Any update on a reprieve for some dealer closures?

[Ghoste]

Just before Christmas Congress had approved some kind of omnibus bill that held out a potential of another chance for some of the car dealers ordered to close.  Has anyone heard any more about this? 

[451-74Charger]

I know my local dealer took their signs down over Christmas, They were amongst those headding up the repreive efforts

[stripedelete]

My cousin lost Buick and C/J.  I had breakfast with him on Sunday.  I think they have about a month to submit the appeal and then at some point they go in front of an arbitrator.  Everything will be final by May. (June maybe? I don't remember?) 

Decisions will be based on 7 specific criteria.  We were interupted during that part of the conversation so I never got them.  I will get back to you on those .

He expects to get the Buick franchise back.  It's closure was political (paybacks are a bitch kinda thing).  There were some politics in the C/J closure too, but, Chrysler's point is arguable.  I think he would be happy with some compensation.  He doesn't see Chrysler as long for the world.  (Less than 1 million units in 2009)

Don't look for too many Chrysler reopenings.  There were a few Dolphines caught in that Tuna net - but most closings were not that  far out of line.

Look for a few GM re openings/reprieves or some compensation. 

But at the end of the day there were/are too many domestic dealers. 



   

[Ghoste]

But at the end of the day there were/are too many domestic dealers.     

You know, I still haven't had anyone give me a satisfactory argument for that one.  If the rest of the continent is going the same direction as I've seen closer to home, then it doesn't add up.  How is it beneficial to close all of these independent franchises and reduce competition?  One of our main complaints on here have been dealers who don't want to deal or work to honor service agreements.  Can anyone really think that having fewer dealers to choose from will aleviate this?

[stripedelete]

But at the end of the day there were/are too many domestic dealers.     

You know, I still haven't had anyone give me a satisfactory argument for that one.  If the rest of the continent is going the same direction as I've seen closer to home, then it doesn't add up.  How is it beneficial to close all of these independent franchises and reduce competition?  One of our main complaints on here have been dealers who don't want to deal or work to honor service agreements.  Can anyone really think that having fewer dealers to choose from will alleviate this?

By the description of your location it sounds like you are in Canada between Leamington and Erieau.  I cannot speak for the situation in Canada.
Regardless, it's not a two sentence explanation.   The short version is:   In certain regions of the country dealers are not competing with each other, they are actually cannibalizing each other.  Since all dealers have to be treated equal under the franchise system a dealer network is only as it's weakest link.  Fewer dealers mean remaining dealers will be more well capitalized. You can't implement changes in your dealer network if nobody in your dealer network has any $$$$$.  "Changes" for example could include dealers being required to spend money on facilities, programs, and human resources, to drive CSI.  In "CSI" lies your service agreement issue. 

That's as short as I can make it.  I can fill in the gaps upon request.

   
Specific to Chrysler closings:

In the case of Chrysler, 95% of the dealers closed were "no-brainers".  Most of these dealers were either tiny and in the middle of nowhere or they were right on top of each other.  I remember standing in the showroom of a CPD dealer in Indiana and looking across the street at the CPJ dealer.  There were less than 10K people in the town.  There were a lot more situations like that.  As you get into the NE united states Chrysler dealers are/were right on top of each other. In many cases it may not seem like they were right next door but when you figure population and distance as-the-crow-flys it gets really tight.  (note: Chrysler dealer overlap was compounded by the acquisition of Jeep.  Jeep Dealers became Jeep Eagle and then Chrysler Jeep, while the Chrysler Plymouth dealer was becoming Chrysler Jeep.)




 


   

[Ghoste]

That I get but where it loses me is the portion about dealers in the middle of nowhere and the franchise capitalization.  I've noticed that the bigger stanardized megastores they want to force the dealers to adopt most typically are the ones with the worst service and the least honorable sales staff.  There is an important place for the smaller dealers in the nowheres.  I totally get the cases where there are dealers on top of each other but I doubt that there were really that many left like that.  Good old competition should be able to naturally take care of that.  A shrunken retailer base is largely what it looks like to me.  I guess time will be final proof though.

[stripedelete]

That I get but where it loses me is the portion about dealers in the middle of nowhere and the franchise capitalization.  I've noticed that the bigger standardized megastores they want to force the dealers to adopt most typically are the ones with the worst service and the least honorable sales staff.  There is an important place for the smaller dealers in the nowheres.  I totally get the cases where there are dealers on top of each other but I doubt that there were really that many left like that.  Good old competition should be able to naturally take care of that.  A shrunken retailer base is largely what it looks like to me.  I guess time will be final proof though.

First, I agree that a "B" dealer can provide a better dealership experience than an "A" dealer. 

You are correct, there will always be a need for a small dealer out in an isolated "berg".  But not 2 of the same franchise in an isolated "berg".  In fact the NEW GM's Strategy is to always cover the "bergs"/small towns.  It has become their core.  But they are going to put all the franchises under one roof in those towns. 

When I refer to middle of nowhere, I mean "middle of nowhere" - In a wide spot in the road with no population around.  Grampa's Grampa signed the dealer agreement with Walter P. Chrysler himself in '24 and god himself can't break it.  They just needed a sign and a car, at least until Chrysler went bankrupt. Many EXIST, or at least they did.

As far as "Not many dealers left like that".  Don't count on it - those were the majority of Chrysler's closings.  Of the Chrysler dealership closings in the midwest, I felt sorry for a number of dealers, but I only scratched my head on a few.  In other words, most made sense.  What was it?  900 dealers accounted for only 13% of sales?  Don't let the media fool you.  They were just left over from a different time.

Now when you mention  "good ole' com petion".  That's what the manufacturers were counting on - but that's an attrition based solution.  Attrition combined with a franchise agreement becomes an issue.   If the dealer adhears to his 50, 60, or 70  year old outdated franchise agreement, and if his building is paid for, he can be there forever.  You can end up with two Chevy dealers just "existing" in the same town of 6,500 and you can't touch them.  You can't turn around GM's dealer network on attrition.
Unless of course the manufacturer goes out of business and then all bets are off.  And here we are.

[no318]

However, all of those small dealers still had to meet chry. training standards, paid advertising, paid franchise fees, bought all the special service tools, parts, vehicles, etc.  EVEN if they sold a small percentage of cars, they sold SOME, advertised some, and were a "feeder" for some of the bigger stores nearby.  AND it didn't cost Chrsyler corporate anything to have them there, other than some administrative zone reps, etc, but again, isn't that what the DEALER is paying for, not corporate Chrysler.  I don't see how Coporate Chrysler (& GM) stand to save much money by eliminating self sustaining dealers.

Within 50 miles of me (I am in Nebraska in a town of 8000), we lost 4 GM dealers, One dealer still standing and they lost Cadillac (and obviously Pontiac).  We lost 2 Chrysler dealers.  Still have 3 Ford in that same area.  Where do you think everyone is going to buy?   I think many folks will still buy local and buy what they can get local, be it Ford, Honda, or Toyota. 

[stripedelete]

However, all of those small dealers still had to meet chry. training standards, paid advertising, paid franchise fees, bought all the special service tools, parts, vehicles, etc.  EVEN if they sold a small percentage of cars, they sold SOME, advertised some, and were a "feeder" for some of the bigger stores nearby.  AND it didn't cost Chrsyler corporate anything to have them there, other than some administrative zone reps, etc, but again, isn't that what the DEALER is paying for, not corporate Chrysler.  I don't see how Coporate Chrysler (& GM) stand to save much money by eliminating self sustaining dealers.

Within 50 miles of me (I am in Nebraska in a town of 8000), we lost 4 GM dealers, One dealer still standing and they lost Cadillac (and obviously Pontiac).  We lost 2 Chrysler dealers.  Still have 3 Ford in that same area.  Where do you think everyone is going to buy?   I think many folks will still buy local and buy what they can get local, be it Ford, Honda, or Toyota. 

I agree with your statement in regards to costs.  It is not a cost issue.   If you can't force an undercapitalized/poor dealer to make changes(due to franchise agreement) then you can't force larger more well capitalized dealer to make changes(due to franchise agreement).   Makes it tough to turn the ship.

There were more politics (axes to grind) in the GM closings. Maybe in your area you will see a GM dealer come back.  Or, the franchise will go to some one else (this is where it gets really scary - remember who owns GM?  You get your franchise yanked and two years later it is awarded to someones uncle's cousin's brother's buddy that gave 100K to the state senator re-election fund.  Don't laugh, I'm not paranoid,  it has already been tried.  Any way that's a whole nother thread). 

More on "axes to grind":  If you put your unbaised,  GM exeecutive hat on, and look at the map in my county and maybe make a couple of dealer visits, it will  be VERY EASY to pick the two Chevy dealers to be closed.   However, they were not closed.  The stronger larger Chevy dealer was closed.  This followed ABSOLUTLEY no BUSINESS logic. (note: there are other Chevy dealers in the county - it's not about leaving only one point.)   It was closed because that dealer, his father and his grandfather had kicked GM in balls for 80 years.  Maybe with good reason, the factory can dirve you out of business if you let them.  BUT -  "pay backs are a bitch".  It is not in GM's best interest to close this point, due to demographics.   They will sit tight and when one of the other two fail  they will re-open the point.  Or they will just wait for the economy to turn and reopen the point anyway.  It's just like your job.  If you call off every monday morning, get the flu 5 times a year, have ten grand parents die every year, they may not call you in and fire you.  But, when it's time to down size, your position is the first to be eliminated.

As far as Ford goes, they have not entered bankruptcy, therefore, they have not touched any points.  Also, Ford has been more aggressive over the last 30 years in eliminating points when they went out of business or not allowing them to change hands. They did alot of "father to son, but no further".  There are still open points out there under this case.  When the son is done the point is done.

Glad you brought up Toyota.  In many counties they out sell Chevy with 1/2 or 1/4 of the number of dealerships.   Look for domestics to follow their example.