It's a commonly accepted fact that General Motors, Ford and Chrysler have far too many retail outlets relative to the number of vehicles they sell. A new study by CNW Marketing Research has now tried to quantify the dollar cost of that excess and come up with $3.9 billion, or $436 per vehicle. The three US carmakers have 15,741 dealers between them, while the Japanese carmakers have less than 4,000.

Domestic dealers, on average, sell less than half as many vehicles per store annually than a Japanese brand dealer, and most sell far less than that. The extra cost comes from items like having to deliver vehicles to so many outlets, advertising support for dealers and the administrative costs associated supporting them all. For years, the domestics have been trying to find a way to reduce their dealer counts, but state franchise laws make it almost impossible for the carmakers to get rid of dealers until they want out themselves. Unfortunately, the Starbucks model of a coffee shop on every corner just doesn't work for car retailing.

[Source: Detroit Free Press]

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