Chrysler and GM Closing Car Dealerships - Will It Hurt Sales?

The WSJ reported Monday that Chrysler and GM are close to identifying which of their dealers are going to be axed and should let the winners and losers know their status in the next few days. That’s hardly earth shaking news but it did raise a question in my mind.

Would the fact that a dealer might not be around influence my decision about what brand of car to buy? All other things being equal, I think it might.

I would think twice about buying from a Chevy dealer that wasn’t going to be there in six months when I needed service. Not that I think I couldn’t get the car taken care of by another Chevy dealer but I might not like the prospect of driving across town for that service rather than taking it to a dealer a couple miles away.

I don’t suppose they’ll tell us who is going to be closed down — that would spell instant death to any of the losers — and I’m sure if I ask the dealer if they are one of the chosen that I will get a “yes” answer so I’m going to be put in the position of buying and hoping. The only way I’ll probably find out that I made the wrong choice is when I call for a service appointment and I get the recording that the number I’m trying to reach is no longer in service.

Now I could probably live with that, but here’s something that would concern me.

The transplants’ dealers have far larger territories than do their domestic counterparts. Their dealers physical plants are designed to handle the volume of service cases that their territories imply. Such would not be the case with a domestic dealer. In a lot of cases the survivors may be significantly undersized in their service operation since it was designed for a smaller territory and therefore a smaller volume of repair business. There might be some service issues there I just don’t want to touch.

Now I could have this all wrong, so if there are some pros out there that know the ins and outs of this end of the business let me know if I’m off the mark. And even if you aren’t an expert let me know if there’s anything about closing dealerships that would make you skittish about buying a GM or Chrysler product.

Comments

[User 158164:]

Does the fact that Honda and Toyota have a small fraction of the dealers compared to GM hurt them?

May 12 12:44 PM

[Thadeus III:]

Exactly. The "foreign" brands have far fewer dealers. Shall we talk about Toyota loosing sales for the first time since 1937 and it's relatively small dealer network? The negativity from some of these authors regarding our American Brand car makers is astounding. They must be Toyota stock holders. Go ahead, keep driving the business down and wages down with your negative articles. More of the same negative rhetoric.

May 12 01:22 PM

[User 412656:]

yes


On May 12 12:44 PM User 158164 wrote:

> Does the fact that Honda and Toyota have a small fraction of the
> dealers compared to GM hurt them?

May 12 03:06 PM

[User 412656:]

Toyota and Honda would have outsold GM and Ford long ago if it were not for their smaller dealer network

May 12 03:13 PM

[goundas:]

I think the last responder missed the point completely. Many domestic dealerships are still sized to handle only their local, i.e. smaller markets. Most import dealerships are of a larger scale and could handle the increase in business if their nearest competitor went out of business. I believe the concern of the article is whether or not domestic dealerships can handle the increase we are likely to see if our nearest competitor were to go out of business. YES. I work at a Chevrolet dealership and we rebuilt, after Hurricane Katrina, a facility capable of hadling 2-3 times the customers we are seeing now. GM has standards for new showroom / service facilities and for the past few years has required these to have the capacity to service many more customers.

May 12 03:55 PM

[goundas:]

I can only assume that you drive a foreign car. Did you know that Chevrolet regularly beats out Honda and Toyota in initial quality on similar product - Malibu did it in 2008 vs Camry & Accord. Oh, by the way, it was a new model, in its first year of production. And those Honda trucks sure are nice. I cannot speak for Chrysler and Ford, but, I have driven and compared GMs line to the competition and I am proud to be driving and selling the best cars and trucks in the world! When you get a chance, go to a Chevy dealership and drive an Impala or Malibu or Silverado or the new Camaro and then make a decision on today's offerings. Don't simply remember the bad old days. Give us a shot and we'll give you a quality product!


On May 12 03:13 PM User 412656 wrote:

> Toyota and Honda would have outsold GM and Ford long ago if it were
> not for their smaller dealer network

May 12 04:02 PM

[ebworthen:]

OMG!!!

O.K., so today Chrysler announced closing 768 dealerships and said "profitability of the dealership was not the primary factor" but rather "location".

LOL!!!

Brilliant!

And they wonder why they are having to declare bankruptcy!?!?.

Unbeleviable.

Somewhere along the line idiocy has been heavily rewarded.

May 14 04:13 PM