Firms Jostle for Closed Dealerships' Business

Edward Niedermeyer
by Edward Niedermeyer

This spot (which cribs the Allman Brothers tune that gearheads will recognize as the Top Gear theme) is part of what AdAge describes as the repair chain’s effort to attract customers from closing dealerships. After all, the service department is often where the real money is made at dealerships, and the race to snag shuttered dealerships’ business is on. Automotive News [sub] reports that CarsDirect is even offering free 60-day online listings for any dealership that is going out of business. “We hope this offer helps dealers sell more cars as they work to stay in business and remain fixtures in their communities during the transition,” says CarsDirect VP Ken Potter. Not to mention a little free publicity that comes with the charitable territory. Meanwhile, how are GM and Chrysler shoring up their PR after the nasty dealer shutdown debacle? According to a WaPo analysis, Chrysler is emphasizing product competitivity (huh?) and GM is emphasizing restructuring (why?). So much for putting the best foot forward.

Edward Niedermeyer
Edward Niedermeyer

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  • Afabbro Afabbro on Jun 12, 2009

    I've never worked in the auto industry. I've heard that new car sales are small profit but the real money for car dealers is in the used car lot. Or is it in service? I'd be curious to know. Not that I'm planning on opening an auto dealership...

  • Geotpf Geotpf on Jun 12, 2009

    Both used cars and service make more money for the dealer than new cars do. Of course, if you sell somebody a new car, there's a very good chance they will come back to the same dealer for service, at least when it's under warranty.

  • CreepyMayne CreepyMayne on Jun 12, 2009

    I would never even trust Aamco to check my oil. They would probably try to sell me some synthetic blinker fluid and some new muffler bearings. lol

  • NulloModo NulloModo on Jun 13, 2009

    CreepyMayne - At which point you always have the option of telling them no, you'll just take what you asked for in the first place. In business today everyone tries to upsell regardless of the industry. The same reason that they try to sell you some overpriced slushy drink every time you go through the Taco Bell drive through, every fast food place pushes the value meals, and Best Buy tries to sell you an service plan for virtually everything you buy is simple - if someone is already saying yes to buying something, try to squeeze as much out of them as you can before they say no. With less people spending money the only way to keep profits up is to increase the average profit per sale. Affabro - Yes, used cars and service are both big profit centers, although new cars can be as well depending on the situation. These days it's harder to make a profit on a new car due to everyone and their brother having a wealth of information on the internet about invoice pricing, incentives, etc, in addition to the competition between local dealers. The beautiful thing about a used car is that there is no invoice, so, if the dealership was able to take in a trade at below market value or get a steal at an auction, they can offer a car at market price and still make a respectabe profit on it.