Hampton Roads, like many parts of the country, has too many automobile dealerships, and those familiar with the local market acknowledge that some will close as the U.S. car industry restructures.
"We will lose dealer head count," said Fred Miller, president and chief operating officer of Hall Automotive, the region's largest dealer group with 16 locations. "Maybe that's what needs to happen to right-size the industry."
Don Hall, president of the Virginia Automobile Dealers Association, agreed that Virginia is "overdealered" in some areas, particularly more populous metropolitan areas, such as Hampton Roads.
As auto sales plummet and U.S. car makers continue to lose sales to imported brands, industry leaders have recognized that they have more stores selling cars and trucks than they need. In Virginia, vehicle sales have dropped 20 percent for the year and 35 to 40 percent in the past two months, compared with 2007, Hall said.
"What we're going through right now is totally unprecedented," he said.
In plans submitted to Congress as part of their request for federal financial assistance, General Motors Corp. and Ford Motor Co. said they intend to shrink their dealership networks. GM projected it would reduce the number of its dealers by 27 percent, from 6,450 nationwide to 4,700 in 2012.
"At our current and expected future market share, we clearly have too many dealers and therefore have made it increasingly difficult to sustain a healthy and profitable dealer network," Ford wrote in its plan, submitted Dec. 2 to the House Financial Services Committee. "To address this overcapacity, we are partnering with our dealers and are downsizing and restructuring the Ford, Lincoln and Mercury network in our largest 130 metropolitan market areas."
At the end of 1997, the Big Three - GM, Ford and Chrysler LLC - had 71.5 percent of the car-buying market, said George Hoffer, an economics professor at Virginia Commonwealth University who specializes in the auto industry. In January 1998, domestic auto dealerships numbered 17,865, said Hoffer, citing an Automotive News market report.
A decade later, the U.S. manufacturers' market share has dropped to 50.6 percent and their dealership franchises to 14,294. They have lost about 30 percent of their market share but only 20 percent of their dealers, and most of those dealership cuts were part of the elimination of the Oldsmobile brand, Hoffer said.
"They are whistling in the dark unless something fundamentally changes," he said.
GM said it will focus on the four of its eight brands that account for 83 percent of its sales - Chevrolet, Cadillac, Buick and GMC. Pontiac would become a "specialty" brand, GM said. The company has suggested it might sell Hummer and Saab.
Saturn "has performed below expectations," GM wrote in its plan. It will "explore alternatives for the Saturn brand."
The owners of Cavalier Automotive Group, which operates the Saturn dealerships in Virginia Beach and Chesapeake, did not return phone calls this week.
Hall Automotive owns the sole Hummer dealership in the region, and Miller said he has confidence in its future.
"My presumption is I'm going to be selling Hummer," he said. "I just don't know who I'm going to be selling Hummer for."
The Ford dealerships in South Hampton Roads have performed well even as sales have fallen, said Robert Christian, sales manager for Kimnach Ford in Norfolk.
"We've been holding our market share," he said. "It's impossible for them to come in and shut us down."
By targeting the retailers, the industry has put national and state dealer associations - and their significant lobbying muscle - in a precarious position. Dealers want to support manufacturers to make sure they can keep supplying products to sell, but they don't want Congress to give the automakers the power to shut them down.
Today, most states have franchise laws that restrict the ability of the manufacturers to close individual dealerships. If an automaker does seek to shut down a dealer, the laws generally require that the dealer receive fair compensation for its new-car inventory, some of its equipment and sometimes even its real estate, Hall said.
In most cases, automakers make little investment in local car dealerships, Hall said. Dealers pay for their inventory - usually through a line of credit, often provided by the manufacturers - as soon as they order the vehicles, and they take all the financial risk of building, staffing and running the operation, Hall said.
So keeping dealerships open - even too many of them - doesn't cost manufacturers anything, Hall argued. "The size of the dealer network really isn't the problem."
Ford and GM want to downsize their dealer networks primarily to gain more oversight of the retailers that remain, Hall contended. "It allows them to shrink the body and exercise more control," he said.
Carolyn Shapiro, (757) 446-2270, carolyn.shapiro@pilotonline.com
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dharma41
Did you pull that off the DNC website, or the UAW's or Das Kapital?
What 28 year of Reaganomics Hath Wrought
Just as the Uber-Capitalists falsely tried to place the blame for the worldwide financial meltdown on low income homeowners who got swindled into with inappropriate mortgages, so now the same “greed is good” crowd, using misleading and intellectually dishonest statistics, is trying to pierce the heart of unionized labor by falsely blaming it for the economic woes of the US auto industry. Sadly, as many of the comments here show, the proletariat is buying the lies of their masters. If only they would look at history, they might learn something about what organized labor has done for the average working person and to what lengths corporate owners have gone and will go to crush unions.
Just to clarify
To those who may wonder, I'd dare to guess that no one who has posted comments against the bailout, wants to see the Big 3 fail. I myself have been a Chevy man my entire life and own a Monte SS at this very moment. In my family, you'd almost be dissowned for not driving a GM. It's one of the things that is so very sad about what the UAW has done to their own companies, not to mention American Heritage. These people have done this, laughed all the way to the bank... going through the drive through in a Honda or a Toyota. Don't believe it... take ride through one of the Big 3 plant employee parking lots sometime.
One other thing not mentioned yet here
Is the enormous success that all of the Big 3 have overseas. Can anyone guess why? No government interferance with CAFE(sp?) standards to make the tree huggers happy. A large part of the cost of any car here, is useless parts required by the Feds. As for the Ford Fusion, if it is made in Mexico, can anyone guess why? NO UNIONS!! And, yes... Union's are driving the design of cars in GM. It's part of the 'crack deal' they have with the liberals in the Fed to appease the tree huggers and help "Algore" become enriched. After all, the man invented the internet you know. ;-) In return for this, and the camaign money to Democrats, we get the Union Bailout, disguised as being for GM.
Patriot
Well of course it costs more for a non-ford truck. They we're built here and when they went on strike Ford had the right sense in shutting down the plant. I use to work at bar in which was the only bar near Ford Plant w/o crackheads. The strict drug testing policy made them goto work the next day hung over and you wonder why we made the Ford EXPLODER. My Sentra Spec V in 6th gear is capable of 40mpg at 40mph. I don't know of any US car capable of it. It's even doing better than the us Hybrids.
You see, the Dems want to
You see, the Dems want to save a union, the Republigans want to save an industry.
Your comment is awaiting staff moderation.
If the worker was paid $100/hr, and it takes 21 hours to build an escalade, that means the labor cost is $2100 on a vehicle with a price tag of $50,000.
They Are All Just Cars
I worked at GM and Chrysler shops for many years. I would always hear a customer threaten to buy a Japanese car when having problems. When I went to work for Toyota I found that they had the same issues as the American brands. There you would hear customers say I am going to buy American.
dukedr says:
"Took me 11 years to get my degree during the times I quit college to earn funds I worked for 3 different Unions."
So why did you work union jobs when there are so many non-union jobs available?
Time to go Unions!
And to the idiots in charge that agreed to stupid agreements where they pay full retirement for those no longer working. It doesn't take a rocket scientist to see that this was going to happen sooner or later.
Chapter 11 is the way to go to regroup. But I live in a nation full of stupid idiots that feel we have to save everyone. What ever happened to taken care of yourself?
No fusion.
As I stated the foreign plants in the USA are "ASSEMBLY" plants which means most all parts are made overseas. As I also stated these parts come from factories without all the rules and regs "WE" must follow. I do not own a Fusion but it is every bit as good as anything Honda or Toyoya offers in class and cheaper with the profits supporting an American company. I own 2 ford trucks built in the USA and they were cheaper than a Toyota or Nissan in class and a far better truck if you wanted a true "truck" not a vehicle to drive that looks like a truck.
As I stated before I hope the trickle down effect of ignorance bites all the rest of you non supporters in the rear like it has the American manufacturing community.
unions pick the designs?
According to Detroit the consumers picked the designs.
New Car On The Horizon
All we have to do is wait a few months and wait for the new car that the that the Democrats are going to design and demand the big 3 build for us.
It will be called the OBAMABILE.
What About Congress?????
Submitted by FlightInstruct on Fri, 12/12/2008 at 1:57 pm.
See that all the geniuses with their twenty year old pickups are going around Rushgurgitating what they heard on the radio. "it's all the unions' fault..."..."what about Wright?.."(oh that's last months mouth virus)...Welcome to the Bush Depression folks.
Congress is sure not doing anything to help.........
FlightInst..
Ummmm....maybe car companies will be better of with national health care but you won't have any money to buy cars. Nothing is free and national health care is far far far from free. Take england for example, I would have to pay 1/3 of my gross earnings for health care tax and SS tax alone. That does not include VAT, $4 gal gas tax, income tax, etc. And guess what, they still don't have enough to cover it and are always in the red finding new taxes to pay for a mediocre system. Canadians come to the US for health care because they can't wait 6 months or more for simple procedures. Yes, our system needs to be tweeked to make it affordable for any one that "wants" to "buy" it but NO, national health care is not the answer. Socialism does not make anyone more well off, it makes more people poor.
re: 50/50 industry blame plus..........
Patriot wrote:
>>>As for all you import brand fans, quit believing the hype and media biased bologna. Also please show me a comparable vehicle to the Ford Fusion made by Handa or Toyata that costs less, does not exist. Continue to buy your imports people but remember the trickle down effect just like NAFTA may it bite you in the rear as it has millions so we may laugh at you as you do your fellow "countrymen".<<<
Guess you are an import fan, Patriot:
Toyota Camry, built in Lafayette, Indiana
"Handa" Accord, built in Marysville, Ohio
Ford Fusion, built in...drumroll please...Hermosillo, Sonora, Mexico
Looks like it was NAFTA that got you your precious Ford Fusion...
Ford is going to survive, as for GM its going to die.
Ford has a 65mpg turbo diesel car in Europe. GM needs $4 billion right now to survive which will last a week or two. Then they said they will be asking for another $6 billion when Obama comes into play. In which the UAW will demand bail out since they gave to his campaign $400 Million. They should have give the money to the workers instead of him. Not like it would make a difference. The GM Volt was designed aerodynamicly better going backwards, they need some more schooling.
Ever stop to think that with National Health Care, -
-the car companies would be able to make and sell a decent product for less? Honda makes great high quality reasonably priced vehicles right here in North America...Canada actually. They can do that because of Canadian National Health Care. Think how your life would be different if you had free medical insurance. Too costly? Added up your premiums for the year? Your co-pay? Your out of pocket expenses? The uninsured coverage on your car? Socialistic?
OK, let's bring on some Socialism! We are already paying for it on Wall Street, might as well get some health care out of our tax dollars.
50/50 industry blame plus..........
The problem is partly the company and partly the union. Just like US politics neither side wants the other to win or accomplish anything. This US vs THEM mentality is destroying our industry and country. The unionj should do what is in favor for the "workers" not individuals. The Company needs to design and build and design products people want and quit paying millions and millions to executives, pay them based on company earnings not millions for failure.
As for all you import brand fans, quit believing the hype and media biased bologna. Also please show me a comparable vehicle to the Ford Fusion made by Handa or Toyata that costs less, does not exist. Continue to buy your imports people but remember the trickle down effect just like NAFTA may it bite you in the rear as it has millions so we may laugh at you as you do your fellow "countrymen".
Do not forget than the foreign auto "assembly" plants in the US do not yet have the legacy costs the big three have. So if you approve of slave labor, no benefits, no retirement, no OSHA regs, no EPA regs, no fair hiring practices or labor laws then sleep well but do not ever complain about your job or compensation.
235,000 mile Ford
See that all the geniuses
See that all the geniuses with their twenty year old pickups are going around Rushgurgitating what they heard on the radio. "it's all the unions' fault..."..."what about Wright?.."(oh that's last months mouth virus)...Welcome to the Bush Depression folks. Many of you voted for him (twice), so you should just enjoy your trickle down standard of living...Is that a waterfall you hear in your future? Meanwhile the billionaires are living large and enjoying their ski condos at Aspen and their NYC shopping apartments.