Chrysler Cuts Show End For Small Dealer
For decades, they've been the backbone of auto sales in the U.S. The smaller independent dealer is what most of America grew up with. Now those smaller dealers are about to dwindle in number and influence.
When Chrysler and GM announce plans tocut roughly 3,400 dealerships today and tomorrow, the smaller dealer is going to feel the brunt of the pain. Both companies are moving towards a business model with fewer dealers who, in theory, will be stronger. Inevitably, the guys who survive will have the most capital, more than just one brand under the roof, and the largest footprints. In other words: the days of the small, one brand dealer are numbered.
These dealers are often the guys who have been selling Chrysler or Chevy or Pontiac for decades. They come from families that have owned the dealership for generations. They are guys who grew up in the showroom. For them, the consolidation of GM and Chrysler dealers is not just a major threat to their livelihood, it's a painful end to a way of life.
This doesn't mean all smaller, family owned dealerships will disappear.
When GM and Chrysler re-draw their sales maps, most of the dealerships that will be cut are in urban and suburban markets where, according to the auto makers, showrooms for the same brand are too close to each other. In less populated areas where the dealers are more spread out, GM and Chrysler are looking to cut fewer dealers.
For years, the big, and often publicly traded auto retailers have been growing and making the multi-brand dealerships a common sight. Heck, in most suburbs we've all come to expect that long stretch on a main road with one mega-dealer after another. They represent the arms race in auto sales that has driven smaller dealers to either keep up or get out.
Now, those who have survived the changing landscape of the auto business are facing a major crisis. The next shock to the system will come from Chrysler and GM and the small dealer will feel it.
Click on Ticker to Track Corporate News:
- Ford Motor
- General Motors
- Toyota Motor
- Honda Motor
Questions? Comments? BehindTheWheel@cnbc.com