Planet-9 Porsche Forum banner

1 - 1 of 1 Posts

·
Registered
Joined
·
23,161 Posts
Discussion Starter · #1 ·
Retail throughput (new vehicle sales per franchise outlet) is arguably the most important issue in the controversy about the recent dealer count reduction by Chrysler and the planned reduction by GM. The huge disparities in throughput between the domestics and Asians have not been highlighted in discussions of the dealer count reductions, but maybe they should since they are the crux of the problem. In 2008, the typical Toyota dealer sold 1,589 new cars and light trucks, the highest average throughput in the industry*. Honda was second at 1,253, and Nissan was third (among non-luxury brands) at 785 units. In contrast, the typical Ford Division dealer in 2008 delivered 477 units, with Chevrolet at 459 and Dodge at just 202.

In the luxury market the gap is even larger. The typical Lexus dealer sold 1,158 new vehicles in 2008, more than ten times that of the typical Cadillac (112) or Lincoln (83) dealer. Lexus's average throughput was higher than that of any other brand in the industry except Toyota and Honda.

While the Toyota, Chevrolet and Ford brands nationally sell approximately the same number of new vehicles, the typical Toyota dealer sells many more than its domestic counterparts because there are far fewer Toyota stores. As of January 1, 2009, there were 1,225 Toyota and 1,029 Honda franchises nationwide, compared to 3,812 and 3,430 Chevrolet and Ford outlets, respectively. These widely divergent numbers have received virtually no media coverage.

The obvious way to increase throughput at the domestic stores is to reduce the number of stores, something the domestics have been trying to do for years. But closing one store in normal times can take years because of state franchise laws. GM and Chrysler’s bankruptcies presented them with an inviting one-time opportunity to dramatically shrink their networks with "one stroke of the pen."

Throughput is highly correlated with dealership profits. The more profitable Toyota and Honda dealers currently have more money to spend on employee salaries, employee training, and facility improvements (among other things), raising the entire water level of their operations relative to the competition. The domestic OEMs are well aware of this situation, and it is the central reason for their recent actual/planned dealer count reductions.

All comments and/or rebuttals are welcome.

*All throughput data are from the 2009 Automotive News Market Data Book

Posted by Tom Libby, PolkInsight Advisor, Polk (02.15.2010)




More...
 
1 - 1 of 1 Posts
Top