Political Party Considered in Closing Chrysler Dealerships? - Page 8 - Mercedes-Benz Forum

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post #71 of 73 (permalink) Old 05-31-2009, 07:36 AM
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What is really dumb is having multiple brands which are distinguished from one another only by cosmetic differences that compete against each other in a marketplace for a finite sales volume. This, and multiple dealerships in an area for the same brand, are a part of the problem. They need to focus on less things.

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post #72 of 73 (permalink) Old 05-31-2009, 12:22 PM
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I am willing to capitulate that political party may not have played as much a factor in closing as I thought at first blush. i.e. if 90% of the dealers are republicans then how can you come close to an equitable distribution of of closings.

The thing that gets me though is your insistence that it is ok to close down profitable dealerships.

There must be something that we don't understand about the auto industry if it makes sense to close down a dealer who is making money, ergo they are buying vehicles from the manufacturer, therefore the manufacturer makes cars.

I mean unless the aim of the administration is to just hurt political enemies afterall. I mean 90% of the dealers are republicans...
When cost cutting, the concept is to take out the highest cost loads that affect your business model the most. Sometimes it is a dealer that might make a profit. What we don't see in the 30,000 foot analysis is that profit might be spread across multiple distributorships Chrysler/Nissan OR the PROFIT might be because the dealer has a free and clear dealership, building, real estate and low overhead, none of which have anything to do with the FACTORY OVERHEAD that is considered in the cuts.

So, we can take two theoretical dealers, one making a small profit, one at a small loss. If the profitable dealer has a free and clear building, no real estate costs, low wages due to region and sells 200 cars a years, and the unprofitable dealer has a mortgage on the building, real estate costs, higher wages due to region yet sells 240 cars a year, which dealer would YOU close if your cost to maintain each at the Corporate level was the same and you HAD to close one?

Nobody said it is fair when you have to reduce franchises. It happens all the time in the food industry, in other franchise businesses.

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Being smart is knowing the difference, in a sticky situation between a well delivered anecdote and a well delivered antidote - bear.
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post #73 of 73 (permalink) Old 05-31-2009, 12:36 PM
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So, we can take two theoretical dealers, one making a small profit, one at a small loss. If the profitable dealer has a free and clear building, no real estate costs, low wages due to region and sells 200 cars a years, and the unprofitable dealer has a mortgage on the building, real estate costs, higher wages due to region yet sells 240 cars a year, which dealer would YOU close if your cost to maintain each at the Corporate level was the same and you HAD to close one?
...
Furthermore, the mortgages could be on the books of a TARP bank so there is additional incentive not to stress the financial system. The auto task force are infested with Wall St types and this calculation would not be beyond them. Again, WHAT ARE THE CRITERIA USED ?

There is something wrong in the system when better run companies suffer at the hands of the government who favors the bad ones ... banks, insurance, autos and what else.

... and this important discussion continues.


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