My local Buick dealer is out of business

[Matt Harwood]

I was pretty bummed and unhappy to see that Qua Buick, here in my home town, has folded up shop. They've been here longer than I've been alive.

Things must be pretty bad in GM country if a Buick/Pontiac/GMC Truck franchise can't stay in business in one of the wealthiest communities in Cleveland. On the other hand, how much money did dealers make when GM was selling cars at a $1500 loss? That must have hurt them a lot, too. Perhaps that statistic of the average Buick dealer only selling 2 cars a month was true...

This is a BIG warning flag for me. GM's troubles are about to become everyone's problem, and this is just one example of it. My city, which has very little commercial tax base, just lost one of its biggest contributors. That's only going to cost me more taxes, reduce the value of my home and hurt the standard of living in this town. Sooner or later, GM's slide will hurt everyone.

Sad.

[JohnD1956]

How sad... Maybe they just wanted to retire and couldn't find anyone to take over for them?

JD

[Guest 1938McLaughlin]

A friend of mine works at a Nissan dealer. Apparently they had to expand and renovate the dealership to match the 'Corporate" design. Cost Big money, and the owner is pinching pennies now to keep things going.

Could have been similar situation, so they packed it in instead.

just a thought

[NTX5467]

Sorry to hear of the closing of your local dealership, Matt.

Even at the various pricing levels that GM has used in the past months, there's still some profit in the sales at the dealership level. If the customer desires to purchase an extended warranty, that's a little profit. If the customer finances the vehicle through the dealer or an associated bank, that a little profit too. And then there's the profit from the sale of the trade-in.

GM might have been losing money on their side of the deal (which they seemed to be able to cover with the profits from GMAC's profits--as mentioned in the press-- but now the "investors" want part of GMAC sold off, to the investors' beneift of "unlocking shareholder value"). All in all, GM came out of the deal reasonably well off, considering, at the corporate level, but it took all of the various entities of GM to make that happen, not just the car sales side. I know of some B-P-GMC salespesons that made over $15K in those first two months of the initial program.

Now, after all of the employee-type pricing went away (followed by "value pricing" as is now in place), the sales volume diminished a good deal. By the end of all of the employee-type pricing programs, the dealership traffic typically consisted of "buyers" that had negative equity rolled into their existing car loan (too large of a payoff for the vehicle to cover it) and/or had poor credit numbers. Now that value pricing has settled in and some time has transpired, the "normal" amount of sales traffic (for the time of year) has seemed to return--by observation.

At the local level, there can be many factors. As mentioned, GM does have minimum standards for the appearance of the dealership that need to be maintained--at the dealer's expense (but GM can help finance it somewhat too). In the Image 2000 program, there were specs for the outside appearance, signage, and interior of the dealership areas, for example. As also mentioned, Nissan is in an upgrade situation also. I believe it's in the basic franchise agreement that these minimums must be maintained.

It can also be a situation, as mentioned, where the dealer is just tired of the whole "thing" and with no heir apparents to take it over, they just retire. By the same token, it's the "heir apparents" that end up in financial trouble and end up closing things down later on--by observation-- but it also seems that there are more 2nd and 3rd generation dealers in the Buick area than in many other carlines of GM.

And then there's that somewhat ominuos thing called "CSI" (Customer Satisfaction Index). This pertains to the new vehicle ownership experience (warranty work in the shop, sales experience during the sales process, sales experience at the time of delivery) at the selling and servicing dealership. A dealership that is consistently below their respective zone average, and doesn't seem to be able to improve things, might face the consequences. I suspect that if GM felt that sales point was consistently "underperforming" and values it, they'll find somebody to take the franchise over, probably pretty soon.

A side issue might be that it has not made any money for some time and had to close due to IRS guidelines of what is "a business". Why it might not have been profitable could be open for debate (of issues we have no knowledge of).

Therefore, I wouldn't really call that particular dealership closing as being orchestrated by GM's alleged problems (as readily reported by the media!) when most GM stores have put some good volumes of vehicles on the road during the past 4 months--including BUICKS. Profits were made by the dealers on each and every sale during that time too, probably not as much as if they'd been made 6 months earlier, but one of those deals where you make up the lesser profit/unit with the increased volume that just got dropped into your lap.

You might have noticed that GM's later versions of "employee pricing" also included "At Participating Dealers" in their advertising. So that was seemingly optional for them to choose to participate, but I suspect that if they didn't participate, why should the customer buy a vehicle there if price was a determining factor. The current "white tag" prices are furnished by GM themselves are are typically displayed by the original window sticker for the vehicle.

Just some thoughts . . .

NTX5467

[R W Burgess]

That pricing rebate thing bothers me as the "Special Factory Red Tag" says $22,300 give or take on my new GMC, but I still was able to get another $400.00 off of that. Somebodies making money some kind of way! <img src="http://forums.aaca.org/images/graemlins/confused.gif" alt="" /> <img src="http://forums.aaca.org/images/graemlins/confused.gif" alt="" />

Wayne