Posted on 04/19/2009 6:51:56 PM PDT by bruinbirdman
Across America, car dealers are getting desperate. Now Uncle Sam is going to put many of them out of business.
~snip~
These are desperate times for auto dealers. Some will do anything to escape their crushing debt. Others are barely holding on to longtime family businesses. Into this maelstrom comes the federal government, which has given taxpayer-supported General Motors ( GM) until May 31 to develop a new restructuring plan, with bankruptcy looming as an option. Overhauling GM's capital structure is the priority, but the government wants other changes, too. Its directives include one to prune the dealer population, now 6,246, by more than the 35% GM had planned--and to do it much faster.
Back when GM controlled half of the U.S. auto market, its huge dealer network was a competitive advantage. Now that GM is selling only 18.6% of the cars in the U.S., the dealers are a millstone. Having too many showrooms depresses profits for all of them and leaves them unable to compete effectively with dealers for other carmakers. GM knows this; it has been gradually shrinking its dealer network since 1970. In the last four years GM has eliminated 15% of its dealerships, partly by encouraging separate Buick, Pontiac and gmc outlets to combine under one roof. Over the next four years the number will shrink by a further 25%, to 4,700, as GM sheds brands like Hummer, Saab and Saturn and owners go out of business. Its goal, now rejected by the government, was to have 4,100 dealerships by 2014.
What's stopping a faster pace is a collection of state and federal laws that make it difficult for car companies to terminate or relocate a dealer franchise. Killing Oldsmobile in 2004 cost GM $1 billion to buy back unsold inventory and compensate dealers when their
(Excerpt) Read more at forbes.com ...
Sad for those family dealerships, but they’d just as well fold before they are stuck with the Obama equivalent of Yugos that Government Motors will mandate and that no one will buy. We will be like the Cubans, who are still nursing their 1950s models.
Bush 2
Dow 13,500
Unemployment 3.9%
The government essentially instructed GM to SHUT DOWN the GMC Division last week because it doesn’t meet CAFE standards and has no hope of doing so because it makes trucks and SUVs. I’ll bet the GMC dealers are ecstatic about that order from Obama.
This should be a good time for me to buy a new car.
AMEN to that. I have been saying that for a while now. And those little crackerjack boxes they want us driving are NOT safe on any highway, not for the driver or other drivers. A good gust of wind, they are airborn!
They belong on a golf course, NOT a raodway.
The dirty little secret is that, with a few exceptions, the SUVs cover the costs of the passenger cars. GM loses $$ on most passenger cars they sell. With UAW labor, the margins just aren’t there.
To me it is no mystery why the former "Big 3" are in the situation that they're in.
I've also dealt with them on a professional level and have been in the factories. You can almost smell the decay, and the rotten attitudes of the workers (clock watchers is a more apt title) are practically written on their foreheads. I would say that they're only fit for Walmart, but that would be an insult to Walmart.
BTW, can someone tell me what level of intelligence is shown by people who go out on strike for longer coffee breaks while foreign competition is cutting their throats on price and quality?
Who knew?
Slightly OT, but the options on automobiles help, too.
Saw a great review of the Ford Flex in the paper today. Ford is selling an optional micro-refrigerator that fits between the back seats and can cool a couple of cans of soda and a sandwich or two. The cost? $780!!
I can buy a boatload of styrofoam coolers for that price!
This is long-standing common knowledge in the automotive world, not a matter of opinion. For decades, the profit margins on light trucks and SUV's were much juicier than those on passenger cars, and for many recent years, such meager profits as Detroit actually banked were attributable entirely to the truck/SUV segment. That may have changed in the past year with the run-up in gas prices, but in general the original poster is correct, and your bewilderment is a manifestation of your own ignorance of the subject.
Getting rid of Hummer and Saab I can understand; getting rid of Saturn I don't. What's with that one?
Here’s what is probably more or less the identical product for $98.26.
http://www.cooler-store.com/koolatron_kool_kaddy_cooler_p75_354_prd1.htm
No doubt it’s the same product. The Federal Motors warranty allowance is the reason the price went from $100 to $800.
That’s the newest, most creative and banal argument I have yet heard.
SUVs and trucks subsidize all the rational-sized vehicles?
Who knew?
If some automaker had shouted "F-You!", laid off its union hands and produced the rocket sleds people want to buy, they would still be in business.
Slightly OT, but the options on automobiles help, too.
For many in this era . . . DEPRESSION—CLINICAL EMOTIONAL PSYCHOLOGICAL DEPRESSION—IS A SERIOUS ISSUE.
The following is an EXCELLENT THREAD AND RESOURCES, LINKS ON
CLINICAL DEPRESSION
WELL WORTH IT IF YOU KNOW ANYONE SUFFERING FROM DEPRESSION
http://www.abovetopsecret.com/forum/thread455408/pg1
I love my 2008 Saturn Sky Redline. I will be taking a serious look at the Nissan 370Z Roadster.
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