There are a lot of car dealerships that are very angry right now. A large number of Chrysler and GM dealerships are being cut loose. The general sentiment is "poor car dealership", but I don't buy it.
The dealers did it to themselves. GM didn't build the cars that the American public wanted. They didn't build the cars GM wanted. They built the cars GM dealers wanted.
I worked for 5 years, getting information out of dealer's mainframes and onto websites. Something that a large number of dealers resisted. Mainly because they didn't want to expose their prices. On the one hand they obviously wanted people to come into their dealership where they could play hardball. But they also didn't want consumers to be able to compare prices. They were also afraid because they saw the dealerships that "got it". They had salesman doing Internet sales and selling cars like clockwork throughout the day. The internet sales were all about volume. They sold for far less than the standard profit margins and the non-internet savy car dealerships were doing their best to try to shut that down. Especially since those internet guys were giving people prices in writing that they could use to get a better deal at their local dealership.
Dealerships have always been about trying to prevent educated consumers. Why do you think that every dealership has special floormats, or custom pinstriping? All those tactics were explicitly about keeping consumers from being able to make meaningful price comparisons.
But the biggest sin was in the SUV/Truck market. This was almost exclusively driven by dealers. Because they liked the profit margins. They kept selling SUVs on having lots of space, but most SUVs aren't any bigger than a sedan. And almost all of them have less room than minivans (which sell fully-loaded for shockingly low prices).
GM's dealers kept demanding more and more SUVs and Trucks. And higher and higher profit margins. That's what destroyed GM the car company. The actual bankruptcy was caused by GMAC selling bad home loans. But the car company was destroyed by its dealers a long time ago. The dealers didn't want the profit margins of small cars and refused to sell them. Even when customers wanted them, they steered them into their high profit lines.
And now no one wants to step foot into a GM dealership. I can't help feeling like they made their bed.
I have some
ex-coworkers who are doing extremely well helping dealers sell used cars for the lowest price possible. The dealer makes money off of financing in volume. It's a sustainable model and thrives because it's all about selling the cars to people that they actually want to buy. The car dealerships make money off of the volume.
For most of us the idea that one wouldn't want to sell as much as possible is ludicrious. I don't think any customers are going to be sad to see the old model of only selling what the dealer wants to sell you go away.
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