Closing dealerships

[Ghoste]

Can anyone tell me if there is a legitimate rationale behind all of this?  Because I still don't get it and it seems like there are a lot of theories and guesses but I can't recall reading any factual information about the need for it.

[Brock Samson]

yeah, noone is buying cars.

[Ghoste]

So how is the solution to that problem to be found in eliminating the retail outlets?  Especially since they are closely in an almost random appearing way.  Dealerships are being told to close whether they are volume sellers or not.  Furthermore, most (perhaps all?) of these dealers are independent businesses and it isn't as though GM or Chrysler have money tied up in them.

[bull]

It's probably the typical bean-counter rationale. Such-and-such dealer costs X-amount to keep open so closing it will save the company X-amount of money. It's not how reality works but that's the way they seem to see it. That and poor planning on the front end of all this which I'm sure has a lot to do with the current problems. But yea, I don't see any logic in closing high-volume dealerships like they've done.

[Ghoste]

I still don't see where anyone has been able to explain how "such and such a dealer" can be costing the carmakers anything.  Unless they own the dealership they don't have squat invested in them.  I do know there are some dealers who finance through the lending arms of their respective mfg but in addition to paying interest to the mfg on that money they are also beholden to dealer floor plans whereby they are forced to accept whatever they are sent as inventory.  But there doesn't seem to be any record of them targeting the franchises that owe them money.  It appears much more random and I just cannot follow the logic of telling somebody who had been able to sell a lot of your product and doesn't owe you money that you will no longer allow that person to sell said product and that this is being done for reason "X" which is good for business.

[nh_mopar_fan]

Here's an explanation of how dealers cost the manufacturer money.

http://www.slate.com/id/2218761/

[Ghoste]

So this is about getting rid of the people who support the dealers from the corporate side?  Terrific.
Curiously, they still seem to need the same number of people at the very top to manage the smaller company.  Maybe with their own now reduced workload they would all accept a reduction in their own compensation packages. 

I appreciate that link btw, but I will state that I don't agree with all of his theories.  He says it weeds out the weaker dealerships.  How, by closing some of the stronger ones? 

[Tilar]

If ya ask me, I'm guessing it's nothing more than a political decision made by the chimp in charge.

[chargerboy69]

If ya ask me, I'm guessing it's nothing more than a political decision made by the chimp in charge.

  I have to agree.

[hemi-hampton]

Where does it say in Print that they are closing the stronger dealerships? Can you name your source? By my house they just closed a Chrysler dealership. Just up the road less then 1 mile was another popular Chrysler dealership. Do you really need 2 big fancy Chrysler dealerships within 1 mile of each other?   LEON.

[bull]

Where does it say in Print that they are closing the stronger dealerships? Can you name your source? By my house they just closed a Chrysler dealership. Just up the road less then 1 mile was another popular Chrysler dealership. Do you really need 2 big fancy Chrysler dealerships within 1 mile of each other?   LEON.

Not to speak for him but I believe he's saying they closed some of the stronger dealerships which I know is true. At least here in the NW they closed one of Washington state's highest volume dealerships and one of the largest/highest volume dealerships in Portland.

[Dodge Don]

There are too many dealerships in my opinion. Culling the herd is a good thing. My town has 2 Chrysler dealerships....we don't need two.

Yeah I know some jobs are lost but that is old economy....we cannot keep subsidizing outmoded concepts. As far as I'm concerned Chrysler can go out of business altogether for all I care. Just because I'm a huge fan of classic Mopars doesn't mean I'm married to some corporation for eternity.

[bakerhillpins]

Curiously, they still seem to need the same number of people at the very top to manage the smaller company. 

Welcome to Corporate America. I suspect they will give themselves all raises when its all said and done. Ya know, cuz they sailed the ship through the storm and it survived...

Ever notice how all the annual reports you get from companies NEVER mention what they hosed up and how much that cost you? I really enjoyed my rozy report from Rockwell Automation (when I worked there) the year they closed our mfg wing (which had the highest profit/cost relationship in the company) because they needed to show how they were containing costs. The move to Mexico was supposed to cost something like 3Mill but ended up costing well over 2x that and they couldn't even build a working platform for 6 months so we pissed off a bunch of customers. It was billed as a complete success! What a joke. It's an old boy network where everyone is handing out money to each other and a lot of smoke and mirrors to sell it to us as proper compensation to keep "top talent". My friggin 7yr olds have more common sense then these idiots.



Sorry....

[bakerhillpins]

Back on point...

While I agree with the points raised in the article, the only issue I see with less dealerships is - How do they plan on trying to control dismal service? The local Chev/Chry dealer is the same owner and they have a HORRENDOUS service dept. At least with more dealers you could find one you trust and go there. Though I must say I have given up and simply use a local shop for all my service unless its warranty work.

Bryan

[Ghoste]

Where does it say in Print that they are closing the stronger dealerships? Can you name your source? By my house they just closed a Chrysler dealership. Just up the road less then 1 mile was another popular Chrysler dealership. Do you really need 2 big fancy Chrysler dealerships within 1 mile of each other?   LEON.

Well as a real good example, here in my hometown there are two Chrysler dealers and both are staying open.  Of the two GM dealers, the higher volume one is getting the axe.
As Bull said, I'm not saying they are closing all of the stronger ones just some of them.  Althought the link posted addresses some of the issue it still doens't answer the question for me.  Admittedly I'm a skeptic right off the bat because the article wasn't penned by someone from the boardroom of GM or Chrysler, it's from a reporter and in my book most of those guys are about as qualified to be experts on world events as my 12 year old.  They are in business to sell their story however they need to spin it to make it stand out from the rest.  They are to news what music critics are to the music biz.
So, I still don't see a formula at work with a rational plan that was carefully laid out and applied equally to each closing decision here.

[bakerhillpins]

So, I still don't see a formula at work with a rational plan that was carefully laid out and applied equally to each closing decision here.

I am betting you will never see one. Mostly because I don't think it exists. I think they closed dealerships in a quazi lottery fashion with little regard to how they performed overall.

Bryan

[Troy]

Curiously, they still seem to need the same number of people at the very top to manage the smaller company. 

Welcome to Corporate America. I suspect they will give themselves all raises when its all said and done. Ya know, cuz they sailed the ship through the storm and it survived...

Ever notice how all the annual reports you get from companies NEVER mention what they hosed up and how much that cost you? I really enjoyed my rozy report from Rockwell Automation (when I worked there) the year they closed our mfg wing (which had the highest profit/cost relationship in the company) because they needed to show how they were containing costs. The move to Mexico was supposed to cost something like 3Mill but ended up costing well over 2x that and they couldn't even build a working platform for 6 months so we pissed off a bunch of customers. It was billed as a complete success! What a joke. It's an old boy network where everyone is handing out money to each other and a lot of smoke and mirrors to sell it to us as proper compensation to keep "top talent". My friggin 7yr olds have more common sense then these idiots.



Sorry....

Weird, it seems to me like they are cutting plenty of white collar jobs...
Chrysler to cut 25 percent of white-collar jobs (Fri Oct 24, 2008)
http://www.upi.com/turl-5d1f77/


Dead End in Detroit for White-Collar Workers (February 16, 2009)
After closing plants and shrinking their blue-collar work force, Detroit's troubled Big Three are cutting white-collar jobs in their hometown at an unprecedented pace — more than 15,000 in the last year, with more to come.

Unlike union workers laid off from idled factories, salaried workers have no safety net of health care or guaranteed income for a year. At best, it's a small severance or buyout, and a voucher for a discount on one of the hundreds of thousands of unsold cars that G.M. or Chrysler has sitting in inventory.

White-collar workers who walk out of the headquarters of the auto companies face few prospects in the Michigan economy. And with G.M. and Chrysler surviving on federal loans, facing a deadline Tuesday to submit new and broader restructuring plans to the government, the outlook grows only more bleak.

The market for the skills of auto engineers or designers in the prime of their careers has evaporated, with no hope in sight for a turnaround. Moving to another city is hardly an option when there are so few buyers for the suburban homes that would have to be sold first.

"I know it's not great everywhere, but this is probably the worst place to find a job," said Doug Zupan, a designer who took a buyout in November after working at Chrysler for six years. He was one of 5,000 salaried workers who accepted a buyout the day before Thanksgiving from his job at the Chrysler Technical Center in Auburn Hills, Mich.

Mr. Zupan, a 35-year-old father of three preschool-age children, said he was stunned by the sudden and rapid decline in an industry suffering through its worst sales in more than 25 years. "I am going to do my best to get out of the auto industry," he said.

G.M., Ford and Chrysler have eliminated a total of 120,000 manufacturing jobs in the last three years. And now the cuts are drastically thinning the ranks of white-collar professionals, turning the once-bustling office towers of the companies into half-empty monuments to better days.

G.M. delivered another blow last week when it said it would reduce its global salaried work force by 14 percent, or 10,000 workers this year. In the Detroit area, that could mean an additional 3,000 workers will be out of a job by May 1. G.M.'s next round of white-collar cuts will not include buyouts. Chrysler has not said whether it plans more cuts.
http://www.nytimes.com/2009/02/17/business/17detroit.html



General Motors to cut 4,000 white-collar workers by year's end (June 23, 2009)
General Motors Corp. has notified its U.S. white-collar workers that it plans to cut about 4,000 more jobs by the end of the year.
...
GM already has cut about 2,600 salaried jobs this year. It plans to reduce its salaried work force from just over 27,000 to 23,500 by Dec. 31.
http://www.mlive.com/auto/index.ssf/2009/06/general_motors_to_cut_4000_whi.html

Troy

[hemi-hampton]

Just wondering how you know which dealerships are the strongest unless you got statistics/facts? Seems more like Speculation. No Insult Intended. I predicted 20 years ago this would happen after what my Dad told me. The big 3 only thought about now & not the Future. The future is now here & too late, Damage is done. LEON.

[nh_mopar_fan]

Yeah, I knew about those cuts and heard about more white collar jobs being cut today as I drove home.

Some people only see what they want to see.

[Ghoste]

I didn't say white collar workers, I said at the very top.  Those white collar workers they are getting rid of would fall squarely into the part a few posts up about dealership support.  White collar workers covers a huuuuuge area encompassing, well basically anyone not carrying a union card.  As far as highlighting the fact that they don't get the same benefits as the blue collar employees losing their jobs I'm afraid you won't get me crying any extra blues for them.  Job loss is job loss period and both parties suffer.  Traditionally the salaried automotive workforce didn't run the same risks of job loss or layoff as the line workers so the fact that they are taking that hit now doesn't make me feel extra sorry for them.  Read that carefully, I don't feel extra sorry for them.  I am not by any means pleased about it.  Again, job loss is job loss.
Go to the top floors of those two corporations and count how many heads are cut.

[Ghoste]

Just wondering how you know which dealerships are the strongest unless you got statistics/facts? Seems more like Speculation. No Insult Intended. I predicted 20 years ago this would happen after what my Dad told me. The big 3 only thought about now & not the Future. The future is now here & too late, Damage is done. LEON.

Fair enough.  So someone can provide facts for me that the ones they are closing are the weakest ones then right?

[nh_mopar_fan]

I'm willing to bet that there are plenty of heads being cut at the top.

Hell, the CEOs of both Chrysler and GM were sent packing. You don't get much higher than that.

I can tell you that with new leadership at the top, there's always a lot of turnover. The new leadership always brings in their own people. That's a fact.

I've seen it happen throughout my career in more than a couple very different industries.

[Ghoste]

But the number of them will likely remain at or very close to what it was.  Thats turnover not termination.

[nh_mopar_fan]

Just wondering how you know which dealerships are the strongest unless you got statistics/facts? Seems more like Speculation. No Insult Intended. I predicted 20 years ago this would happen after what my Dad told me. The big 3 only thought about now & not the Future. The future is now here & too late, Damage is done. LEON.

Fair enough.  So someone can provide facts for me that the ones they are closing are the weakest ones then right?

I think if you're the one making the claim, it falls on you to support it, not the other way around.

BTW, I have no idea what reasoning they're using in deciding what ddealers close.

[nh_mopar_fan]

But the number of them will likely remain at or very close to what it was.  Thats turnover not termination.

Not necessarily, there is always a duplication of effort which drives some of the cuts.