Domestic Nameplates Need Drastic Reduction in #'s of Dealers...

[enzl]

http://freep.com/apps/pbcs.dll/article?AID...1014/BUSINESS01 Edited February 3, 2007 by enzl

[VenSeattle]

The article is about reducing the amount of dealerships... not nameplates. But I agree... The domestics need to drop/kill the following brands in the US: Volvo, Land Rover, SAAB, Jaguar, Aston Martin, & Mazda. DCX has all but severed ties to MMNA (Mitsubishi), which should be gone soon enough. Right there alone are 7 nameplates that the Domestics can assist with getting rid of in the US market to help cure the current gluttony of makes.

Ford could use Fords from Europe as Fords. Mercury could sell rebadged Mazdas. Lincoln won’t feel suppressed by Volvo, Land Rover, & Jaguar.

Not what you wanted to hear... but oh well

[CSpec]

Why should Volvo, Land Rover, Aston, and Mazda disappear? They sell well and have some allure to them, except for Mazda which is highly regarded. Ford should cut Lincoln and Mercury before Volvo.

[Flybrian]

And, to supplement that...

GM cut 87 stores in '06

Amy Wilson | Link to Original Article @ Automotive News | February 2, 2007 - 7:11 pm

LAS VEGAS -- General Motors trimmed 87 stores from its U.S. dealership count last year, a reduction of 1.2 percent. But although it still has too many dealerships, the automaker doesn't plan buyouts to reduce those numbers at a faster pace.

"We don't have a lot of cash to invest in that," GM North America President Troy Clarke said Friday at the J.D. Power and Associates Automotive Roundtable. He made reference to the closeout of the Oldsmobile dealer network, saying, "GM is a company who knows what that costs."

GM's cash is better spent on new product investments, Clarke said. It will handle its reduction in part by encouraging dealers to work out consolidations among themselves. GM will try to help with agreements when possible but "won't take a real heavy hand with that."

Clarke described the matter of reducing dealership numbers as one of "extreme problem-solving." GM won't lay out specific targets or mandates because there's no upside, he said.

GM ended 2006 with 7,036 dealerships across its eight brands, a company spokeswoman said Friday. That compares with 7,123 at the end of 2005.

Asked when GM would get more aggressive on dealership consolidation, Clarke replied: "I don't know. But it's not tomorrow."

[the_yellow_dart]

How about a little Darwinism? Bigger sales numbers get you lower factory prices?

And, to supplement that...

GM cut 87 stores in '06

Amy Wilson | Link to Original Article @ Automotive News | February 2, 2007 - 7:11 pm

LAS VEGAS -- General Motors trimmed 87 stores from its U.S. dealership count last year, a reduction of 1.2 percent. But although it still has too many dealerships, the automaker doesn't plan buyouts to reduce those numbers at a faster pace.

"We don't have a lot of cash to invest in that," GM North America President Troy Clarke said Friday at the J.D. Power and Associates Automotive Roundtable. He made reference to the closeout of the Oldsmobile dealer network, saying, "GM is a company who knows what that costs."

GM's cash is better spent on new product investments, Clarke said. It will handle its reduction in part by encouraging dealers to work out consolidations among themselves. GM will try to help with agreements when possible but "won't take a real heavy hand with that."

Clarke described the matter of reducing dealership numbers as one of "extreme problem-solving." GM won't lay out specific targets or mandates because there's no upside, he said.

GM ended 2006 with 7,036 dealerships across its eight brands, a company spokeswoman said Friday. That compares with 7,123 at the end of 2005.

Asked when GM would get more aggressive on dealership consolidation, Clarke replied: "I don't know. But it's not tomorrow."

[balthazar]

CSpec= >>"Why should Volvo, Land Rover, Aston, and Mazda (which is highly regarded) disappear? They sell well.... "<<

Sales are dropping for the first 3, investment is draining considering they are all limited niche brands, and the market is in a glut. Mazda has the worst ownership retention of any make short of izusu; all too soon everyone that would consider a mazda will have tried and rejected it: the future there is not bright.

I agree with Ven- dump those he listed and good riddance. We all know what a handful the chinese junk is going to be to deal with in the market, if they ever make it here (and here's hoping they don't).

[VenSeattle]

Why should Volvo, Land Rover, Aston, and Mazda disappear? They sell well and have some allure to them, except for Mazda which is highly regarded. Ford should cut Lincoln and Mercury before Volvo.

Where is your logic??

You want to know mine?

The expense of supporting three separate dealership networks, individual brand marketing, R&D, and production of these small 'niche' brands are hazardous to Ford's US health while contributing to the brand gluttony in this country's market.

Volvo: Independent dealer network

2006 annual sales: 115,807 (down 6.3%) (8 models)

Mazda: Independent dealer network

2006 annual sales: 97,074 (down 14.9%) (9 models)

Jaguar & Land Rover: Mostly consolidated Joint Dealership Network

2006 annual sales:

Land Rover: 47,774 (up 3.5%) (3 models)

Jaguar: 20,683 (down 32%) (4 models)

Three separate exclusive dealership networks, roughly 24 separate models between 4 brands... all for what? 281,338 annual sales?!!?

GM's sacrificial lamb Buick sold 240,657 alone last year with 5 separate models while sharing a dealership network with Pontiac and GMC.

Ford's sacrifical lamb Lincoln-Mercury division sold a combined 301,324 with 13 separate models while sharing the same dealership network.

Mercury could easily sell rebadged Mazdas while allowing Euro-Fords to be sold here as US Fords. Buick and the rest of GM would benefit from the additional resources that are currently being spent on SAAB. MMNA... well, DCX has done everything it can to severe corporate ties for when it goes belly up.

You can say "Brand Appeal" (or allure/high regard) is the important factor in saving Mazda, Volvo, Jag, & LR... but the "exclusiveness" of the Ford niche brands actually means no one is buying them! With the proper models, Mercury & Lincoln would be competitive like any other manufacturer and sell more too. Look at what they're currently doing with re-badged Fords (and less models)!

Those are my reasons why.

[Drew Dowdell]

Most Jag/Land Rover dealers seem to be paired up with other premium makes. Around here we have a Jag/LR/BMW and a Jag/Lex/Volvo

Mazda usually seem to be paired with someone else also.... oddly, around here, it's generally VW.

[evok]

CSpec= >>"Why should Volvo, Land Rover, Aston, and Mazda (which is highly regarded) disappear? They sell well.... "<<

Sales are dropping for the first 3, investment is draining considering they are all limited niche brands, and the market is in a glut. Mazda has the worst ownership retention of any make short of izusu; all too soon everyone that would consider a mazda will have tried and rejected it: the future there is not bright.

Have you ever thought or considered these vehicle brands might have a global presence and I focus my comments on Volvo, Mazda and LR. The are a lot bigger than you might think.

BTW - Mercury will be euthenized as soon as Lincoln can pick up the lost retail volume.

[Drew Dowdell]

BTW - Mercury will be euthenized if Lincoln can pick up the lost retail volume.

fixed

I don't think either brand is safe.

[Cory Wolfe]

Mazda, Volvo, and Land Rover? Going away?

Someone is high. First off, sales aren't as important as profit. I'm willing to bet Ford makes alot more money off those three, than they do Mercury or Lincoln. Not to mention that they have appeal outside the fleet market, geriatric crowd, and outside the US unlike Mercury and Lincoln. If any brand is in danger of being dropped, it's those two. Hell, Pontiac has a better chance of being dropped even with the upcoming G8.

[balthazar]

>>"Have you ever thought or considered these vehicle brands might have a global presence and I focus my comments on Volvo, Mazda and LR. The are a lot bigger than you might think."<<

I love how you always know what I think.

Global brands, you say? Shocking news. However, the article focuses on the U.S. market, not the world market.

If Merc is discontinued, I'm sure the diversion of the billions to buy the underperforming, money-sucking euro brands had nothing to do with it.

[evok]

>>"Have you ever thought or considered these vehicle brands might have a global presence and I focus my comments on Volvo, Mazda and LR. The are a lot bigger than you might think."<<

I love how you always know what I think.

Global brands, you say? Shocking news. However, the article focuses on the U.S. market, not the world market.

If Merc is discontinued, I'm sure the diversion of the billions to buy the underperforming, money-sucking euro brands had nothing to do with it.

Yet your comments I responded to were related to the euro marks and were not accurate. As for Mercury, much like Olds it became irrelevant to the public many many years ago. Nasser should have axed in the late 1990s when he had the chance and built up Lincoln which was the plan.

This article has no focus and it is pointless without the numbers. In other words - it is Girsky's opinion.

I just double checked Girsky's numbers - and they do not paint the whole picture. In other words he is full of crap in his analysis.

That is not to say consolodation on the dealer level for the big 2.5 may or may not be good, but the numbers used in the article paint a very distorted picture and do not factor into the equation any of the dealer brand consoldation of the past decade.

i.e. On average dealers that sell Chevrolet trun over app. 550 vehicles/year. The problem with his analysis is that dealers today even within a manufacturer are not exclusive. The franchise might average that 550 number but what about the other GM brands that dealer sells?

i.e. GM has app 14k franchises and yet on app 3,000 are exclusive and carry one brand.

i.e. Chrysler Group has app 9000 Jeep, Dodge, Chrysler franchises but yet there are app. 3000 dealers selling the three brands under one roof.

i.e. His analysis did not factor in certified used vehicles from the OEM.

i.e. Most importantly, what were the dealership number 5, 10, 15 and 20 years ago.

Edited February 3, 2007 by evok

[enzl]

How about a little Darwinism? Bigger sales numbers get you lower factory prices?

Franchise Laws limit the manufacturer's ability to do so....

I think the interesting part of this article is the simple supply /demand issue. Less competition for customers= more $ per transaction = better revenues.

Unfortunately, the 5%/year reduction in dealer points will only get the 2.5 so far...

Edited February 3, 2007 by enzl

[Robert Hall]

Mercury has been among the living dead of brands for years...unless Ford can craft a unique style with some unique models for it (not Fords with different plastic trim), then I see no point in continuing it...

[enzl]

>>"Have you ever thought or considered these vehicle brands might have a global presence and I focus my comments on Volvo, Mazda and LR. The are a lot bigger than you might think."<<

I love how you always know what I think.

Global brands, you say? Shocking news. However, the article focuses on the U.S. market, not the world market.

If Merc is discontinued, I'm sure the diversion of the billions to buy the underperforming, money-sucking euro brands had nothing to do with it.

Volvo has always been profitable, however, the problem with the English Patients has always been an attempt to Supply markets that didn't Demand the volume...Jags chase for volume was a disaster, which contrasts with BMW, who create demand and then supply product.

Mercury, much like other middle class brands, has suffered a squeeze from the Targets (Hyundai, Kia, Honda) & the Saks' (BMW, Lexus, Audi) on either side...Merc is necessary for Lincoln dealerships, but as a brand, its almost completely irrelevant---declining US interest and Zero International sales.

I would argue the Firestone Fiasco & Ford's abandonment of the Taurus are almost as much to blame as Euro brands.

[evok]

Volvo has always been profitable, however, the problem with the English Patients has always been an attempt to Supply markets that didn't Demand the volume...Jags chase for volume was a disaster, which contrasts with BMW, who create demand and then supply product.

Land Rover is on the cusp of profitability last I looked at the finacials. It also needs to be pointed out, PAG contributed 30 Billion in revenue to Ford which is equivalent to Ford of Europes contribution to Ford.

In NA there are about 250 Jaguar and 300 LR dealers.

Edited February 3, 2007 by evok

[Flybrian]

From a dealership standpoint, I don't see why anyone would be concerned with Jaguar or Land Rover. As mentioned before, I bet there are zero true standalone Jag/LR retailers and the 'eurocar' lots that typically sell these brands are a collection of low-volume marques supplemented by a high-volume one (Cadillac, Mercedes, BMW, etc.).

As far as Mercury goes, I've thrown it out there in the past that Mercury and Lincoln have the natural layout to be moderately successful (or at least justify their existence), its only been the fault of Ford having absolutely no idea what to do with the brand. L-M dealers provide generally above average service and have a more upscale environment thanks to the presence of Lincoln. Mercury as a brand needs to be tailored as a 'ramp up' division to Lincoln, providing the smaller entry-level vehicles to contrast Lincoln's higher-end and lower-volume lineup. Of course, this is in an ideal situation where Ford knows what its doing.

[balthazar]

>>"PAG contributed 30 Billion in revenue to Ford "<<

Revenue is irrelevant to the bottom line; what was PAG's profit?

[thedriver]

I have to disagree. I think the seling of foreign product under American brands is watering down Ford and Chrys

ler. GM has resisted this except for the Zeta chassis and the Opelization of Saturn.

Ford is selling a Volvo and 2 Mazdas wrapped in Ford clothes. The only domestics left are Mustang and Crown Vic. Dodge is selling 2 Mitsubishis and half a Mercedes. The truck side of things hasn't changed much, yet, unless you are GM selling Isuzus.

I am in the vast minority, beliving that the notion of a "world market" is only benefitting the strugling nations at the expense of those better off, I feel that the domestic brands should focus on building cars for here and selling them other places rather than importing parts and engineering for parts of the market they "cannot compete in" or "cannot afford it".

The notion of an "American car company" is well on its way to extinction.

[enzl]

I have to disagree. I think the seling of foreign product under American brands is watering down Ford and Chrys

ler. GM has resisted this except for the Zeta chassis and the Opelization of Saturn.

Ford is selling a Volvo and 2 Mazdas wrapped in Ford clothes. The only domestics left are Mustang and Crown Vic. Dodge is selling 2 Mitsubishis and half a Mercedes. The truck side of things hasn't changed much, yet, unless you are GM selling Isuzus.

I am in the vast minority, beliving that the notion of a "world market" is only benefitting the strugling nations at the expense of those better off, I feel that the domestic brands should focus on building cars for here and selling them other places rather than importing parts and engineering for parts of the market they "cannot compete in" or "cannot afford it".

The notion of an "American car company" is well on its way to extinction.

Umm, the disaster that the Big 2.5 have become is mostly because their American fiefdoms routinely ignored the globalization of other, growing international competitors.

There's no rational reason for Ford of Europe's fantastic product not to be here, when Toyota sells nearly identical product globally. Bear in mind that Ford provided the resources necessary to develop the full line of Mazda products & most of the Volvo growth is predicated upon the transfer of its tech to other Ford-owned products, eventually.

Putting their zenophobic and short-sighted heads in the sand is part of the big 2's huge problems today.

[VenSeattle]

Have you ever thought or considered these vehicle brands might have a global presence and I focus my comments on Volvo, Mazda and LR. The are a lot bigger than you might think.

I did take that into consideration in my posts... I, too, was just referring to the US market...

Mazda would be perfect sold as re-badged Mercuries... However, Ford could also just phase out Mercury and consolidate Mazda franchises in with Lincoln dealerships. My thing is, if the CX-9 was badged as a Mercury replacing the Mountaineer, it would sell like CRAZY. However, as a Mazda, I predict its sales will be average at best. Part of that has to do with the amount of dealerships and their location... but why isn't that viewed as a positive for Lincoln-Mercury? Mercury could peddle Mazda's line-up far better than Mazda does in the US.

Jaguar & LR's sales in the US are horribly low, as I'm sure they are in the rest of the world. I don't think their global presence really justifies their existence (or investment)... unless you have global volume numbers (or profit numbers) to back it up? If LR & Jag were to continue overseas, I'd just use them as platform donors for the next-generation of Lincolns. Jaguar's aluminum platform should have supplied Lincoln with a truly competitive Towncar to compete against large Mercedes like it did in the 1980s... but no, Ford decided against that. It could still happen though. It would sell better in the US as a Lincoln than it does as a Jag also(how could it not) A version of the Range Rover would make an excellent next-gen Navigator (once again, selling better.)

Volvo... yes. Globally is a strong brand and manufacturer, however, as you said earlier, Ford has already integrated their technology into Ford vehicles... so there's really nothing to stop Ford from continuing to use Volvo R&D & platform sharing with future global Fords while selling Volvo vehicles overseas.

All in all, Ford would continue to benefit from its global investments, but wouldn't be spread so thin in the US market supporting a dwindling market share(which numbers include PAG sales) Once again, we're talking about 4 brands and 280,000 annual sales... if their global presence is that significant, it shouldn't hurt them much. My opinion is those 4 global brands only sell 280,000 cars in the largest car market currently in the world. F-L-M could easily absorb and exceed that type of volume locally with competitive products provided from overseas. The volume would benefit them all, while reducing the amount of brands in the US significantly.

[evok]

>>"PAG contributed 30 Billion in revenue to Ford "<<

Revenue is irrelevant to the bottom line; what was PAG's profit?

As enzl said - Jaguar is the problem - therefore PAG is negative. But Volvo has been and LR should be profitable this year. Bare in mind LR just invested a lot of money into new product and upgrading operations. LR and Volvo generate the bulk of the revenue at PAG just on sheer volume and pricing. Minus Jaguar - PAG should be adding close to a billion dollars to the bottomline.

[evok]

I did take that into consideration in my posts... I, too, was just referring to the US market...

Mazda would be perfect sold as re-badged Mercuries... However, Ford could also just phase out Mercury and consolidate Mazda franchises in with Lincoln dealerships.

Mercury as a brand is irrelevant. Mazda outsells Mercury in the US using global product. KIA outsells Mercury - the market has spoken. But I have heard the idea that the M in L-M could turn into Mazda. To me that seems like a viable option for Ford to investigate.

Jaguar & LR's sales in the US are horribly low, as I'm sure they are in the rest of the world. I don't think their global presence really justifies their existence (or investment)... unless you have global volume numbers (or profit numbers) to back it up? If LR & Jag were to continue overseas, I'd just use them as platform donors for the next-generation of Lincolns. Jaguar's aluminum platform should have supplied Lincoln with a truly competitive Towncar to compete against large Mercedes like it did in the 1980s... but no, Ford decided against that. It could still happen though. It would sell better in the US as a Lincoln than it does as a Jag also(how could it not) A version of the Range Rover would make an excellent next-gen Navigator (once again, selling better.)

Jaguar is another story but LR sell app 200k vehicles globably at $50k+. Lincoln does not have the reputation to command the pricing of LR or Jaguar. For that reason, sharing the AL platform is most likely not viable. That is more vehicles than Lincoln and a little less than Cadillac. GM wishes they could sell 200k Escaldes and Hummers.

All in all, Ford would continue to benefit from its global investments, but wouldn't be spread so thin in the US market supporting a dwindling market share(which numbers include PAG sales) Once again, we're talking about 4 brands and 280,000 annual sales... if their global presence is that significant, it shouldn't hurt them much. My opinion is those 4 global brands only sell 280,000 cars in the largest car market currently in the world. F-L-M could easily absorb and exceed that type of volume locally with competitive products provided from overseas. The volume would benefit them all, while reducing the amount of brands in the US significantly.

And PAG generates 30 Billion dollars and is 1/2 of Fords total European operations. PAG is about premium pricing - it has nothing to do with only selling 280k in the US. And by the way - The Europe is the largest vehicle market in the world.

[Camino LS6]

It seems to me that Mecury's fate has already been sealed, just a matter of time now.

[VenSeattle]

Europe is the largest vehicle market in the world.

I don't personally consider a continent as a single car market. The UK is very different than the mainland, not to mention all the language and cultural barriers that a company has to individually market to in each European country. Not all brands are available universally throughout Europe like in the US.... But yes, laws are now much more accommodating since the EU... and it really can be viewed as an equivalent to targeting the US market. Thank you very much for the reply on my comments... very informative and interesting.

[evok]

I don't personally consider a continent as a single car market. The UK is very different than the mainland, not to mention all the language and cultural barriers that a company has to individually market to in each European country. Not all brands are available universally throughout Europe like in the US.... But yes, laws are now much more accommodating since the EU... and it really can be viewed as an equivalent to targeting the US market. Thank you very much for the reply on my comments... very informative and interesting.

I would not under-estimate the EU as an economic zone when compared to the US.

For the most part, no borders, common currency, and english is the business language. There are more product choices for the consumers in Europe than the US to go with the 150 million more people than the US.

Side by Side facts:

http://en.wikipedia.org/wiki/European_Union

http://en.wikipedia.org/wiki/United_States

Edited February 4, 2007 by evok

[ZL-1]

The UK is very different than the mainland, not to mention all the language and cultural barriers that a company has to individually market to in each European country. Not all brands are available universally throughout Europe like in the US.... But yes, laws are now much more accommodating since the EU... and it really can be viewed as an equivalent to targeting the US market. Thank you very much for the reply on my comments... very informative and interesting.

You're right.

I would not under-estimate the EU as an economic zone when compared to the US.

For the most part, no borders, common currency, and english is the business language. There are more product choices for the consumers in Europe than the US to go with the 150 million more people than the US.

And you're right too.

The two of you are looking at the same reality from two different perspectives. VenSeattle is looking at what the European Union is now: a number of different nation-states, with different and sometimes conflicting tastes, economic policies, and so on. But he also notes that the EU is following a path of integration in several aspects: the common market is slowly but steadily leveling regulations and to some extent consumer tastes, which leads to evok's point, which is the ultimate goal of the EU experience: a truly single or common market, where differences between Portuguese and Swedish consumer preferences can be thought of as the differences between consumer preferences in Florida and New York (differences in a single market instead of several individual/compartmented markets). What is dominant today is still the national side, but there is a trend towards harmonization in consumer preferences.

I'd even argue that this harmonization of consumer preferences is much broader than a US vs. Europe discussion: it includes the whole developed world and growing parts of the developing countries (see China or India or Indonesia/Malaysia/Singapore 25 years ago, and compare with today). But that's another interesting discussion :AH-HA_wink:

Edited February 7, 2007 by ZL-1