dealers shutting down

[Txwalt]

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.

Walt

 

[cowboy43]

I don't believe anyone can answer that question without it being political so I will keep my thoughts to myself.

 

[larryshoat]

I wondered the same thing. It looks like they would have wanted more dealers instead of less :? .

Larry

 

[bigbull338]

the manufacture doesnt own the dealerships they are closing.when their contract is up they arnt renewing it.i know our local chevy dealership dosent have meny new cars an trucks on their lot.an ive heard that chevy isnt going to renew their contract when it comes due.an i also know that the dealership has had major probs in the last few months.

 

[Jovid]

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.

Walt

The way it was explained on the news was that the less dealers in an area the less the competition which results in higher prices for you and me

 

[Jogeephus]

Makes it a grass roots problem to gain support.

 

[1982vett]

Funny that they don't get it Walt. It isn't competition that is the problem. The problem is the sticker price.

 

[larryshoat]

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.

Larry

 

[Jogeephus]

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.

Larry

Don't think they would do that for another reason. GM has been planning for several years to close many of their smaller dealers and form mega-dealerships. This is an attempt to control autos. Under this strategy, their thinking is that people will not be able to afford vehicles and will only lease them. Carrying this a bit further, they had hoped to use OnStar to track their vehicles. So if you were a customer and flew to Denver you could call them and they would tell you where a vehicle was parked and you could just get in it and drive. Customers would never have to service the vehicles, pay insurance, etc. Personally I don't think it would work well but what do you expect from people that just don't get it.

 

[john250]

The automakers won't need many dealers to serve the demand for those 39 mpg cars they will be building.

 

[alacattleman]

there was around 500 of those GM dealers that sold 35 cars or less a year, alot of em had other car lines im sure that was their bread and butter......we were fortunite not too get cut. we are a small dealer but when times were good we kicked ass.

 

[HerefordSire]

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.

 

[alacattleman]

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.

a sale without a profit, is a donation :cowboy: