This Looks Very Bad For People Who Work At Car Dealerships

[FarCenter]

We're just playing around some more with the new Vehicle Miles Traveled data that's available on FRED, and we made this chart.

Growth in vehicle miles traveled has aligned almost perfectly with the growth in the number of employees working at automobile dealerships.

Thus the collapse in vehicle miles traveled does not look good for dealerships.


Read more: http://www.businessinsider.com/this-looks-very-bad-for-people-who-work-at-car-dealerships-2012-5

[yardwork]

1. So what you're saying is that when the economy tanks it hurts everybody?

[FarCenter]

7. Fewer miles driven means cars last more years, which results in fewer sales

But it is good for the environment.

[yardwork]

9. Electric cars powered by solar energy are good for the environment.

They would still be sold at dealerships. And people could drive as much as they wanted without having to pay so much for gas.

[FarCenter]

10. Batteries are costly, which means that a lot fewer cars can be afforded

Plus, the manufacturers have factories to build internal combustion engines that have to be depreciated over decades.

[yardwork]

11. I own a Prius. It cost less than many other sedans and costs way less to drive.

[FarCenter]

12. It doesn't run on solar power, does it?

[yardwork]

13. Not, that's a shame. It could but the gas and oil lobby are still very powerful.

Everytime I'm sitting in the blazing sun here in the southeast with the air conditioner running I think about all that energy being wasted as it bounces off the roof of my car and the thousands of cars around me.

[Union Scribe]

17. The UAW thanks you.

Thanks for walking the walk!

[Zalatix]

2. Interesting quote downthread on that page

International Jeff on May 5, 5:42 PM said:

Wanna know what will cause the total destruction of auto dealers? The second a state allows people to buy factory direct, we'll see a shuttering of dealers. There is NO reason why I can't go on Chevy.com (or whatever) and load up my car with whatever, have the factory make it, and have it delivered without paying for dealer fees, advertising costs, etc.

Not sure if this will utterly wipe out car dealers; people will still want to do a test drive first. ESPECIALLY when it comes to used cars.

[Lionessa]

3. Yes but if they then order on-line, it's like a double whammy

Have to have employees, but none make any commissions.

[elehhhhna]

6. nah - ya pay some showroom hostesses

and don't have a ton on inventory on the lot.

huge huge savings for the car co's...and (limited, probably) savings for the consumer

[Tikki]

4. My mother bought every car 'fleet sale' starting in the early 1960's.

About 4 cars over the years, I believe. 2 or 3 Chevys and a Ford of some model.

Picked them up in Portland OR and broke them in on
the highway trip 250, or so, miles back home.


Tikki

[FarCenter]

8. Due to state franchise laws, I doubt this will happen anytime soon.

And the auto dealers are usually politically influential at the state and local level.

[NBachers]

14. Yeah, but where do you take it for required maintenance to keep the warranty valid?

[Zalatix]

15. Good question. I wonder if that could create a sustainable business model

for auto dealers. Buy the car there, get discounts on maintenance?

[tammywammy]

16. The reply to that post clearly explains why that won't happen

Nice idea, but you've missed an important detail on May 5, 6:43 PM said:
@International Jeff: I am not aware of even one automaker that is considering direct auto sales with no participation by a dealership. It is actually against the interests of the automakers.

Here's how it works. Automakers rely very heavily on their dealership networks. Most people think that the main goal of an auto dealership is to sell new cars. Guess what, the sale of new vehicles is one of the least profitable departments of a dealership. Used cars typically earn a bit more. But the two true profit centers of any dealership are Parts and Service.

When a person buys a new car from a dealership, that dealership is typically responsible for registering the sale of that vehicle with all necesssary State and Federal Departments, and is responsible for collecting all State and local taxes. Automakers don't want to have to deal with that directly.

All automakers have policies that dealerships must follow, such as the requirement that when a salesperson sells a new vehicle, they must introduce the new owner to the Service and Parts Departments. Why? Because the automaker will make more profit from future parts sales, and needs the Service Department to take care of any warranty or recall issues on behalf of the automaker.

A few years back, Ford experimented with owning and operating their own dealerships. They abandoned that idea, as they quickly discovered how much is actually involved in running a dealership. It is much easier to operate dealerships as franchises, rather than own them.

By the way, it is difficult for anyone to just purchase a dealership as the dealership principal. Most automakers screen potential buyers to make sure that they have actual dealership experience. If you want to buy a dealership, but don't have any dealership experience, then you should look to be an investor with some dealership group, rather than waste your time only to be denied ownership.

Also, I've worked at a few dealerships that had their franchise license revoked by the automaker due to poor customer service ratings. The automakers definitely keep an eye on their dealership network, and take matters seriously.

One more point to make. I recall the ability to order vehicles from the factory over the Internet. However, when that option is available, the automaker doesn't ship the vehicle directly to your house. They send it to either the nearest dealership or to the dealership of your choice. In other words, the vehicle is still handled through the dealership network.

Even if a manufacturer decided to sell direct, they'd still have to maintain a parts & service network. On top of that, the manufacturer would have to then do all the paperwork associated with sales. It's much more beneficial for the manufacturers to use the sales & service agreements they have now, dealerships are not franchises, than it would be for them to take on direct sales.

[mother earth]

5. Price of gas & repair costs, lack of integrity, loss of job security for consumer and the need for

alternative energy vehicles...change is in the air, for many business as usual fields.

The car salesman has never been a favorite, but when you are constantly paying more for food, housing, etc., people cut back everywhere they can.

[tabbycat31]

18. My car will soon hit 200K

And I'd love to replace it, but that is simply not in the budget right now. I'd love to support my local Subaru dealer and buy a new Forester, but unless someone gives me a winning lotto ticket, that's not happening anytime soon.