<span style="font-size:12pt;line-height:100%">Ford, GM consider culling dealerships</span>

"The Big Two have cut the number of their employees, benefits, factories, and executive salaries and dividends. Now executives of The General and Blue Oval are considering reducing the number of their dealerships.

General Motors has over 7,000 dealerships for its Buick, Cadillac, Chevrolet, GMC, Hummer, Pontiac, and Saturn brands in the U.S. (Saab excluded), while the Ford Motor Company has around 4,400 dealerships. The linked article compares both to Toyota Motor Co. which currently has 1,430 dealerships. While a Ford dealership may sell 780 vehicles on average, a Toyota dealership sells nearly twice as many.

Neither GM or Ford gave specific details on how either would reduce its dealership network. GM in particular was vague, after recently announcing the need to keep all of its brands."

 

<div class='quotetop'>QUOTE(BC_Shelby @ February 12, 2006, 8:30 AM) Quoted post</div><div class='quotemain'>
<span style="font-size:12pt;line-height:100%">Ford, GM consider culling dealerships</span>

"The Big Two have cut the number of their employees, benefits, factories, and executive salaries and dividends. Now executives of The General and Blue Oval are considering reducing the number of their dealerships.

General Motors has over 7,000 dealerships for its Buick, Cadillac, Chevrolet, GMC, Hummer, Pontiac, and Saturn brands in the U.S. (Saab excluded), while the Ford Motor Company has around 4,400 dealerships. The linked article compares both to Toyota Motor Co. which currently has 1,430 dealerships. While a Ford dealership may sell 780 vehicles on average, a Toyota dealership sells nearly twice as many.

Neither GM or Ford gave specific details on how either would reduce its dealership network. GM in particular was vague, after recently announcing the need to keep all of its brands."
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I've been saying this for years. There are about 15 Ford dealers in my market but only 4 Honda, 4 Toyota. If you eliminate half the dealer body each remaining dealer gets stronger. The better salespeople stay employed, the best service techs stay employed and the ones that shouldn't be in the business anyway go away. Each dealer sells more units, becomes more profitable thereby being able to build better facilities, hire and pay for better help and service their customers better. Count me in as a vote in favor of.

 

We have already lost Ford Dealers in my area, never to return.

 

GM's dealer network is for a market share of about 50%, so given they've fallen to around 25%, they need to pare down their dealers quite a bit.

 

I am in a smaller market area but there are 3 other Ford stores within a 10-15 min drive of us plus a Ford truck store. This does not cout the several smaller stores in the outlying areas.
There is a LOT of brand loyalty in our area so my biggest competitor is the other Ford dealers rather than the imports. We consistantly rank #1 in our entire zone of 30+ dealers.
I don't see Ford eliminating any of the medium market dealers but I would not be surprised to see some of the lower volume dealers in the rural areas go by the wayside. I for one would not like to see that because a lot of them are a viable part of their community and closing them would have very adverse impact those small town residents.

 

<div class='quotetop'>QUOTE(Karpro @ February 12, 2006, 6:16 AM) Quoted post</div><div class='quotemain'>
I've been saying this for years. There are about 15 Ford dealers in my market but only 4 Honda, 4 Toyota. If you eliminate half the dealer body each remaining dealer gets stronger. The better salespeople stay employed, the best service techs stay employed and the ones that shouldn't be in the business anyway go away. Each dealer sells more units, becomes more profitable thereby being able to build better facilities, hire and pay for better help and service their customers better. Count me in as a vote in favor of.
[/b][/quote]
[img]style_emoticons/<#EMO_DIR#>/werd.gif[/img]

 

<div class='quotetop'>QUOTE(ISELLFORD @ February 12, 2006, 12:50 PM) Quoted post</div><div class='quotemain'>
I am in a smaller market area but there are 3 other Ford stores within a 10-15 min drive of us plus a Ford truck store. This does not cout the several smaller stores in the outlying areas.
There is a LOT of brand loyalty in our area so my biggest competitor is the other Ford dealers rather than the imports. We consistantly rank #1 in our entire zone of 30+ dealers.
I don't see Ford eliminating any of the medium market dealers but I would not be surprised to see some of the lower volume dealers in the rural areas go by the wayside. I for one would not like to see that because a lot of them are a viable part of their community and closing them would have very adverse impact those small town residents.
[/b][/quote]

A few years ago the medium market dealership I was working for (see avatar) got bought out by a large Lincoln dealer. Within the past 5 years, Ford built them a large facility in a better location. The smalltown dealer that was now only about 10 miles from the new place disappeared. As I recall, (I left after the 1st year of the take over) Ford paid for the land and the facility. The new owner still has some pretty high connections in Ford and these more centralized facilities seem to be what they are working towards.

 

I have always been under the impression that car dealerships were small business ventures run by the owner(s) who also run the risk of success or failure in a free market. I have never heard of a manufacturer buying the land and building the facility. Am I wrong?

And I can't see that it makes any difference to Ford or any other manufacturer to reduce the number of dealers they supply unless its through normal business attrition or for cause, such as unethical business practices.

What am I missing here?

 

<div class='quotetop'>QUOTE(scottie1113 @ February 12, 2006, 11:00 PM) Quoted post</div><div class='quotemain'>
I have always been under the impression that car dealerships were small business ventures run by the owner(s) who also run the risk of success or failure in a free market. I have never heard of a manufacturer buying the land and building the facility. Am I wrong?

And I can't see that it makes any difference to Ford or any other manufacturer to reduce the number of dealers they supply unless its through normal business attrition or for cause, such as unethical business practices.

What am I missing here?
[/b][/quote]

Back in the day when I bought my Acura, the dealership was in a bad location (hard to get to, no room to grow, etc) and the general manager was telling me that Honda was going to buy them land and build a brand new facility to help increase Acura sales in the area (they were the only Acura dealership in a 100 mile radius).

As far as reducing the number of dealerships, I haven't heard of that being done before.

 

There are some locations which have not done as well as they should and Ford actually takes over the stores and makes them Dealer Development stores. Ford then puts a person in the position of dealer principal. If the dealer turns it around, he/she has the opportunity to become the sole owner.

 

I have 3 ford dealers in a 5-7 miles radius of me in a small-medium size market. It makes no sense to have them located so close. I agree with Karpro 110%. Have a larger dealership with your best people. If Toyota can do it with less dealerships, then obviously Ford and GM are doing it wrong. A larger dealer will work on volume. Moving vehicles faster, and streamlining the process IMO.

 

Though that's obviously sound business practice, you must also take into account the importance of proximity as far as routine dealer maintenence is concerned. While I would be more than happy to drive 30 miles to buy a new car every few years, I would be pissed if I had to set aside an entire day to driving out, waiting around, and driving back just to have a timing belt changed.

 

<div class='quotetop'>QUOTE(scottie1113 @ February 13, 2006, 12:00 AM) Quoted post</div><div class='quotemain'>
I have always been under the impression that car dealerships were small business ventures run by the owner(s) who also run the risk of success or failure in a free market. I have never heard of a manufacturer buying the land and building the facility. Am I wrong?

And I can't see that it makes any difference to Ford or any other manufacturer to reduce the number of dealers they supply unless its through normal business attrition or for cause, such as unethical business practices.

What am I missing here?
[/b][/quote]

You are missing that the new owner's high up Ford connections.

 

Thanks for all your answers. I learned something new here.

 

When I was Mustang Shopping last year, the big dealers were the ones charging the big markups. The small dealer (Maritime Ford, Manitowoc, WI) in our town gave me the best deal and actually had the best chance of getting a car. When we talked, his reasoning was this...

"We could put a big markup on the Mustangs, but we are dealing with neighbors and loyal customers who come back to us over and over because we are their home town dealer and we treat them fairly. If we screw with them, they'll go to the big dealers in Green Bay or Appleton and we'll lose them."

 

<div class='quotetop'>QUOTE(Juice @ February 19, 2006, 11:42 AM) Quoted post</div><div class='quotemain'>
When I was Mustang Shopping last year, the big dealers were the ones charging the big markups. The small dealer (Maritime Ford, Manitowoc, WI) in our town gave me the best deal and actually had the best chance of getting a car. When we talked, his reasoning was this...

"We could put a big markup on the Mustangs, but we are dealing with neighbors and loyal customers who come back to us over and over because we are their home town dealer and we treat them fairly. If we screw with them, they'll go to the big dealers in Green Bay or Appleton and we'll lose them."
[/b][/quote]

Same thing here in Milwaukee. Dealer that I bought F-150 from is not big at all, majority of their vehicles are F-150s. They had few Mustangs and Fusions, but majority is trucks.

 

My problem is i have to drive 30 minutes to get to a ford dealer, but we have 1 pontiac/buick/gmc dealer and 1 chevrolet dealer, and 1 dodge/jeep dealer in town, and i have a small town containing under 5000 people. I think Ford needs to relocate some of its dealers also, because alot of locals buy the other brands so they dont have to drive.

 

Reason for letting the market dictate who stays open. If one dealership ticks you off, you can go to other nearby one.

Unqualified personel will always be employed due to the somebodies Brother or In-Law unspoken rule of employment.