Closing auto dealers: Dumb move

[Homeslice]

Originally Posted by pauldun170

2 dealers close together = Two dealers competing against one another.
Two dealers competing against one another = price competition
price competition = decreased market value of each car.
end result is that it reduces profits on each car sold, it hurts the market perception of the product you are trying to sell and negatively effects the bottom line.
Chysler and GM can only compete in certain market spaces and considering their individual market positions a large heavy onerous distribution network is counterproductive.

You are talking about long-term hypotheticals.
In the short term, inter-dealer price competition only hurts the dealers, not the manufacturer. The manufacturer gets paid the same amount for the car. Your hypothesis that it will hurt the market perception of the brand, and thus eventually force the manufacturer to reduce its price, is a longer-term hypothetical that may or may not be true. What if it also causes a customer to buy Chevy instead of Toyota because he was able to negotiate better at the Chevy dealer, while the Toyota dealer wouldn't budge? And flash forward to today, with fewer Chevy dealers around? Chevy customers won't be able to negotiate as well as they did before, therefore some of them might buy a Toyota instead.

Also, eliminating dealers causes a loss in brand awareness, since anytime you have new cars sitting on a lot somewhere, it is its own form of advertising.