Off Topic - Dealership Closures

[Dick W.]

Re: Off Topic - Dealership Closures

According to local news reports this morning, a number of Chrysler dealerships in my area (SE PA) are being closed. Most are family owned dealerships that have been in business for many years. A few of the owners interviewed are already talking about seeing their lawyers ASAP. Here we go!!

I believe that the approval of the Bankruptcy Court will negate any claims the dealers may have. Without BC approval, the manufacturer would have a tremendous amount of exposure to legal claims due to franchise agreements.

[Kenneth H.]

Re: Off Topic - Dealership Closures

From the Hemmings Motor News, today:



Paying goodwill



This was added specifically to protect dealerships against bankruptcy by one of the Big Three. The legislation puts in place new protections for dealers so they will not be left in a financial bind for new car inventories, tools or parts when a manufacturer shuts down a product line.

In addition, the bill clarifies details of franchise agreements and creates a new system for reimbursing warranty service and labor costs. It also requires payment of the fair market value of the goodwill of a franchise if a product line is shut down.


- By David Traver Adolphus


Politicians always have to get their 2 cents in.

[Dick W.]

Re: Off Topic - Dealership Closures

I am not an attorney, but I believe that Federal law always trumps state and local laws. Federal bankruptcy court I believe can override that state law. But then again, the bloodsuckers will make millions in fees out of this. They are the only ones that will come out on top.

[Clem Z.]

Re: Off Topic - Dealership Closures

i just stopped at my chevy dealer and he made the first cut,no 1:00 o'clock phone call. they are ranked #7 in their dealer size group which includes 200 dealers. so far so good !!

[Tom L.]

Re: Off Topic - Dealership Closures

I am not an attorney, but I believe that Federal law always trumps state and local laws. Federal bankruptcy court I believe can override that state law. But then again, the bloodsuckers will make millions in fees out of this. They are the only ones that will come out on top.

Dick,

You are absolutely correct. Although I didn't learn much about bloodsucking in law school, I did learn that Federal law preempts state law.

Rest assured that the congressman is well aware of this. If his bill becomes law, any obligations GM incurs as a result will be thrown on the pile with all of the other unsecured debt that will never get paid. The bill is little more than a "feel good" vote getter.

Tom

[Gary C.]

Re: Off Topic - Dealership Closures

Have personal knowledge of Chrysler reasons for closing even profitable dealers. Basically, it's none consolidated dealers. In other words dealers that don't sell Chrysler, Dodge and Jeep. In some cases it doesn't have anything to do with profitability. Chrysler has been trying for the last 5 years or so to consolidate dealers and have dealers carry all 3 lines. This is Chrylser's opportunity to complete their consolidation plans. Recently, in Dallas one of the top five Ford dealers sold his dealerships. It wasn't that he was ready to sell, but Ford put so much pressure on him that he gave them up. This highly successful multiple Ford dealer was always pushing Ford. Even though he was highly successful Ford viewed this dealer as a pain in the rump. This just points back to the problem is more with senior management of the auto manufactuers than anything. JMTCW, Gary....

[Dick W.]

Re: Off Topic - Dealership Closures

Chrysler apparently did not play favorites either. They sent notices to six of the Auto Nation franchises. Auto Nation is the largest dealer group in the US. Number three, Sonic Automotive, got at least one "Dear John" letter. I have a couple of close friends that got their letters yesterday. I talked to one today and he said it was actually a relief. He has a couple of other car lines that are contributing to the bottom line, but the Chrysler was contributing 0%

[John H.]

Re: Off Topic - Dealership Closures

15 Metro Detroit Chrysler dealers made the hit list, and all 15 were either Dodge-only, Jeep-only, or Chrysler-Jeep dealers; none were Chrysler-Dodge-Jeep dealers.

[Bill M.]

Re: Off Topic - Dealership Closures

Tom-----
I am in 100% agreement. I do not understand it, either. They should just let market forces drive the attrition. No dealer is going to stay in business very long if they are losing money.

[Ralph P.]

Re: Off Topic - Dealership Closures

Great conversation. I was at a gathering last night and a few own car dealerships. The only real money is the advertising co-op they provide dealers, inside support staff where GM supplies "help" to delaers and the yearly holdback accounts that all dealers split. Lets be clear 99% of the dealership is carried by the dealer not GM. I didnt realize that GM/Ford are wildly strong in other countries but ours?? This President and Press are determined to close these factories all in the name making one look good? Let me see!! Everyone on this discussion owns a dealership, this President loans the banks money, this President loans the automaker monies then says get a plan that by June 1st to pull out of it! So the car mfg's shut down 2,500 collectively and again the one's I know will have NO choice but to file Chapter 7 which goes back to the bank problem!! So I guess in East Tennessee math that puts pressure back on the first group, Banks!! Our government needs to stay out of business and TRY and run and defend this great nation.

[Tom L.]

I think I found the dealership closure answer

This came from an NPR interview I heard with an auto industry analyst. It wasn't an official statement or position from a particular manufacturer, but it certainly does make a lot of sense.

The closure rationale he offered is that multiple dealers of the same brand in close proximity will bid against each other to make new car sales and thereby drive the price of the vehicles down. The discretion a dealer has over the sales price is largely limited to it's own profit margin. The erosion of the dealers' profit margin, caused by dealers of the same product bidding against each other, makes necessary the financial contributions from the manufacturers in the nature of dealer incentives, which are very costly. If the dealers are selling at or near cost, they will rely on manufacturer incentives as their source of profit.

Having many product outlets (dealerships) made sense when GM had a 50% market share. But now, the reduced demand has caused dealerships to fight for market share among themselves. In the end, the manufacturers pay the price for this artificial depression of the sale prices of their vehicles.

[Paul D.]

Re: I think I found the dealership closure answer

This came from an NPR interview I heard with an auto industry analyst. It wasn't an official statement or position from a particular manufacturer, but it certainly does make a lot of sense.

The closure rationale he offered is that multiple dealers of the same brand in close proximity will bid against each other to make new car sales and thereby drive the price of the vehicles down. The discretion a dealer has over the sales price is largely limited to it's own profit margin. The erosion of the dealers' profit margin, caused by dealers of the same product bidding against each other, makes necessary the financial contributions from the manufacturers in the nature of dealer incentives, which are very costly. If the dealers are selling at or near cost, they will rely on manufacturer incentives as their source of profit.

Having many product outlets (dealerships) made sense when GM had a 50% market share. But now, the reduced demand has caused dealerships to fight for market share among themselves. In the end, the manufacturers pay the price for this artificial depression of the sale prices of their vehicles.

Soooooo.... The whole problem with the car business is that we are not paying enough for our new vehicles? I personally feel other factors are at work here. My limited typing skills hinder my ability to elaborate but I will say as a public service, we should all go grab our represntatives in Washington and pull their heads out of the sand before they drown in it.
Or maybe not.

[Bill I.]

Re: Off Topic - Dealership Closures

May I suggest we just pour water in the sand and MAKE SURE THEY DROWN. Bill (It's called mercy killing, like when an animal is ill).

[Jim D.]

Re: Off Topic - Dealership Closures

From MSNBC -The average Chrysler dealer sells 300 cars a year. The average Toyota dealer sells 1300 cars a year. The average Honda dealer sells 1500 cars a year. Stevie Wonder can SEE the problem.

[Clem Z.]

Re: I think I found the dealership closure answer

Soooooo.... The whole problem with the car business is that we are not paying enough for our new vehicles? I personally feel other factors are at work here. My limited typing skills hinder my ability to elaborate but I will say as a public service, we should all go grab our represntatives in Washington and pull their heads out of the sand before they drown in it.
Or maybe not.

we are going to pay a lot more in the near future for everything not just our cars in the name of saving the planet