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Go Back   Hummer Forums by Elcova > General Hummer Talk > In the News
Reload this Page The Chevy's in the Levee

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  #1  
Old 01-14-2006, 09:57 PM
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<h1>The Chevy's in the Levee</h1>

<p class=MsoNormal style='margin-bottom:12.0pt'></p>

<p class=MsoNormal>by Joann Muller </p>

<p class=MsoNormal>Forbes.com</p>

<p class=MsoNormal></p>

<p class=MsoNormal style='margin-bottom:12.0pt'>Last summer New Jersey car
dealer Donald Toresco gave up his 23-year Ford franchise on a busy commercial
strip 20 miles west of Manhattan to devote more space to his Toyota dealership.
In Wilmington, Del. Frank Ursomarso did the same thing, replacing his
underperforming Ford dealership with an expanded Honda store. "You've got
to follow the market," he says. "I've got to go where the customers are
going."



The domestic carmakers have plenty of problems these days. Now you can add
dealer defections, a trend that if sustained could make it even harder for
General Motors and Ford Motor to bounce back. Lately, amid seismic shifts
toward imports in U.S. market share, those once sturdy networks of loyal
dealers have shown signs of splintering. </p>

<h1 style='margin:3.0pt'><span style='color:#666666'>Following the Money </span></h1>

<table class=MsoNormalTable border=0 cellspacing=4 cellpadding=0 width="100%"
style='width:100.0%'>
<tr>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal> </p>
</td>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Jan. 2004</p>
</td>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Jan. 2005</p>
</td>
</tr>
<tr>
<td style='background:whitesmoke;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>GM</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>7,462</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>7,342</p>
</td>
</tr>
<tr>
<td style='background:whitesmoke;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Ford</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>4,459</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>4,436</p>
</td>
</tr>
<tr>
<td style='background:whitesmoke;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Chrysler</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>4,110</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>3,997</p>
</td>
</tr>
</table>

<p class=MsoNormal style='margin-bottom:12.0pt'><span style='font-size:
7.5pt'>Source: Automotive News</span><span style='font-size:7.5pt'>



</span>"They're just shopkeepers," says Sheldon Sandler,
president of Bel Air Partners, a financial consultant and broker who
specializes in car dealerships. "The dealers will sell what sells."
This difference is reflected in selling prices of dealerships. A Toyota dealer is fetching at least five times pretax earnings, says Sandler, a solid Ford
store maybe three times. The average dealer in 2004, import and domestic, had a
pretax net of $560,000, according to the National Automobile Dealers
Association.



<span class=mainarttxt>Ursomarso had been selling Hondas since 1976, adding
Fords in 1999, when SUVs were hot. Last year he sold an average 78 Hondas a
month, to 26 Fords. His Honda store generated close to $1 million in profit
last year, while his Ford store, 100 feet away — one of five in the Wilmington
area — merely broke even. Honda promised him more hot-selling models if he
invested $2.5 million to expand and upgrade his store with prominent signs and
other amenities. With real estate at a premium, he knew he could devote more space
to Honda sales and service (and to his BMW dealership four blocks away) if he
unloaded the Ford franchise. He found a buyer, but Ford decided the new
location was less desirable and nixed the deal. So Ursomarso simply gave up the
franchise.</span>



<span class=mainarttxt>Eventually, says Ursomarso, "the manufacturers will
wake up and say, ‘What happened? We lost our dealers.' It will be a rude
awakening."</span>



<span class=mainarttxt>"They're going to lose position in certain markets
where they need to be," says automotive analyst Maryann Keller. "They
don't understand that they have lost the loyalty of their dealers."</span>
</p>

<h1 style='margin:3.0pt'><span style='color:#666666'>2004 Vehicle Sales per
Dealership</span></h1>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width="100%"
style='width:100.0%'>
<tr>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Toyota</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>1,464</p>
</td>
</tr>
<tr>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Honda</p>
</td>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>1,185</p>
</td>
</tr>
<tr>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Ford</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>728</p>
</td>
</tr>
<tr>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Chevrolet</p>
</td>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>664</p>
</td>
</tr>
<tr>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Saturn</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>483</p>
</td>
</tr>
<tr>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>GMC</p>
</td>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>260</p>
</td>
</tr>
<tr>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Pontiac</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>170</p>
</td>
</tr>
<tr>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Cadillac</p>
</td>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>157</p>
</td>
</tr>
<tr>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Buick</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>112</p>
</td>
</tr>
</table>

<p class=MsoNormal><span style='font-size:7.5pt'>Source: Automotive News</span><span
style='font-size:7.5pt'>



</span>The carmakers insist they've got plenty of entrepreneurs lined up to
take over open franchises. "For every dealership that becomes available,
I've got five dealers standing in the wings ready to take it over," says
Joseph Chrzanowski, GM's executive director of dealer network planning and
investments.



<span class=mainarttxt>Still, the danger for the Big Three is that the best
dealers — the most talented entrepreneurs — will leave them, along with the
best salespeople. A salesperson goes where the commissions are best and those
aren't on a Ford Explorer or a Chevy Silverado that can be unloaded only with
rebates and haggling. Better to be selling Toyota Priuses, which leave the lot
at a price above the sticker.</span>



<span class=mainarttxt>If the manufacturers had a completely free hand, they
would shrink their dealer networks by forcing badly run stores into the hands
of strong ones and closing down the weakest locations altogether. That would
boost the number of cars sold per store. At the moment the average Toyota store moves 122 vehicles a month, double the Ford and Chevrolet figures. It'll be
no surprise if Toyota dealerships get more of the multimillion-dollar upgrades.</span>




<span class=mainarttxt>But culling the herd is slow and difficult, partly
because state franchise laws protect the country's 21,640 car dealers (who
exert much political power in state legislatures). Another problem is that many
dealerships are family-run enterprises. The next generation may want to cling
to a franchise, even if it's not making much money for the dealer or for the manufacturer.</span>
</p>

<p class=MsoNormal></p>

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  #2  
Old 01-14-2006, 09:57 PM
Klaus's Avatar
Klaus Klaus is offline
Hummer Guru
  
Join Date: Nov 2002
Location: CSA
Posts: 2,511
Klaus is an unknown quantity at this point
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<meta http-equiv=Content-Type content="text/html; charset=windows-1252">
<meta name=Generator content="Microsoft Word 11 [filtered)">
<title>The Chevy's in the Levee</title>

<style>
<!--
/* Style Definitions */
p.MsoNormal, li.MsoNormal, div.MsoNormal
{margin:0in;
margin-bottom:.0001pt;
font-size:12.0pt;
font-family:"Times New Roman";}
h1
{margin-right:0in;
margin-left:0in;
font-size:24.0pt;
font-family:"Times New Roman";}
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<body lang=EN-US>

<div class=Section1>

<h1>The Chevy's in the Levee</h1>

<p class=MsoNormal style='margin-bottom:12.0pt'></p>

<p class=MsoNormal>by Joann Muller </p>

<p class=MsoNormal>Forbes.com</p>

<p class=MsoNormal></p>

<p class=MsoNormal style='margin-bottom:12.0pt'>Last summer New Jersey car
dealer Donald Toresco gave up his 23-year Ford franchise on a busy commercial
strip 20 miles west of Manhattan to devote more space to his Toyota dealership.
In Wilmington, Del. Frank Ursomarso did the same thing, replacing his
underperforming Ford dealership with an expanded Honda store. &quot;You've got
to follow the market,&quot; he says. &quot;I've got to go where the customers are
going.&quot;



The domestic carmakers have plenty of problems these days. Now you can add
dealer defections, a trend that if sustained could make it even harder for
General Motors and Ford Motor to bounce back. Lately, amid seismic shifts
toward imports in U.S. market share, those once sturdy networks of loyal
dealers have shown signs of splintering. </p>

<h1 style='margin:3.0pt'><span style='color:#666666'>Following the Money </span></h1>

<table class=MsoNormalTable border=0 cellspacing=4 cellpadding=0 width="100%"
style='width:100.0%'>
<tr>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal> </p>
</td>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Jan. 2004</p>
</td>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Jan. 2005</p>
</td>
</tr>
<tr>
<td style='background:whitesmoke;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>GM</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>7,462</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>7,342</p>
</td>
</tr>
<tr>
<td style='background:whitesmoke;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Ford</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>4,459</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>4,436</p>
</td>
</tr>
<tr>
<td style='background:whitesmoke;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Chrysler</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>4,110</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>3,997</p>
</td>
</tr>
</table>

<p class=MsoNormal style='margin-bottom:12.0pt'><span style='font-size:
7.5pt'>Source: Automotive News</span><span style='font-size:7.5pt'>



</span>&quot;They're just shopkeepers,&quot; says Sheldon Sandler,
president of Bel Air Partners, a financial consultant and broker who
specializes in car dealerships. &quot;The dealers will sell what sells.&quot;
This difference is reflected in selling prices of dealerships. A Toyota dealer is fetching at least five times pretax earnings, says Sandler, a solid Ford
store maybe three times. The average dealer in 2004, import and domestic, had a
pretax net of $560,000, according to the National Automobile Dealers
Association.



<span class=mainarttxt>Ursomarso had been selling Hondas since 1976, adding
Fords in 1999, when SUVs were hot. Last year he sold an average 78 Hondas a
month, to 26 Fords. His Honda store generated close to $1 million in profit
last year, while his Ford store, 100 feet away — one of five in the Wilmington
area — merely broke even. Honda promised him more hot-selling models if he
invested $2.5 million to expand and upgrade his store with prominent signs and
other amenities. With real estate at a premium, he knew he could devote more space
to Honda sales and service (and to his BMW dealership four blocks away) if he
unloaded the Ford franchise. He found a buyer, but Ford decided the new
location was less desirable and nixed the deal. So Ursomarso simply gave up the
franchise.</span>



<span class=mainarttxt>Eventually, says Ursomarso, &quot;the manufacturers will
wake up and say, ‘What happened? We lost our dealers.' It will be a rude
awakening.&quot;</span>



<span class=mainarttxt>&quot;They're going to lose position in certain markets
where they need to be,&quot; says automotive analyst Maryann Keller. &quot;They
don't understand that they have lost the loyalty of their dealers.&quot;</span>
</p>

<h1 style='margin:3.0pt'><span style='color:#666666'>2004 Vehicle Sales per
Dealership</span></h1>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width="100%"
style='width:100.0%'>
<tr>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Toyota</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>1,464</p>
</td>
</tr>
<tr>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Honda</p>
</td>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>1,185</p>
</td>
</tr>
<tr>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Ford</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>728</p>
</td>
</tr>
<tr>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Chevrolet</p>
</td>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>664</p>
</td>
</tr>
<tr>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Saturn</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>483</p>
</td>
</tr>
<tr>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>GMC</p>
</td>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>260</p>
</td>
</tr>
<tr>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Pontiac</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>170</p>
</td>
</tr>
<tr>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Cadillac</p>
</td>
<td style='padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>157</p>
</td>
</tr>
<tr>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>Buick</p>
</td>
<td style='background:#EFEFEF;padding:1.5pt 1.5pt 1.5pt 1.5pt'>
<p class=MsoNormal>112</p>
</td>
</tr>
</table>

<p class=MsoNormal><span style='font-size:7.5pt'>Source: Automotive News</span><span
style='font-size:7.5pt'>



</span>The carmakers insist they've got plenty of entrepreneurs lined up to
take over open franchises. &quot;For every dealership that becomes available,
I've got five dealers standing in the wings ready to take it over,&quot; says
Joseph Chrzanowski, GM's executive director of dealer network planning and
investments.



<span class=mainarttxt>Still, the danger for the Big Three is that the best
dealers — the most talented entrepreneurs — will leave them, along with the
best salespeople. A salesperson goes where the commissions are best and those
aren't on a Ford Explorer or a Chevy Silverado that can be unloaded only with
rebates and haggling. Better to be selling Toyota Priuses, which leave the lot
at a price above the sticker.</span>



<span class=mainarttxt>If the manufacturers had a completely free hand, they
would shrink their dealer networks by forcing badly run stores into the hands
of strong ones and closing down the weakest locations altogether. That would
boost the number of cars sold per store. At the moment the average Toyota store moves 122 vehicles a month, double the Ford and Chevrolet figures. It'll be
no surprise if Toyota dealerships get more of the multimillion-dollar upgrades.</span>




<span class=mainarttxt>But culling the herd is slow and difficult, partly
because state franchise laws protect the country's 21,640 car dealers (who
exert much political power in state legislatures). Another problem is that many
dealerships are family-run enterprises. The next generation may want to cling
to a franchise, even if it's not making much money for the dealer or for the manufacturer.</span>
</p>

<p class=MsoNormal></p>

</div>

</body>

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