OT-GM Closing Small Town Car Dealers

Two area GM dealers are being closed in towns 30 miles apart.One has 3000 people and the other 10,000 people.The word is GM terminated their contracts because of low volume.Neither was in financial trouble.In fact one dealer is very wealthy.

The day of no car dealers in smaller towns is fastly becoming a reality.

People complain about the price of vehicles. Then they complain when the company cuts costs to keep the vehicle prices down???

Having a dealer doesn't cost GM anything because they charge the dealer for every little thing.

In the '50s, in our little town, there were 6 tractor dealerships and 6 (new) car dealers; of the 12, only John Deere is left and it was sold last year to a corporation which owns dealerships in surrounding towns; there's talk that it may close. Things change..............

I thought GM had already bought out all the small town dealers back in the early 90's. Glad you were able to have dealer in a town of 3,000 this long.


Dave

around my neck of the woods closed the dealerships years ago. With the exception of one, its a chevy dealer in a town of less than a thousand people. Don't look like they'll ever close him down, we see lots of trucks with his name on'em.

They probably shut down on their own. Sales are way down. The dealer's franchise contracts make it very hard for GM to shut them down. I never heard of a volume restriction, if there is one, it must be pretty low.

Someone correct me if I'm wrong, but I think I read that a car company can't close a dealer down because of low sales. Jim

They may not close them but they sure do not help them. They tell them they have to have a new building or so many dollars worth of parts etc. They have their ways. Just like all companys the mom & pop stores made them, now they won't even send a truck to their store because they do not buy enough. Coke is a good example, the big discount stores sell them cheaper then little stores can buy them wholesale, if they can even get a salesman to call on them.

Rumor for months now that the Chevy dealer is going to close in town of 14,000 here. He's down to very little inventory, looked like a baker's dozen of cars on the lot today. I suppose it will be combined over to the Pontiac dealer which has a 4 year old building & lot.

Ford/ New Holland basically shut down the local tractor dealership, it's parts only now. NH demanded they put in all the support for & sales of the Yellow combines, and those things do _not_ sell around here. I only know of 2 running in this county. Pretty hard to put in the training, parts, and fees to support 2 farmers.... So they just pulled away from NH, going to NH compacts for a while, now just NH parts (pretty good older service man for repairs tho) as Kubota was outselling NH anyhow.

There is a pretty stong Ford car/truck dealer in town, with a bigger branch in the neighboring town of 3000. They had plans to build a new building, bought another 1/2 block a couple years ago, but I would certainly think that plan is on hold for now.

The Chrysler/ Dogde dealership was folded a year or 2 ago, and went in with the Jeep dealer in town. This was right as the auto sales collapsed, so there is very little Dodge trucks viewable in town, they never put in much inventory. Too bad, as I kinda was partial to them. I think this dealership promotes Kawasaki heavier than Dodge/Chrysler/Jeep, but not telling them how to run their business, it can't be easy from their side of things!

The JD dealership merged with a group of dealers some time ago. JD id paring down their network, to be run by large franchises owning several dealerships.

IHC/Case left years & years ago - decades ago, as did Agco.

--->Paul

An announcement just this morning that the GM dealer in Centralia/ Chehalis (probably 20,000 people between the two towns) is closing. Owner said on radio that they had lost their "flooring"- I suspect they may not have lost it completely, just a new set of rules that would have forced dealer to pony up a couple hundred thousand bucks to continue.

There's a big "auto mall" in Olympia, 30 miles to the north- so this little dealership was probably considered expendable. More people out of work, a 60 year "institution" in this town gone.

I'll go out on a limb... maybe the 'credit-crunch' is getting to them...in the past financial institutions we're able to 'swing' better packages to allow them to afford the inventory needed to stay 'branded' (weather it's cars-trucks-tractors etc) Some of these dealers may have hit their credit limit alot sooner than in previous years and may realize they can't operate soundly at that level and are opting out.

my 2 cents with change left over...

We had a factory shut down here, 300 employees, because the bank pulled their line of credit. I think there is a lot of that going on.

The only new car and truck we have around here is a combined GM and Chrysler. Ford made some demands on our local long time dealer several years ago, and they just closed up. Ford then followed suit by closing down most of the dealers in the surrounding communities as well, and now it is very rare to see any Ford vehicles anywhere.

Looks like a prime opportunity for a young man to start up an independent, full service auto repair business.

Rumors here in Canada is that GM is closing all its dealerships and is going to sell their product themselves.

With the complexities of modern vehicles, it takes a lot of cash flow just to justify paying for all of the training and equipment to service the vehicles. And it costs the small dealers as much as the large ones. Ergo, some of the small dealers simply can't afford it.

Twenty years ago, I was briefly Service Manager for a small local Ford dealer. The Sales Department didn't have that much inventory. They couldn't afford it. I was trying to support the entire business with the service department and it didn't work. I had it headed in the right direction, but I had too little, too late.

On payday, it was a race to the bank to get your check cashed before they started to bounce. I went to work at the usual 7:30 one morning, and about 8:15 it dawned on me the phone wasn't ringing as it usually did that time of day. I picked up the phone and it was dead. It had been shut off. We managed to get the bill paid so it was turned back on.

The place was finally sold, and I was job hunting because the new owner brought his own management people. He offered me the body shop, but I'd had dealings with him before and didn't like him or his terms.

Much as I hate to see the small, friendly dealers crowded out, and much as I have fond memories of that situation, I have to ask it. Is this really the kind of operation you want working on your new $30,000 vehicle?

That particular dealership has since been bought again by someone well-heeled enough to put up a whole new building and operation out by the Interstate, five miles from the original.

IHC closed a lot of dealers around here maybe thirty years ago. If you owned an IHC dealership and you wanted to retire it was either sold to son or daughter (immediate family) or IHC closed it down. Loss some very good dealers that way. JD came around a few years later and told small dealers to put in their (JD) computer system or loose their dealership. The one I knew said by the time he bought all the puter stuff and had it installed JD way it would cost him close to $50,000. He didn't sell enough parts to pay for so he closed up shop. TRhats how these companies get around any firing laws, legal as heck.

I wonder why the small dealers can't do what the John Deere dealers did in this area, that is, to make a consortium of several dealers in partnership to act as one bigger unit.

M Moline is right on. We have a dealer here that had three small town dealershios. A couple years ago JD called him up and him a deal for four more, two fairly and two small ones. He said the deal he got was so good he couldn't turn it down. JD would have clsed them otherwise.

We have a local car dealer that used to have a GM dealership in a small town near here, Then he bought out the GM dealer here, then the Ford dealer, and several other dealers in the NE IA area. Now has GM, Ford, and Chrysler, with dealerships in 6 or more towns. ps: I taught him how to fly years ago, but wont buy a car from him if I can help it!!

GM nor Ford nor Chrysler can arbitrarily shut down a dealer...period. They all have franchise agreements and in most states they are written to protect the dealers...even the bad ones. One of the untold stories is that GM can't arbitrarily downsize it's dealers any more than they can arbitrarily reduce UAW wages. Therefore, it is a problem very tough to fix. If GM decides to consolidate dealers in an area ( as many on this board have mentioned) they must buy out the dealers inventory, his parts, his special tools and possibly land and buildings plus "blue sky" costing millions of dollars even for very small dealers.

From 1979-82, all the local GM dealerships were folded into one. First the Chevy and Buick dealerships closed, then a local oil distributor decided he wanted to be able to buy new Chevy trucks, so he bought the Olds dealership--at the owner was looking to retire--and then added Buick and Chevy. The dealership muddled along until about 1990-1991, when a multiline GM dealer from another county bought the dealership and made the previous owners "vice-presidents". That meant that they were partners in a dealership with the new owner's name, and had to share in the losses but had next to nothing to say about how the dealership was run.

About the same time, the local Pontiac-GMC dealer was told by GM that he either had to build a new building or give up the franchise. He'd been in the same location since the 1940's, and really never did a huge volume anyway, so he continued as a truck and school bus repair shop and added Bobcat rentals to his business when GM went away to the multiline dealership.

The local Ford dealer's franchise is probably safe, because Ford built the dealership in the early 1980's as a dealer-development shop, since the dealer is a black man in a predominantly white community. He recently remodeled the place, and Ford will probably keep him around as long as possible.

The local Mopar dealer started out selling used cars in the '60's with his two brothers as partners, and they managed to get a Chrysler/Plymouth Dodge dealership in about '68. Unfortunately, they built in a part of town that's now off the beaten path, since the bypass and I-64 went in around 1973-74. Two of the brothers died in a farm accident about 20 years ago, and the surviving brother has become a bit of a community philanthropist, as well as building a reputation for fair deals, especially making sure that widows and old folks are treated fairly in his shop. Odds are that the number-crunchers at Chrysler won't be impressed by all this, if his sales numbers drop off.

The county immediately west of here has NO new car dealers, the last one closing shop in the late '80's as well. So that's a consideration in keeping the current dealerships open.

GM dealer back home got shut down by GM 2 or 3 years ago. They had more service business than they could handle, but just weren't selling enough NEW cars. The GM off lease type cars they were having luck selling wasn't good enough for GM, along with the fact the repair department was so good people would fix cars they otherwise may have traded in. The crappy Ford dealer is still there, I wouldn't trust them to fix a bicycle. They won't take any checks or credit cards, CASH ONLY unless you are the City/County/or school district. They own all the school buses and lease them to the school. DOUG

Don't think so. They are going to cut Canadian dealerships by at least a third, and I think there's lots of room to do it. We have 2 dealers here directly across the highway from each other, both in pretty new setups, one selling Pontiac/GM/Cadillac, the other selling Chev/Olds/Hummer whatever. They can look directly into each others showrooms all day. You'd think there might be even a little friendly competition but their prices are fixed at exactly the same for the comparable vehicles.

Out here they all owned by a few people the competition is nil to none.

When i was a kid we had a Chevy Dealer in my home town of 350 people they had a Model A Ford Tow truck in the fifties.

Now its hard to find one in any city under 10,000.

Walt

I wouldnt worry about it all the bad news is just made up anyway. There is nothing wrong with the economy today. Everything is fine just read the posts from some of these right wingers on here.

Certainly GM has not promoted rural dealerships for many years. However, the current push is to eliminate urban and suburban dealerships. Even GM can recognize that they don't need half a dozen dealers within a few miles of each other.

There is a town of 3000 near here with a GM dealership, but for us to go to any other dealership it is a 40 mile drive. I tried to buy a vehicle or two from the local guys, but they wanted to stop negotiations at the factory sticker price. They do a pretty good business, though so the must make deals with somebody.

The dealership I bought my first car from was Chris Volz Motors. It was the first full line GM dealership, and was located in Milan, IN (Hoosiers). For years they were one of the top Cadilac dealers in the country. Chris Jr. took over from Sr, but his (Jr's) son was a pothead who kept wrecking new cars. The dealership was sold to the top salesman, and then GM encouraged them to sell to the Chevy dealer in the county seat. It was that or replace the shop to meet OSHA and EPA rules. Ripley county still has 2 GM, 1 Ford, and 1 Chrysler dealer.

Last I knew Decatur County didn't have a Honda dealer, just Honda's newest plant. Now that I find funny.

This evening I talked to a friend that works at one of the dealers and it sounds like GM basically forced them out financially.They were going to have to come up with alot of money and assume alot of risk which they chose not to do.He couldnt tell me everything.

The one dealer is a 3 generation dealer that has been in business for over 70 years.Over the years I've bought 6 new vehicles from them..Lots of people will now have to drive 40 miles to the nearest GM dealer.The other GM dealer was the last car dealer left in its county.Just a few years ago they had 3 new car dealers.

The rumor is that our local Ford-Chrysler dealer is having problems too so our county with 25,000 people in it may soon have no new car dealers left.When I was a kid there were 7 new car dealers in town.

A bunch of smaller vending and bottling companies in North Carolina formed Carolina Bottling in the past year. When we go to deliver to them, we never know what the sign out front will say. But it's the same idea, kinda like a buyer's co-op.

It's all about selling new vehicles. I went through the same on an infinitely smaller scale when I was in the boat repair business. I added a McCulloch chainsaw dealership to take up the slack over the winter.

All McCulloch wanted you to do was sell new saws. And it was difficult to make any amount of money doing that. For one thing, they were always jacking around with prices. One time I bought 8 or 10 of a particular model of saw to fill out my inventory, and about the time they were delivered McCulloch got into a price war with Homelite and lowered the list price on that particular saw by $20. Plus, you seldom sold a new saw for list price; you always had to throw in a jug of bar oil, or whatever, to close the sale.

I could tune up a man's saw, sell him a new bar and chain, and make more money than if I'd sold him a new saw. But--McCulloch wasn't interested in after-the-sale service, all they wanted to do was sell new saws. We parted ways by mutual agreement several years later. They did buy back my entire inventory of saws and parts, though.

Right now, all the auto manufacturers want to do is sell new vehicles to clear out their inventory.