Nearly 1 in every 5 dealerships will close this fall!

[likearock00]

Meanwhile, separate report out Wednesday showed the industry fallout: Nearly one in every five car dealerships in the U.S. will close this fall, consulting firm Grant Thornton said.

"An increasing number of dealers are simply closing their doors because sales have plummeted, credit has dried up, the overall retail environment is increasingly challenging and potential investors are sitting on the sidelines," said Paul Melville, a partner at Grant Thornton. "In addition, the domestic automakers who badly need retail consolidation are not spending much of their scarce capital on the problem, because the economy is doing it for them."

An estimated 3,800 auto dealers will go out of business in coming months, Melville said, up from a previous estimate of 2,700.

Bill Heard Enterprises, once the No. 11 U.S. dealership and the country's biggest Chevrolet dealer, filed for bankruptcy protection last week, closing 14 dealerships in Alabama, Florida, Georgia, Nevada, Tennessee and Texas. It also laid off most of its 3,200 employees.

"The declining automobile market, the high price of gasoline and its effects on sales of the dealership's core products, such as heavy trucks and SUVs, and the difficult financing conditions the automobile industry as a whole has faced because of the subprime lending industry collapse all contributed to the decision to close the facilities," the dealer -- once known as "Mr. Big Volume" -- said on its Web site.


http://articles.moneycentral.msn.com...es-plunge.aspx

[t-rex]

Originally Posted by likearock00

Bill Heard Enterprises, once the No. 11 U.S. dealership and the country's biggest Chevrolet dealer, filed for bankruptcy protection last week, closing 14 dealerships in Alabama, Florida, Georgia, Nevada, Tennessee and Texas. It also laid off most of its 3,200 employees.

Maybe having 228 employees per dealership was part of his problem!

Maybe GMCSonoma or some other dealer guy in here can tell us if this is an excessive number of employees for a dealership... It sure sounds like it is!

I'm trying to add it up: say, receptionist, a dozen salesmen, a sales manager, F&I guy or two, warranty clerk, TTL clerk, two or three porters/washers, parts manager, two or three parts counter guys, a parts runner, service manager, two or three service writers, a dozen techs, two or three body/paint guys, half a dozen "girls in the office" and the G.M...


Seems like even an average-sized dealership would be seriously overstaffed once payroll hit 100 employees.

[johnnyl321]

Originally Posted by likearock00

Meanwhile, separate report out Wednesday showed the industry fallout: Nearly one in every five car dealerships in the U.S. will close this fall, consulting firm Grant Thornton said.

"An increasing number of dealers are simply closing their doors because sales have plummeted, credit has dried up, the overall retail environment is increasingly challenging and potential investors are sitting on the sidelines," said Paul Melville, a partner at Grant Thornton. "In addition, the domestic automakers who badly need retail consolidation are not spending much of their scarce capital on the problem, because the economy is doing it for them."

An estimated 3,800 auto dealers will go out of business in coming months, Melville said, up from a previous estimate of 2,700.

Bill Heard Enterprises, once the No. 11 U.S. dealership and the country's biggest Chevrolet dealer, filed for bankruptcy protection last week, closing 14 dealerships in Alabama, Florida, Georgia, Nevada, Tennessee and Texas. It also laid off most of its 3,200 employees.

"The declining automobile market, the high price of gasoline and its effects on sales of the dealership's core products, such as heavy trucks and SUVs, and the difficult financing conditions the automobile industry as a whole has faced because of the subprime lending industry collapse all contributed to the decision to close the facilities," the dealer -- once known as "Mr. Big Volume" -- said on its Web site.


http://articles.moneycentral.msn.com...es-plunge.aspx

Guess we'll see which dealerships are stable and which are "a mile wide and an inch deep"

[stk]

Originally Posted by t-rex

Maybe having 228 employees per dealership was part of his problem!

Maybe GMCSonoma or some other dealer guy in here can tell us if this is an excessive number of employees for a dealership... It sure sounds like it is!

I'm trying to add it up: say, receptionist, a dozen salesmen, a sales manager, F&I guy or two, warranty clerk, TTL clerk, two or three porters/washers, parts manager, two or three parts counter guys, a parts runner, service manager, two or three service writers, a dozen techs, two or three body/paint guys, half a dozen "girls in the office" and the G.M...


Seems like even an average-sized dealership would be seriously overstaffed once payroll hit 100 employees.

Yup that would be way too much people for a single dealership. I think you misread.

They CLOSED 14 dealership but they OWNED more then that. They closed the ones that are not profitable and laid off people in other dealership. The article say's they have 3200 employee total and laid off most of them.

Suppose a simple number of 100 employee per dealership, they close 14: 1400 employee, and remove say 25% of the other employees in other ealership: 2800 X 25% = 700 employee there also. In total it would make 2100 employee kicked out the door, which is more then half and would still allow the other 28 dealership to survive.

[t-rex]

Originally Posted by stk

Yup that would be way too much people for a single dealership. I think you misread.

They CLOSED 14 dealership but they OWNED more then that. They closed the ones that are not profitable and laid off people in other dealership. The article say's they have 3200 employee total and laid off most of them.

Suppose a simple number of 100 employee per dealership, they close 14: 1400 employee, and remove say 25% of the other employees in other ealership: 2800 X 25% = 700 employee there also. In total it would make 2100 employee kicked out the door, which is more then half and would still allow the other 28 dealership to survive.

Oh. It's been my understanding that Bill Heard only owned 14 and closed all of them. I reckoned filing for bankruptcy meant an end to all of his business!

[MrCritical]

The bankruptcy is an attempt at stopping the millions of dollars in lawsuits against them.

"An economic downturn" means the court cases were getting close, and in some cases their license to operate had been yanked or threatened to be yanked.

[AndrewGS]

Originally Posted by t-rex

Maybe having 228 employees per dealership was part of his problem!

Maybe GMCSonoma or some other dealer guy in here can tell us if this is an excessive number of employees for a dealership... It sure sounds like it is!

I'm trying to add it up: say, receptionist, a dozen salesmen, a sales manager, F&I guy or two, warranty clerk, TTL clerk, two or three porters/washers, parts manager, two or three parts counter guys, a parts runner, service manager, two or three service writers, a dozen techs, two or three body/paint guys, half a dozen "girls in the office" and the G.M...


Seems like even an average-sized dealership would be seriously overstaffed once payroll hit 100 employees.

His dealers in Houston, especially Landmark, were freakin' huge. They probably had a total of 75 salespeople, 100 more in parts, another 50 in the shop, plus all the other positions like porters, finance, accessories, etc. Between Landmark on the Northside and Bill Heard in Sugarland there were about 750 employees.

[63GrandSport001]

This is going to have a further negative impact on our economy as the 3,800 dealers lets say had an average 75 employee per dealership. Thats 285,000 people that are going to be out of jobs from the dealerships that are closing and not to mention the dealerships that will be down sizing. This is going to have an impact that will echo through out the economy as these people wont be buying as much things and considering that almost everyone is laying off its un-likely that they will find a drop. Even worse if they find a job at Burger King or a place like that its not going to be enough money to pay off a car and a house note plus all of the bills that come along with it that they might have been able to afford as a salesmen. Its a screwed up situation that we are getting into.

If a dealer can manage to make it through this tough period then when the economy starts to come around then there will be fewer dealers to share growing sales.

[MonaroSS]

As bad as this may be for the dealerships, their employees and their families and communities, it's actually one of the few good things to happen for GM who has too many dealers.

[johnnyl321]

Originally Posted by MonaroSS

As bad as this may be for the dealerships, their employees and their families and communities, it's actually one of the few good things to happen for GM who has too many dealers.

if GM can reduce the production to make what's selling and tell the unions that whatever deals they had going are now off, then yeah, it may help. but, it's the dealerships that BUY the vehicles from General Motors. they're not given to the dealer for free to mark up 20-40k. now, most dealers have already reduced the number of vehicles they're buying because the of current economic conditions, that in turn reduces how much money GM makes, which in turn causes layoffs, which in turn reduces how much money those 100,000+ workers make, which in turn causes them to spend less in their hometowns, which in turn.....you see where i'm going with this, right?
while it may help the DEALERS who stay in business after this mess is over, it's going to get a lot uglier until then. do you have any idea what will happen if almost half a million people were to lose their jobs? 700 billion dollars would be just a start.

[doh]

Profit margins for the Dealership network have been shrunk and shrunk over the last 8-10 years. The manufacture's attitude was one of "Survival of the Fittest"

Ford's answer for 2009 is, Dismissal of the "Full Tank of Gas Program" and Ford credit's "No Dealer Reserve" on all Ford Credit's finance paper writen by thier Dealer's.

The overall end result will be the "Consumer must pay extra" it will be passed down believe me. At the dealer level, we have already been spread "Way Thin"

The truth of the matter is that it costs a dealer X # of $$$$'s/car they sell, to keep the lights on, buy the needed hardware/software, tools and training to keep your car running.

We have been adapting for about 10 years so far, the big 3 need to look at themselves for a quick turn around more than thier Dealers.

I know I talk from a town of less than 10000 ppl, but there is already only 1 GM dealer,(used to be 2) 1 Chrysler dealer, and 1 Ford dealer. (closest import dealer is 20 miles away).

I lived through a GM merger of the PBG with the CO dealer in 2000. GM stated that the new mega dealer would keep 75% of the combined New Car Sales and 100% of the combined Used Car Sales. They have a little over 1/2 of the combined sales, New Car Sales have taken the worst hit, at only a fraction above the original CO dealer's total. (i.e. CO dealer did 280 new per year, PBG dealer did 255/year, new dealer does 305/year) Costs of doing that business before GMAC's new finance charges, Tech Training, Shop Tools, etc. has increased 160%. Warranty repairs have decreased 160%.

Most customer's that have a sour taste in thier mouth from once dealing with dealer X, will not buy from dealer X reguardless of what they are selling.

[zete]

It is ironic that the current economic meltdown might do for GM for free what they need to do re: dealerships.

[tgagneguam]

Seems reasonable, though unfortunate for many who work at these dealerships. It is indeed the survival of the fittest, and it sounds like dealership pruning is long overdue.

[stevecmh]

sad to see.. but there is probably to many

[Xenon]

Originally Posted by johnnyl321

if GM can reduce the production to make what's selling and tell the unions that whatever deals they had going are now off, then yeah, it may help. but, it's the dealerships that BUY the vehicles from General Motors. they're not given to the dealer for free to mark up 20-40k. now, most dealers have already reduced the number of vehicles they're buying because the of current economic conditions, that in turn reduces how much money GM makes, which in turn causes layoffs, which in turn reduces how much money those 100,000+ workers make, which in turn causes them to spend less in their hometowns, which in turn.....you see where i'm going with this, right?
while it may help the DEALERS who stay in business after this mess is over, it's going to get a lot uglier until then. do you have any idea what will happen if almost half a million people were to lose their jobs? 700 billion dollars would be just a start.

Saying that is like saying the grocery store buys food for its own consumption, your local electronic store buys TVs for their own enjoyment, and the video store buys DVDs for giggles. Your forgetting that dealerships are the medium that cars are sold in between the customer, and the manufacturer. So dealerships folding on their own is a result of a lack in customers buying product, not necessarily a fault on GM's part.