Automotive Faqs

It seems that General Motors, Ford, and Chrysler have one too many retail outlets compared to the number of vehicles that they sell to consumers. CNW Marketing Research crunched the numbers and quanitfied how much was excess and came up with $3.9 billion. That averages out to be about $436 per vehicle.

The three US carmakers have 15,741 dealers between them, while the Japanese carmakers have less than 4,000. Domestic dealers, on average, sell less than half as many vehicles per store annually than a Japanese brand dealer, and most sell far less than that. The extra cost comes from items like having to deliver vehicles to so many outlets, advertising support for dealers and the administrative costs associated supporting them all.

For years, the domestics have been trying to find a way to reduce their dealer counts, but state franchise laws make it almost impossible for the carmakers to get rid of dealers until they want out themselves. Unfortunately, the Starbucks model of a coffee shop on every corner just doesn’t work for car retailing.

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