I'm curious. How does closing a dealer save an auto manufacturer money? The dealers buy the cars and parts from the maufacturer. If the dealer can't sell them, the it's the dealer that's stuck, isn't he?
Even if a dealer only sells one care a month, the manufacture makes a profit on that car.
Not after looking after all the paperwork. There is a cost to the manufacturer just to maintain the files on a dealership. Then there is the "co-op advertizing" costs. And all the training costs (new product awareness and service training, etc - all covered by "corporate"
If they are only going to sell 100 cars a month in a geographic area, it costs less to have one dealer do it than 5.
And, there is less chance of a customer having two (or three) dealerships compete against each other for the low-ball price.
A lot of these dropped dealerships got screwed big time over this. The irony is that Chrysler has been twisting their arms to buy some cars and have them sit on their lots. Now the actual people in charge won't buy their cars back.
The dealers also have to be supplied with training, contracts, factory representatives, books, brochures, etc. All of this costs money.
jeff
Competition and advertising would be good for Chrysler, not bad for it.Chrysler doesn't care if their cars are sold at the dealers for $13,000 or $20,000, as long as they are sold.
The actual people in charge didn't strong arm the dealers. They got stuck with a horrible mess.
Of course, it still sucks for the closed dealers. I do feel sorry for them, particularly because minority dealers are particularly hard hit.
Jeff
Absolutely not true. If the cars are sold for $13,000 instead of $20,000 it depreciates the brand in the public eye. Deep discounting is to be avoided whenever possible.
Minority? I believe you mean minor - the small guys who really work at surviving.
A lot of dealers have a floor plan, financed by the factory, or Borg Warner. That costs $$$$$$$$$$!
Steve R.
No, I meant minority, as in not white. Minority dealers tend to sell fewer cars per year and be located inside cities, where they have less space.
My great-grandfather used to work in the mines underneath Scranton, PA. He was a fire boss.
Jeff
MotorsForum website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.