So what is the deal. I don't understand how chrysler shutting down dealerships saves money. I thought the dealerships were owned by the dealers. I'm sure there is a reasonable explanation. I just havn't heard it yet.
Txwalt":tk8bpnv2 said:So what is the deal. I don't understand how chrysler shutting down dealerships saves money. I thought the dealerships were owned by the dealers. I'm sure there is a reasonable explanation. I just havn't heard it yet.
larryshoat":i2ccmny0 said:Call me crazy but if I were Ford I would go out to those dealers that GM and Chrysler are shutting down and cherry pick the best locations, make a deal with these desparate fellers and put Ford cars and trucks on those lots.
a sale without a profit, is a donation :cowboy:HerefordSire":2fel703q said:Plant capacity is being lowered. This reduces supply. Demand has already been reduced. By closing dealerships, the capacity is taken out of the system thereby lowering supply. Wherever demand and supply meets a sale takes place. Therefore, the trick to increase prices, is to lower supply hoping demand will increase in the future.
Historically, new vehicles are bait for the "bait and switch" to used cars and for back-end financing. Ever since stickers were required to be placed on vehicles to protect consumers, there has not been much mark-up in new vehicles so when the dealer made a new car deal, they focused on the back end trying to grab more than a couple of points on interest rates and marketing extended warranties. Additionally, new vehicles are nice to show depreciation logic to a consumer. A dealer can show the consumer how much a vehicle depreciates as soon the the vehicle is driven under new ownership, many times creating negative equity, unless the consumer places a large down payment towards the purchase. It is very easy for a dealer to convert a potential buyer to buy a year or two old same type vehicle with close to half the price in exchange for some wear and tear. This could lower the payment with the same amount of money down and the dealer can still tear someone's head off on the back end.