Open discussion: Car dealer industry

[retailfanmitchell019]

I have a big question: Are car dealers considered retail? There is talk about the car dealer industry consolidating, with a shift to online car buying (Carvana) and national chains buying dealers.
https://www.kbb.com/car-news/the-future ... al-chains/

[Super S]

Well they certainly have a retail component in the parts department.

[Brian Lutz]

i can definitely see signs of consolidation around here. Roy Robinson (which previously owned several dealerships in Marysville) has recently sold their Subaru and Chevrolet dealerships to Kendall Auto Group (which also purchased a Ford dealership in Marysville under different ownership) after building a large new facility for their RV sales and service business. In Bellevue, the dealerships owned by Chaplins (Volkswagen and Subaru) were sold to Michael's (which owns a large Toyota dealership next door that actually took over space formerly occupied by a Marina Safeway,) and at some point within the last year they stopped selling VWs. At some point, Michael's became part of Lithia, although they don't seem to have any overt branding on their dealerships.

[storewanderer]

There is definitely consolidation. However this is not always better.

Without going into names here I am going to just comment- some car dealerships in my area have been purchased by a should we say, publicly traded regional car dealer operator. I attempted to deal with them a few years ago. First off, they don't deal and to add insult to injury they had mark up stickers 10-15% above MSRP on every vehicle and there was no reason for it. Their doc fee etc. was higher than the single dealer of the same brand in a surrounding town- also that dealer did not have mark up stickers on every vehicle (only on a few) and seemed more willing to actually deal a bit from MSRP.

I actually avoided purchasing a vehicle entirely of a brand represented by said publicly traded dealership chain, because of horror stories I had heard about their service departments locally.

Conversely in my area there is another vehicle brand that had been represented by a single location dealer for many years. Back when the father ran it, it was quite a going concern. Eventually the son took over and it seemed to start fading. It ended up as a very low volume dealership and at one point there was a drug bust at the dealership involving management and they still got to keep the dealership which shocked me. The dealership was painfully low volume for the market as far as selling vehicles to individual customers goes. I guess when you have enough corporate/government lease business you get by with it. The service department's reputation was terrible. This dealership finally sold to a regional chain of dealerships and I have heard the situation there is slowly improving.

[TW-Upstate NY]

I've bought 8 new vehicles in my life and every one of those purchases happened at a family-owned dealership with the owner on the premises. And as long as one location family-owned dealerships exist, that's where I'll buy the next one and so on. They're actually easier to deal with in a lot of respects because it's none of this "I have to talk to my manager" kind of stuff because most of the time you're dealing directly with the manager and they make the final decisions. Take my last purchase for example which was a 2020 Jeep Cherokee 4x4 I bought early last year. It had a rebate AND a dealer discount. This was a vehicle they had ordered for their inventory that wasn't on the lot yet and there was some question it would arrive before the rebate expired. I told the owner point blank I want the right to back out of the deal if it arrived late and he wrote it right on the purchase agreement. Try getting something like that at Cars 'R Us or some auto conglomerate. I've also found that at owner operated dealerships you don't get the turnover you see at mega-dealers. It's nice to walk into the service dept. and see the same person behind the desk year after year. They treat you a lot better because their survival as a business depends on you buying your next vehicle from them and so on. The large dealers could care less if you buy from them again because they feel the market is so large they don't need repeat business. And the person who sold you your vehicle there is no help either because they've probably moved on by the time you're due for your first oil change. And to get back to the original question, I'd have to say yes car dealers are considered retail because they're calling themselves dealerships less and less and referring to themselves as stores more and more.

[veteran+]

This consolidation is sad and not good for the customer.

I remember those days gone by when my father bought directly from the manufacturer (a state of bliss in comparison to today).

I buy or lease every 3 years (new). It's awful but I am armed with cost numbers (of car and options) so I'm in control. I am the dealership's worst nightmare but I loathe the process.

I find American brand service departments better than the Asian brand service departments (Subaru being the exception, they are incredible). Conversely, I find the sales experience with Asian brands better than American brands.

And that "lemme speak to the manager" garbage? I say, hold up buddy............I will speak to your General Manager for you.......... . If he says no........................I say........................see ya later, have a nice day.

[storewanderer]

I remember those days gone by when my father bought directly from the manufacturer (a state of bliss in comparison to today).

Tesla will sell in that manner, in the states they are allowed to.

[buckguy]

Dealers refer to their operations as "stores" and they certainly like charging "retail". The consolidation of car dealerships seems greatest in medium to large metro areas, while in smaller markets, the small family owned dealerships still dominate, although they may have bought out some competitors. A family owned consolidated operation, which seems to be the norm, can be hit or miss--my last two purchases were at these kinds of places--one was OK, the other not so much.

The car companies began imposing costs on dealers in the 60s through micromanaging signage, space/layout requirements, sales/month or year, etc. They also phased out dealers that had served as regional distributors, which had allowed something like a factory to buyer experience. I think Chrysler led the way with this, with Ford picking up some of the same ideas shortly afterward. The micromanagement shook out many dealers in urban neighborhoods and in rural areas that were turning into suburbs. Car dealerships often began as repair shops that branched into new car sales, doing small volumes. Among other things, this had allowed low volume makes to survive in places that otherwise wouldn't support a dealership and meant that very small towns might have at least one new car dealer.

GM, for many years, did not permit co-ownership of franchises for competitors. They also discouraged multi-location dealerships. In order to pick up import franchises, some dealers got around this by using a different corporate identity for those franchises, but the restrictions did allow single line GM dealers to survive well after those for Chrysler. Single line Chevy, Cadillac, Buick dealers are still around in some larger metro areas.

[veteran+]

I believe the last time my Dad was able to purchase direct from the factory was in 1968.

Chevrolet Caprice with ALL the bells and whistles available at the time.

[Super S]

Dealers refer to their operations as "stores" and they certainly like charging "retail". The consolidation of car dealerships seems greatest in medium to large metro areas, while in smaller markets, the small family owned dealerships still dominate, although they may have bought out some competitors. A family owned consolidated operation, which seems to be the norm, can be hit or miss--my last two purchases were at these kinds of places--one was OK, the other not so much.

The car companies began imposing costs on dealers in the 60s through micromanaging signage, space/layout requirements, sales/month or year, etc. They also phased out dealers that had served as regional distributors, which had allowed something like a factory to buyer experience. I think Chrysler led the way with this, with Ford picking up some of the same ideas shortly afterward. The micromanagement shook out many dealers in urban neighborhoods and in rural areas that were turning into suburbs. Car dealerships often began as repair shops that branched into new car sales, doing small volumes. Among other things, this had allowed low volume makes to survive in places that otherwise wouldn't support a dealership and meant that very small towns might have at least one new car dealer.

GM, for many years, did not permit co-ownership of franchises for competitors. They also discouraged multi-location dealerships. In order to pick up import franchises, some dealers got around this by using a different corporate identity for those franchises, but the restrictions did allow single line GM dealers to survive well after those for Chrysler. Single line Chevy, Cadillac, Buick dealers are still around in some larger metro areas.

Consolidation of owners is becoming more common. In Longview, WA, the local Ford & Hyundai dealership, which was family-owned for 50 years, sold to the owners of the local Chevy and Subaru dealership, which is locally-based, but has dealerships in other parts of Washington. The Ford/Hyundai dealership is staying in the same location.

Up north in Chehalis, WA, the dealerships are all now under the same ownership. Ford, Toyota, Chrysler/Dodge/Jeep/Fiat, Chevy/Buick. It is local ownership, but it does create a bit of a local monopoly.

One interesting thing about dealerships is how the markup on parts can vary a LOT from one dealership to the next. When I owned a Toyota, I would visit the dealership in Vancouver, WA when I needed OEM parts as they were far more competitive on price. I have seen the same thing with GM dealerships.