Filed under: Car Buying, Trends, Chrysler, LLC., Ford, GM
Big 3 shedding, consolidating dealerships
Detroit's Big 3 American automakers account for roughly half of new car sales in the United States. So how do you explain that they hold almost two-thirds of all the new car dealerships in the country between them? The automakers themselves recognize the problem, and have been closing dealerships faster than you can say "foreign competition".
The Automotive News Dealer Census shows that, as of the start of this year, GM, Ford and Chrysler had 14,199 dealerships across the United States, 621 fewer than at the start of last year. The closures reflect a growing trend of reduction in the number of dealerships and franchises. Today U.S. carmakers have nearly 5,000 domestic dealerships fewer than they did in 1980. The closings began in earnest five years ago when the Big 3 closed 256 outlets in 2003. Of the 513 dealerships that closed last year in the United States, 484 were for American automakers. While GM continues to lead with the most outlets in the country, it closed 238 dealerships and 227 franchises itself last year. Ford closed 214, while Chrysler closed 164. Both GM and Chrysler are also campaigning for its dealerships to consolidate between brands: The General is aiming to combine Pontiac, Buick and GMC into single dealerships, with luxury dealerships focusing on Cadillac, Saab and HUMMER, while Chrysler LLC is undertaking Project Genesis to consolidate Chrysler, Dodge and Jeep franchises into single outlets.
[Source: Automotive News – subs. req'd, Photos by Justin Sullivan and Roberto Schmidt/Getty]
Reader Comments (Page 1 of 1)
Seanross 5:46PM (4/07/2008)
I've been sayin this for years, why do we have so many new cars and dealership AND used car lots (see CarMAX) over here. How the hell does each brand expect to sell a million (im exagerating a little I know) of each model of each brand?
A good majority of people don't want cars and are fine with public transportation, another chunk of the pie graph refuse to buy new because of depreciation. The fact that they were bringing out poorly styled cars wasn't helping either.
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YourNameHere 5:56PM (4/07/2008)
"More fishing poles in the pond equals more fish"
seems to sum of detroits thinking well. rebadging the same vehicle three or 4 times, 1000s of dealers etc.
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Corey W. 10:57AM (4/08/2008)
Better than stuffing one poorly designed vehicle down your throat because it's their only option in that class. And because they rebadge a product that doesn't mean they expected sales of the product to double for every iteration of the platform.
TriShield 6:08PM (4/07/2008)
The gigantic dealer networks are leftover remnants from decades ago when American automakers supported the entire American new car market.
It's the same reason they have so many plants and so many brands. They founded the entire auto industry on this continent and were the industry for decades. As foreginers gradually setup shop here and sales began to dwindle the dealer networks, plants and size of the automakers themselves didn't change much.
Given dealer franchise contracts, US franchise laws and the UAW contracts/strikes they really can't. Saying each automaker should have less brands and dealers is a given but much easier said than done.
If Ford was just making and selling Ford, if GM was just making and selling Chevrolet and Cadillac and if Chrysler had a quarter of the dealerships it has now things would be much rosier for them.
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geo.stewart 6:21PM (4/07/2008)
thx saved me a lot of writing.
too many people ignore the history and the fact that it is easier to start from scratch than to eliminate or deal with legacy.
closing a couple hundred a year is about as any as they can afford to buy out at a time.
all those dealerships fueled the automotive landscape we enjoy today.
Lithous 8:38PM (4/07/2008)
Good summary, though you left out another problem faced by GM and the other domestics... when they tried to down size they were portrayed as evil i.e. Roger and Me. Think about it, "How dare you downsize?" and then the next generation asks, "Why didn't you downsize?"
superdart 6:22PM (4/07/2008)
This is a smart, if not late, move. The current situation is partly out of our past.
Decades ago, people rarely drove LONG distances. There were lots of small dealerships in rural areas so people didn't have to drive far. These days people are driving farther and farther all the time, and will typically drive all over the place to get the car they want. The need for lots of dealerships is unnecessary.
Also, the car company usually owns the facility. Fewer dealers means less property to own. It will also allow for companies to do less cross badging.
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spots 6:47PM (4/07/2008)
In the county in FL where I live, there is one- ONE- new car dealer. It's a Chevy dealer that has been there at least as long as most people here have been alive. They sell a (relatively) LOT of cars and trucks to folks who simply do not want to deal with an 80 mile round trip to a different brand's dealership- either for sales or, especially, for service.
GM probably would love to close them down and force everybody to buy their cars in Lake City or Jacksonville; it'd sure tick off the locals though.
My own Chevy- bought used from a Ford dealer nearly 100 miles away- has never needed dealer service, so I have no personal experience with them- but I'm glad they're only 15 miles away from me, just in case.
Tourian 6:52PM (4/07/2008)
No, most dealers are privately owned.
mroverlord 7:29PM (4/07/2008)
The dealers are privately owned, but, as I understand it from the people at the local Dodge dealer, the property is often owned by Chrysler.
jw 8:33PM (4/07/2008)
well by the end of the year about 10% of the domestic dealers will be gone anyway..the weak go out 1st. this correction may take a few years and alot of red ink on the dealers bottom line but there will be more toyota/honda dealers then domestics eventually. I remember when toyota 1st opened its franchise and the good old boys from detriot said " when going to drive them back into the ocean". ha ha !!!!
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Galley 8:18AM (4/08/2008)
One of our Five-Star Chrysler dealerships closed recently, but then again it was four blocks away from a Five-Star Dodge dealership (which now carries Chrysler and Jeep).
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Sandy 4:27PM (8/15/2008)
The smaller dealers are usually family owned, and are the better place to do business. the huge mega mega highway stores with 2,000 in stock are not really where a person interested in qualirty and fair dealing would want to spend their money, nor endorse their sales tactics, by voting for them, with their money.