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Excessive Number Of American Car Dealerships Compared To Market Share Heart Of Dealership Problem

While some continue to draw in absurd political conspiracy tales about why some American car dealership numbers are being trimmed, obvious explanations continue to be ignored. The real fact of that matter is that Toyota with just 1,400 American dealerships sells nearly as many vehicles as GM does with as many 7,600 still open active dealerships. And Toyota easily outsells either Chrysler with 3,800 dealerships or Ford with 3,000 dealerships. Even the steadily climbing Hyundai sales are very strong despite just 695 active dealerships, far less than any American brand.chrysler dealership.jpg

The fact of the matter is that all three major American auto brands all have dealer networks far in excess for their actual market share, only splitting a shrinking market to the point that many dealers can just barely make a profit and remain open, scavenging each other for sales in a declining market. This is the obvious fact here. Yet the politically absurd only continue to blame the Obama White House for axing dealers or for political favoritism somehow influencing which dealers remain open, for what is a marketing reality or a responsibility of the Federal bankruptcy court to decide.

Sometimes when an explanation is so obvious, some will yet still continue to look for an absurd explanation, especially when it matches their political ideology, rather than a genuine search for the truth or facts.

Way too many dealers compared to their actual market share is the obvious answer here why American auto brands GM and Chrysler are paring down their dealer networks. No other explanation really fits. And even small, but rising star Hyundai has proven two vital facts here, by great improvements in vehicle quality as well as a small but steadily rising number of dealers that are well in proportion to the company's actual market share, it is able to establish itself as a profitable corporation that is very well managed. Some American auto companies such as GM and Chrysler simply allowed some management issues to get far out of hand until it created a number of business crisis issues, bringing both firms to the point of bankruptcy.


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Comments (5)

Allen:

"I thought that, eventually, the right outcome was going to be bankruptcy...
Bush decided that he did not want to be the one who pulled the plug just before he left office." -- Cheney, admitting GM was another mess they left for Obama to worry about . The Bush bastards, the only administration in 230 years to lose two major American cities. They watched New Orleans drown and they passed the buck on Detroit.

It's interesting to hear Republicans complain about General Motors - that the government shouldn't get involved in telling GM what to do. Huh? We are the taxpayers and we now own GM. As the owners it's our company and we do what we want with it. We have to look out for our investment to make sure our company, GM, makes the right decisions.
If not for us GM wouldn't exist. Therefore we're not taking away free enterprise's right to sovereignty. Since we, the taxpayers, are stuck owning them then we get to shape our company in what we think is best for the public interest. Then we'll sell it back to the private sector and when they pay for it they can do whatever they want.

DaveD:

"Then we'll sell it back to the private sector and when they pay for it they can do whatever they want."

Allen,
Are you sure the government can fashion a business model for GM that will be attractive to private investors will want to buy into?

JLawson:

DaveD -

The way the Obama administration stiffed the GM creditors, I've got a hard time imagining there's going to be a rush to invest in GM...

Mac Lorry:

I think GM and Chrysler are doomed to ultimately fail (chapter 7) or be bought out without repayment to taxpayers. GM and particularly Chrysler haven't manufactured world class cars in many years and have stayed in business because of ignorance of the car buying public and because of the loyalty of many of it's customers. In discarding many long time dealerships they have also discarded many long time customers.

Younger customers searching the internet find that the long term quality of GM and particularly Chrysler products doesn't measure up to that of the competition. According to Consumer Reports, a ten year-old Toyota has the same reliability as a 3 to 4 year-old Chrysler.

The buy American sentiment falls on deaf ears for those who have lost jobs to offshore competition and for those who know that many "foreign" models are built right here in the U.S. by companies that are traded on our stock markets, and thus, publicly held just like GM is. On the other hand, Chrysler will be owned by a foreign company, as it has been in the past.

A significant number of conservatives will never buy a GM or Chrysler again because of the way secured creditors and bond holders (pension funded in some cases) have be demoted behind the UAW for apparent political reasons.

When it becomes obvious that GM and Chrysler an no longer viable the end will come quickly for them and it's unlikely Congress will be in a mood to keep poring billions into these rat holes. It would be cheaper to just give every UAW worker their wages for the next ten years as a buy out.

Stan25:
They watched New Orleans drown and they passed the buck on Detroit.

Hmmm I thought that both cities were dead before before Katrina and the demise of the major auto plants. Hell Detroit was dead after the 1967 riots. Guess which party was and still is running both cities, when these cities during these disasters. If you guessed the Democrats, you get a lollipop. No wait, that will taxed as a gift by Obama.


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Publisher: Kevin Aylward

Editors: Lee Ward, Larkin, Paul S Hooson, and Steve Crickmore

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