Flashy "Taj Mahal" dealerships hit hard by downturn
Like those affected by the overinflated housing market, many auto dealers are experiencing a similar situation with their real estate. During the recent boom times, the thinking was that you needed a big, flashy facility with all sorts of extras and perks to attract customers. Manufacturers helped push the trend by offering extra incentives to dealers for interior and exterior upgrades, or flat-out demanding that some brand outlets conform to a particular standard.
That's all well and good when you're able to grab people's attention and dollars with your store's circus atmosphere, but the rent bills keep coming relentlessly while buyers have all but buried their cash in coffee cans. Some markets that still hold their noses high will continue to demand ridiculous dealerships that are more experience than transaction, while other markets will see the excesses of the past catch up and take a bite out of the dealership's hides.
[Source: Automotive News - Sub. Req.]
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Reader Comments (Page 1 of 1)
cowboy bob 8:55AM (2/12/2009)
I'll never forget going to a local dealer and being "attacked" by the "greeter" at the door. I left with the thought that if they could afford to have someone on the payroll who did nothing but rush you at the door to direct you to a sales person that I would probably not get my best deal there. Somebody has to pay that overhead, and I did not want to be it.
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Yikes 9:11AM (2/12/2009)
Agreed.
When I see that mega million dollar dealership, I know that the overhead to operate and pay for that is coming out of my pocket when I purchase the car.
In my opinion, all they need is a nice service facility with trained competent service guys.
They can sell the cars out of a tent as far as I'm concerned. Just this week the Chinese have announced they plan to sell cars here through "big box" stores like Walmart.
Good idea!
Jake B 4:32PM (2/12/2009)
Yeah right, you think it's hard getting a battery pack for a Chinese made RC car? Try getting a new tranny for your actual Chinese car.
Sea Urchin 9:00AM (2/12/2009)
Wait until the dealer finds out that GM is killing Hummer.
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scappy 9:12AM (2/12/2009)
When I was out in Vegas in November I spotted a Hummer dealership that was now selling Smarts. Talk about a 180.
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Phil L. 9:22AM (2/12/2009)
scappy -
Appropriately, I believe the picture above is of Towbin Hummer - Yup, the same dealership now selling Smart:
http://www.autoblog.com/2008/09/10/vegas-hummer-dealer-switching-to-smart/
Sabbac 10:27AM (2/12/2009)
Actually that's Bergstrom Hummer in Milwaukee, which also is no more. It's now a used car lot, ironically next to a Smart dealer.
gslippy 9:29AM (2/12/2009)
The Taj Mahal look doesn't come for free; that's fat being scraped from consumers' wallets.
I bought my last car (9 years used) from a tiny dealership with a wooden shack for an office; the service was great and so was the price, and I'll go back there again.
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sw 9:34AM (2/12/2009)
Hopefully this means the end of the dealership. The ideal would be to order the car online and pick it up at a service center where it goes back for warranty work or recalls if needed.
No salespeople, no overhead admin, and no flashy building. Just a lot, a small office and a few bays to work on cars with.
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Hamhock 9:41AM (2/12/2009)
As a fellow rational human being I understand what you are saying and have the same wish, but as long as there are so many Americans for whom price research consists of walking into a dealership and saying 'howmuchistheleaseona" there will be a business model in place to screw these people out of as much money as possible. And that's ok, until a person who has done some reasearch comes in and tries to do a deal, and get drowned out in a sea of 'howmuchistheleaseona"s
cliff 10:43AM (2/12/2009)
Yep, the dealership is probably going away, and it should. There is no need for it. People will go online, or go to Costco or yes, maybe even Wal-Mart. They read online reviews, order what they want, and purchase it at a set price.
Well, at least I will.
CoffeeJones 1:33PM (2/12/2009)
And don't forget being talked up and away from the base model.
"It's only $50 more a month! Sure the loan went from 36 to 48 months, but who reads that fine print?!"
BosGav 10:42AM (2/12/2009)
If buying a car were ever a good experience designed to make consumers' lives easier, I'd actually be willing to pay for some of that overhead. But it's not about a centrally-defined arc to the steel roof or a giant logo on the front of the building, it's about information, assistance, and service.
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S K 11:51AM (2/12/2009)
Taj Mahal in India gets a huge number of tourists/visitors each year and will continue getting them each year unlike a "flashy" Hummer dealership which is highly dependent on gas prices, so its rather unfair to compare it to the Taj. :)
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Tagg 12:37PM (2/12/2009)
Dealers believe it or not have only limited control in what their dealership looks like. If an older dealer wants to redo their store thay have to get approval from say GM, Ford or Toyota to how it can look. Another fact is those Hummer dealers that builds the quonset hut stores HAD to build those if they wanted to sell Hummers. Hummer stores had to be stand-alone, have the quonset hut theme and have
that stupid "H" framing the door. GM pushed to get many of it's brands to be stand alone not they are forcing them to consolidate which is why many GM dealers do not have a good relationship with them.
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Patrick 12:41PM (2/12/2009)
I just saw a dedicated Smart dealer yesterday and thought that was a bad idea. How can you justify a standalone showroom for 1 car? At least Mini parlayed off of BMW dealerships. Businesses need to think more like a family and build up some reserves instead of scraping by month-to-month with huge construction and rent loans to pay off.
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jeff 12:42PM (2/12/2009)
itll never happen (no dealerships that is) at least not for a long time. reasons being...
-people are trained to "want a good deal" and want to negotiate on a car
-walmarts and costcos wont be able to train employees enough to know what they're talking about
-they wont be able to handle the people coming back with an issue with the car, such as a scratch, or a ding, or not knowing how to use a specific feature
-as much as people say they hate dealers, they need them in order to get a good deal, and get know how to use their vehicle
-what about the used cars? are they going to take your POS trade off your hands?(maybe, probably not, but if they do theyll charge you a disposal fee)
-how will they handle financing? or is everyone from now on just going to pay cash? or put it on a credit card?
you say you dont want to pay over head? at costco and walmart you wont be paying their overhead as much as padding the execs pockets, you think walking into walmart and being forced to pay what they say for the price isnt making them a huge chunk of money think again.
the reason people get good deals and negotiate is because they can, take the competitive dealers out of the scenario, take them away from trying to beat the next dealers price by 100.00 to earn your business, might as well bend over and take it from costco or walmart,
walk into dealership on your next car purchase and say youll pay what the sticker says and see how easy the process goes LOL. itll be the easiest process of buying a car youll ever have, i promise you that. the consumers are the ones that make the process difficult, which is not entirely a bad thing, its what saves you money.
also, last point....
buy a 4-5000.00 car from walmart or costco and see how long it lasts, see how safe it is...its like buying a bicycle or snowboard or furniture from these same places, you go to the place that specializes in these items will always treat you better, give you superior service and a superior product. buy a huffy from walmart, and buy a bike from a bike shop and tell me if you can feel the difference. or buy a dresser from walmart and one from a furniture store tell me if you can tell the difference, yes it costs more, but contrary to popular belief people would rather pay more for the good stuff.
-the US will never allow these Chinese piles to be sold at walmart, too many safety standards, to many emissions regulations etc... so when you start imposing all that stuff on them, youll see how much the price jumps up with a quickness.
-not to mention neither will the manufactures, they are extremely prideful of their product and want people that know what they are doing(dealers) working with their customers. it just simply wont happen. not anytime soon atleast.
-what i can tell you what will happen is this....
dealers that dont treat their customers with respect and professionalism, dealers that dont focus on the service side of things, and dealers that refuse to train their employees and staff to know what they are doing and make sure the consumer has an excellent experience will not survive. "the old car dogs" are in for a surprise in the next coming years if they dont change their practice.
-not everyone is an enthusiast or as informed as most of you on this site... which means most of you dont need a dealer to purchase, but you will want atleast one aspect that a dealer can provide during your transaction. the rest of the millions and millions of people that do need help, the dealers will be there. for a long time.
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Polly Prissy Pants 1:29PM (2/12/2009)
You basic premise is that dealerships are necessary because that's how we've always done things. The dealership model works for no other consumer industry (except maybe Apple stores, but you have a captive, non-cross shopping, religious customer base that would buy anything with that brand on it so that doesn't count) so I see no real reason why it's suddenly required to sell a car. Will dealerships always be around? Probably, but if it becomes legal to go elsewhere you'll see the majority of car buyers doing so.
sw 3:00PM (2/12/2009)
No dealerships SHOULD happen. here's why
- I do get a "good deal" by shopping when things are on sale or with discounts.
- I usually know more about the vehicle than the salesperson by the time I walk in.
- You get rid of dealers and overhead, there will be some cost cuts.
- Sell your car on autotrader.com, you'll probably get more money than the dealer will give you.
- Handle financing the same way appliance stores do, through a bank.
- I know I'm paying an exec whether or not I pay overhead, so that point is moot.
- Take out ALL dealers and now companies are forced to be competetive.
- If you're paying sticker it's either a rare car or you're an idiot and deserve to lose your money.
- The last T.V. I bought from walmart has worked just fine. But I'm thinking car should be sold how dell sells computers, and dell has excellent products.
- The Chinese are coming and they will improve quality, mark my words. Korean companies have been very aggressive and have turned out quality products. The Chinese in all likelihood will be even more aggressive.
You do have a valid point about not everyone is an enthusiast and not as informed, and despite all the things I've just said, this is the reason why dealerships will never go away. You can always make money on the gullible and uninformed who won't take a few hours to research the thing that they'll spend thousands of dollars on. You'll never go broke appealing to the lowest common denominator.
jeff 2:19PM (2/12/2009)
and i disagree with the dealership model, in the previous comment i mentioned 3 seperate products, bicycles, furniture, ski/snow board equip,
heres somemore,
jewelry, motorcycles, auto parts, RVs, boats, clothing, many many more,
look at all the designer clothing stores, prada, armani, etc... they all have dedicated stores that only sell their brand.
granted costco and walmart sell alot of these products also,
but the majority of people choose to go to macys or nordstrom over walmart for a pair of jeans or shoes. its the same idea.
like i said even if they do carry some no name chinese cars, they wont be successful, and most people will opt for something better, people say they hate car dealers and so on and so forth, but until cars dont exist, car dealerships will be there.
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