's a genuine POS. Here, in New Jersey, there may be too many Chevy dealers, but there is a big shortage of Buick & Pontiac, Lincoln/Mercury dealers. In my county of over 1/2 a million residents, there is NO Buick or Pontiac and only 1 Lincoln/Mercury. There are 3 Chevy. There is also:
Toyota, Honda, Kia, Hyundai, Nissan, Infiniti, Lexus, BMW, Mercedes, Volvo, Jaguar and other imports.
Roll your cuffs up, where reading AutoClog.
Rastus @ Feb 5th 2007 1:29PM
The good news is that many, many of these diseases upon our society will have to close.
Either through buy-outs or individual bankruptcy, a closing of a domestic auto "dealership" is a quite a positive move.
T_R_J @ Feb 5th 2007 1:45PM
As I read this article and saw the picture I couldn't help but think I know this building. If I'm not correct this is a old ford repair shop in my hometown of Sheridan, Wyoming... I didn't not expect to see that at all.
Wild...
matt @ Feb 5th 2007 1:46PM
why is he comparing number of domestic dealerships to the population of asians? what does that have to do with anything?
Louis Duran @ Feb 5th 2007 2:57PM
It looks like there was a big mistake in the re-reporting (better to just read the original article in Detroit News). However, now that the mistake has been pointed, and acknowledged by the author, the mistake still remains in the submission. This should be corrected ASAP to maintain credibility among readers. Thanks to all the readers who pointed out the egregious error.
Howard Kerr @ Feb 5th 2007 2:59PM
Having lived in rural areas of Texas and Pennsylvania, I'm not surprized to find that there are more domestic auto dealers than there are McDonald's restaurants. I've lived in several areas where there was NO McD's and NO Burger King. As has been pointed out, being near a dealership in these areas, when service was needed was nothing short of a godsend. I can get a sandwich somewhere other than a fast food restaurant.
However, it would behoove factories to think long and hard when they award a franchise. Here in Memphis, the Toyota Camry outsells it's domestic rivals out of half the number of dealerships. The ratio of Asian to domestic dealers in this area follows what was found in this article....1 to 2.
AzMike, I live near a military base, and I still had to "educate" the SALES MANAGER at my local Ford dealership. It's been my experience that dealer salespeople (pretend?) don't seem to know what rebates are offered on their products, but amazingly they can tell you what their competitors offer.
I realize it would take a computer to keep up with these rebate/financing plans...so why is it the "only" computer at a dealership seems to be in the F & I office?
SunByrne @ Feb 5th 2007 3:44PM
So, with the figures corrected to be annual, and not monthly, and all the grammar sniping aside, and with the irrelevant J.D. Powers thing aside (Powers is not mentioned in the original article at all), the basic numbers are pretty staggering.
There are more domestic auto dealerships than there are McDonalds. Yikes. That's just wrong. I can see an impulse purchase of a Big Mac because I happen to be passing a McDonalds, but I cannot imagine the same being true for a car.
And yes, sure, each dealership is an independent business, but they rely on the manufacturer for their product, and if the manufacturer believes it is in their best interests for there to be fewer dealerships, they DO indeed have the right to attempt to reduce the number of dealerships. They cannot FORCE it, but they can refuse to authorize new ones and they have every right to try to buy out dealerships they don't want around. If you own a dealership and don't like it, don't take the buyout.