A sad day for all of the lovers of automobiles

[Peter Lombardo]

Well gentleman, we have arrived at a new place in our country’s history.

As most of you know, Chrysler LLC has told just under 800 of their franchise dealers to start looking for a new line of work. Some on the “insideâ€, if there is such a thing as the “inside†anymore, say that there will be an additional round of terminations coming and I for one believe that to be true.

GM sent out the first round of letters to the 1,100 bottom rung dealers that they will also need to find a new line of work.

GM expects to declare bankruptcy on June 1st. Without bankruptcy, these terminations could not happen as the potential law suits would be disastrous.

I have been watching this and talking with many dealers the past few weeks and I have to tell you there is a ton of dis-information out there. The bottomline appears to be that when the dust settles, Chrysler will lose around 1,250 dealers and GM around 2,800. And don’t think Ford is immune to this illness, they will lose some more stores too. From my dealership experience, the average dealership has around 50 to 60 employees, so for argument sake I will use 50 per. That translates to just over 200,000 people losing their jobs and that is just within the dealerships. Now add into that the factory people and suppliers and support people (advertising, paint chip repair, sublet installation and cleaning services, etc….) and the number of jobs lost will be around 325,000. More importantly, that means that around 1,000,000 people will be affected by this as the spouse and children will be effected too.

A million American lives will be effected by the events of the past few months. Don’t misunderstand me, this problem did not appear overnight….it has be percolating all along under the surface since around 1975. For the past 35 years or so, the import manufacturers have been making great inroads into the American market. The domestic manufacturers have kept the collective heads in the sand by stubbornly insisting that their product was just as good, even though, until recently, the imports were better.

I realize that many of you will take exception to that comment, but having spent 30 years in the retail side of auto dealerships, I have seen it from within….the imports were better, and yes, recently the gap has closed but it is too little….too late. The horror stories I heard over the years from customers of all three domestic manufacturers dwarf all of the import problems our customer experienced time and time again.

This is such a sad time in our history…the very fabric of our business and automotive world is being torn apart and most of us feel like we are powerless to stop it. I feel like I am riding a bull in the rodeo, I can’t hold on but will not let myself fall off.

These are scary times, my friends…just watch, the effects of this will be long lasting and wide spread.

[Harry P.]

As bad as things are in our auto industry, you have to remember one very important fact: The auto industry's problems are basically self-induced. That's why I am so adamantly opposed to tax money being used to keep the auto makers running.

For far too long the US auto industry sat on its backside, fat and happy and seemingly blind to the fact that the competition was getting better and better all the time. For far too long our auto companies seemed to believe that they were simply invincible. Not until far too late did they even begin to take the competition seriously. Now they're in full panic/crisis mode. Well, where was the planning, the product development and the effort to seriously compete with "foreign" auto makers 20 years ago? Or 10 years ago?

Like the saying goes, "If you snooze, you lose". Well, our auto industry is just now waking up from their collective nap... but it's too late.

BTW... someone explain to me how cutting dealership numbers would help the manufacturers? Aren't the dealerships in reality the manufacturer's CUSTOMERS??? Dealers are the people who buy GM and Chrysler cars... then the dealer resells them to us. Dealers are independent operators, the automakers don't subsidize them. So how will trimming dealer numbers bolster the fortunes of GM and Chrysler? I can understand trimming production... but trimming dealerships? Why?

[FujimiLover]

Times like this, makes you wonder what's next?

My other thought is if the dealerships close, who will work on all the cars that are currently on the road? More than half car-owners get their cars fixed AT the said-dealership's repair/service stations.

Edited May 15, 2009 by FujimiLover

[CAL]

sad? it needed to happen. Why do you need 5 or more chrysler stores in a five mile radius, which often happened?

We all saw this coming 5 years ago. There were too many stores. Denver doesn't need 25 GM, 15, Chrysler, 20 Ford, 15 Toyota, 5 Mazda, and on and on. Denver isn't that bloody big. It's STUPID car mentality of if one store does 100 units 25 stores will do 2500. Sorry it doesn't work that way. If you market place is X and you can capture Y doesn't matter how many stores you have Y is just getting split up between Z # of stores. It's simple math.

[Peter Lombardo]

Here is the situation with the number of domestic dealers, Cal. Back in the 1940’s, 50’s and 60’s, in the US, the Detroit Iron ruled the road. With the exception of a few VW dealers, we (American cars) were the only game in town.

In the 1970’s, 80’s and 90’s, the import manufacturers began taking an increasingly larger share of the pie. Think of it like a pizza pie. In the past there were 8 nice big slices, Ford, Chevy, Pontiac, Chrysler, Dodge, etc….today there are 36 slices of varying size, the Toyota and Honda slices are big, Mercedes and BMW, pretty big and the domestics slices are getting smaller all the time. The imports, for the largest part have been smarter. As they grew in market share, they resisted the urge to open more and more dealerships. They saw that if they kept the number of dealerships low, each dealer would sell more cars at a higher profit thereby insuring that the value of the product remained high and that the individual dealer made more money so he would plow it back into the store keeping the facility at a higher level, better paid and therefore happier employee’s and the desire to keep the manufacturer happy so they would do as he dictated. All and all, this is a much better business model. The US car builders have taken the opposite tack. As early as a year ago, Chrysler was selfishly adding dealers into an already crowded marketplace with the ridicules idea that they (Chrysler) would sell more cars if they has more dealers in a market area. Completely wrong!!!! More dealers in a crowded market forces the dealers to compete more and more for the sale…that translates into lower price and lower profit for the dealer but more importantly lower market value for the vehicle which translates into lower residual value of the vehicle and directly lead to the banks dropping leasing of American cars. You can lease a Mercedes or BMW SUV for less then a Jeep Grand Cherokee….who’s fault is that???? Certainly not the Germans. The actions of the domestic manufacturers have brought this down upon themselves and now WE, the American people will have to pay the price. The US manufacturing industry is going the way of Great Brittan’s industrial complex, which is, for all intents and purposes, nonexistent. Those who don’t study history are bound to repeat it, or something like that.

As for the mechanics, it is true that some will find work in the surviving dealerships, but not that many. Take a Chevy store that currently has 10 technicians. They are most likely carrying at least one or one and a half more tech’s then they need right now mainly as insurance if they get busy and because they most likely did not want to lay off that many workers when the business began to slow. So now as a few local stores go out of business around them, they will absorb one or two of the displaced technicians from closed stores. But that can leave 6 or 7 others without a job. Make no mistake about it, the ripple through out the local communities will be hard felt. As these workers lose a paycheck, the luncheonette will lose the breakfast and lunch business from them, the uniform company will lose the business so they will cut back, the tool supplier company will scale back his business, and so on and so on right down the line.

I do not mean to paint nothing but doom and gloom, but I will not keep my head in the sand on what is happening to our country right under our nose. We are being forced to watch the wholesale destruction of our life style, economic prosperity and our children’s future. Our country is falling prey to corporate greed, apathy, ignorance and a power hungry government that puts it’s own political dominance above the rights of the people. Wake up America, if you sit back and do nothing to stop this, you are just as guilty as those who plot to take away our way of life.

[old-hermit]

I do not mean to paint nothing but doom and gloom, but I will not keep my head in the sand on what is happening to our country right under our nose. We are being forced to watch the wholesale destruction of our life style, economic prosperity and our children’s future. Our country is falling prey to corporate greed, apathy, ignorance and a power hungry government that puts it’s own political dominance above the rights of the people. Wake up America, if you sit back and do nothing to stop this, you are just as guilty as those who plot to take away our way of life.

We have forgotten history and it is repeating itself. In the last days of Rome the Coliseum was what people wanted. The spectacle of battle to the last man (reality TV anyone) while the ruling class sat on their fortunes oblivious to the reality of chaos occuring around them. Right now we are in the same place Russia was before it fell. In a war we can't win and a disgruntled populace who care for none but themselves and their wants. Every great civilization has failed. We ARE next !!!!!!!!!!!!!!!!!!!!!

[James Flowers]

The powers greed can not see, for it is all about thee. Our government does not listen to the thee. They listen to the dollar they get form the Lobbyist of greed. For if you no money, I have no time for thee.

[lordairgtar]

Pretty much boils down to corruption and greed. When the US auto industry collapses, who do you think the government will appoint to head a coalition task force to fix it? Politicians, ex-CEOs and Union bosses to guide the industry back.....and it will fail. These dealers are not really part of the industry as they really do not have control over what the auto companies do. The only way they will save their own bacon is to become independent dealers of used autos and lease the service area to companies that sell mufflers, brake service and tires, or speed shops. Consider also that these people who run the dealerships are also movers and shakers in the community (even the head of baseball, Bud Selig is a car dealer) and drive many foundations and charities that support varied groups that deal with poverty, health, research. Kill these dealer franchises and you affect the quality of life in so many communities, not just jobs but food pantries, homeless shelters, hospitals, the arts, and various outreach groups.

[lordairgtar]

sad? it needed to happen. Why do you need 5 or more chrysler stores in a five mile radius, which often happened?

We all saw this coming 5 years ago. There were too many stores. Denver doesn't need 25 GM, 15, Chrysler, 20 Ford, 15 Toyota, 5 Mazda, and on and on. Denver isn't that bloody big. It's STUPID car mentality of if one store does 100 units 25 stores will do 2500. Sorry it doesn't work that way. If you market place is X and you can capture Y doesn't matter how many stores you have Y is just getting split up between Z # of stores. It's simple math.

Then explain McDonalds.

[B_rad88]

to be simple and to the point!:

i am going to stick with honda! i never had a porblem with hondas, and they hold there resale vaule! also every honda i have had is very reliable! never had problems! i even did engine swaps and turbos!

[Abell82]

What I don't understand is WHY would the govnmnt, spend 32 billion dollars for a bailout, when there is only 6 billion people in the ENTIRE world? Give ALL AMERICANS, a $2500.00 tax refund, that would help pay off much of their credit cards. Which would help free up the credit market, which would help people get loans for new cars, or save their homes from foreclosure, which would help the housing market, which would...... .....

Edited May 16, 2009 by Abell82

[old-hermit]

Give ALL AMERICANS, a $2500.00 tax refund

300,000,000 people X 2500 dollars = 750,000,000,000.00, thats 750 billion,

150 billion less than what they have spent already.

[Smart-Resins]

Greed came in and soiled! Our economy was faultering over a year ago. Gas prices finially went down and economy went up some giving a false hope. Gas prices are going up, economy going south. Thats just a srat. But gas effects most any thing any more.I think we all saw the big turn in the automotive world durring the 70's when the gas wars had changes the auto industries veiw of cars. Before then, the American automotive manufacturers ruled. After that, the imports started to come in with thier higher milage cars. This hurt the industry here. Eventually they cried that the importers were coming in too cheap to compet5e with. So, it was made so that the importers would have to pay more so that GM and Ford and Chrystler could better compete. What did they do, they got gready and raised thier prices. How in the world is that competing? Now lets go back to the evil gas discussion, in the late 80's and 90's, we started seeing larger increases in gas and it effecting other things.Combine the two ideas and I am sure we can agree that in the 90's is when things started to slide south and everyone wanted to ignore it. We have had every president since have to come in and "fix" the budget, appeasing us and making us all(used loosley here) happy. But by the time thier term was up, it was messed up again and we were looking for someone else to "fix" it. Many are happy with how Oboma is "fixing" things right now/ Wait until he is done and we need the next one to "fix" it!! Crued oil is down compared to last year, but yet I have seen gas prices increase $0.25 in the last 4 days!!As the price goes up, fewer poeple will want to go out next weekend!! Where on the other hand, if a price cap was to be put into place, more poeple would go out. Heck, if a sale happened next weekend, many would go out just because the gas was so cheap. But they would spend far more on BBQ items, or food, or motels ect. not thinking about it, just because they would be happy to get out because there was a gas sale!! Reverse phsycoligy man!! Want us to spend more, give us something cheaper so we say hey, I saved, lets go spend!! When they allowed all of this money to go to the automotive industry, they thought it would fix the problem. However, the dealerships are still closing and poeple are still losing thier jobs! If they had sent that money to poeple to use on trade ins, there would have been a slew of new cars sold, wich would have helped sustain the industry more!! They sent money to many banks to save them. But the banks are also starting to slowly close because poeple are afraid!! If that money had been sent to the people to help them refiniance thier mortgages, the banks would have gooten the money and poeple would be still in thier homes and spending money on them!! There are many more areas where gread has been involved and over ruled comen sense and yes, this is jut the beginning! Now I know many if not most wont agree with me here, but its just the way I see things according to what I have seen and heard. I think our economy is in a backwards state and slipping down hill in a bad forward motion! Jody

[MikeMc]

Pretty much boils down to corruption and greed. When the US auto industry collapses, who do you think the government will appoint to head a coalition task force to fix it? Politicians, ex-CEOs and Union bosses to guide the industry back.....and it will fail. These dealers are not really part of the industry as they really do not have control over what the auto companies do. The only way they will save their own bacon is to become independent dealers of used autos and lease the service area to companies that sell mufflers, brake service and tires, or speed shops. Consider also that these people who run the dealerships are also movers and shakers in the community (even the head of baseball, Bud Selig is a car dealer) and drive many foundations and charities that support varied groups that deal with poverty, health, research. Kill these dealer franchises and you affect the quality of life in so many communities, not just jobs but food pantries, homeless shelters, hospitals, the arts, and various outreach groups.

Bud hasn't sold a car in years......and is a traitor to FORD.....remember Knipple Selig Ford?????

And never forget..."Only the strong survive"!!!!!!!

[The Creative Explorer]

Then explain McDonalds.

different product, different targetmarket. Would you drive 10-20 miles for a $1 burger? You need to see and keep things in perspective.

As for the whole thing; I kinda sympathise with Chrysler, but I am for sure not that feeling bad about GM. It seems to me that Chrysler is working harder to make it work, e.g. the deal with Fiat.

But in general; the big 3 have been making the wrong products for a very long time. American people are quite patriotic ( no offence, since I am not using it in a negative way ). If and where possible, people from the U.S. rather buy products from the USA than imported products.

But. There is a reason the American People let grew Toyota and Honda big..(and the other imports ofcourse)..That is because the big 3 just simple did not offer want they really wanted. And on top of that, the big 3 basically produced cars that were only being designed and engineered for the North American countries. For example; in Europe there is hardly a demand for US-originated cars.

So the market the big3 have to live on, is the North-American one, where Honda and Toyota build cars that can be sold worldwide ( with a few exceptions).

And the worst thing in this whole story is that actual people, like Joe the plumber, are the ones that getting the bill and consequences. That part is the part that bother's me most. Families that getting into debt, because daddy got fired.