Big 3 Plans Dealership Consolidation

Anthony Fontanelle
March 26, 2008

Detroit’s Big 3 plans to consolidate dealerships to cut costs. The savings will be used to finance the turnaround plans in order for them to return to profitability in accordance with their timeline.

Due to the declining market share, many Big 3 dealers are losing money. This is why Detroit automakers are finding ways to recuperate. According to the National Automobile Dealers Association, 28.6 percent of Chrysler LLC, Ford Motor Co. and General Motors Corp. dealers broke even or lost money in 2007. Foreign-car dealerships, meanwhile, only have 14.5 percent.

With the consolidation on the way, many single-brand dealerships will be affected. One of them is Gene Beltz's Shadeland Dodge, which started in 1970. Chrysler, under its new leadership, wants to jettison hundreds of single-brand dealers like Shadeland.

Chrysler’s plan is similar to those of Ford and GM. And it could mean an exit for Shadeland and other single-brand dealerships which have etched a deep mark in the American auto industry.

"I'm kind of a dinosaur," said owner Kevin Beltz. In an interview with The Associated Press, Kevin said he does not want to sell. He said he'd rather buy the Chrysler-Jeep dealership down Shadeland Avenue. But he knows that dealer would like to buy him.

"When you're a family-owned store and you own your own property and this is your livelihood, what are you going to do?" he queried.

Nationwide, the Auburn Hills-based automaker has about 3,600 dealer sites. And they are all battling for the same clientele. Chrysler plans to merge them to be more profitable. Experts in the industry, however, said that there still will be plenty of competition between dealers, from other automakers, and on the Internet.

There are talks surfacing about Chrysler cutting dealerships in half but the automaker won’t say if it has a target in mind. The automaker's plan, though, is to push the consolidation by cutting the roughly 30-model Jeep, Dodge and Chrysler lineup by up to half in four or five years. The Chrysler brand likely would sell cars and the company's only minivan, while Dodge would be more truck-oriented and Jeep would get sport utility vehicles, reported MSNBC.

Doug Seagrave, athletic director at Warren Central, equated consolidating car dealers to the banking industry, in which many local businesses were bought up by far-off corporations. "They're just so big now, you don't even know who to get a hold of," Seagrave said. "You lose that local flavor and the person that you know and deal with."

In less than no time, different brands under one automaker will find their way in one dealership. And owners, so long as they have valid license tucked by a license plate bracket, are expected to adjust swiftly.

Source:  Amazines.com