Automaker's Cut Back On Dealers Incentives Cause Many To Operate At A Loss

The floor is yours Matt, give us the inside story and affect of this...

Today was Newport Beach day.

The dealerships in our group are all operating at a solid profit. We have radically shifted our inventory practices, to carry far less variety.

At one dealer we try to have 20-25 Fusions in inventory and maybe 10 on the lot where we used to have 75 in inventory and 15-20 on the lot. We are scrambling to get our inventory of the Ranger up. We ramped down the Focus a long time ago and we're stuck with about a dozen Fiestas that are paper weights. Getting inventory on the Ranger is incredibly challenging.

We have also taken to saying "I'm sorry, but we cannot make a deal." We won't make a deal without a profit. We'll break even on the Fiestas most likely.

By reducing inventory and saying no to deals that are bad for us, we have kept profits healthy.

We've been aggressive on the internet and aggressive with used cars.

The automakers need to start weeding out dealerships...the dealership model is a huge added cost in the system. In the future as car ownership drops and EVs (which inherently need less maintenance) take over the number of dealerships is not justifiable. It is much more cost effective to have dealerships further spread out with loaner drop off/vehicle pickup for luxury makes and drop off/pickup shuttles for the economy makes.

If you're a socialist, this makes sense. To no one else is it logical.

To me it is. Calling him names just proved his point, nice going.

Pointing out someone's political affiliation is name calling? Take a pill, unicorn.

I predict in 10-15 years the Dealer/Franchise system will be drastically different if it exists at all.

It is a well known fact in and outside of the industry that there is little to no profit on new car sales. The headline says: Automaker's Cut Back On Dealers Incentives Cause Many To Operate At A Loss ... but did not specify if the loss relates to new car sales or overall operations.

If a dealer is operating at a loss, it's managed poorly.

“If a dealer is operating at a loss, it’s managed poorly.”

Kind of a yes and no. A problem sometimes occurs when a dealer (group) tries to apply a selling system across all franchises, be it mass market, upscale, exotic etc. The same thing goes for the manufacturer. Selling $25,000 cars and $100,000 are not the same.

You must think you're an oracle: "Selling $25,000 cars and $100,000 are not the same."

Duhh!

You know NOTHING about the business of selling cars, so stop trying to pretend you do.

Typical response of a mass market dealer that probably learned the business from Jackie Cooper or Ziegler Super Systems seminars. Work that 4 square, TO the customer to F&I for some rust & dust, sell them that extended warranty on 36 month lease.

Wonder why Genesis is failing, letting Kia/Hyundai dealers sell them is part of the problem, same thing goes for Maserati/Alfa with CDJR dealers that try to use their selling systems thinking it will work with any buyer.

So aside from spewing bullshit and throwing names around to give the appearance that you know something, you said nothing coherent. Then you rant in the second paragraph, but it goes nowhere.

The businesses I am involved with are ship-shape, comfortably in the black and prospering.

Again, you know NOTHING about the automotive retailing business, so give it up already.