Can someone explain to me how the car dealership networks of the auto companies work?

JVS

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Thu May-14-09 08:18 AM
Original message

Can someone explain to me how the car dealership networks of the auto companies work?

I'm confused about why the car companies see the dealership agreements as something they want to get out of. What does having dealers cost the car company? Aren't the dealers the only ones who can buy the cars from the company and then retail it? I've never heard of a beer company wanting to shut down a bar that sells their beer due to poor sales, in fact it's always been the bar that cuts the poorly selling beer in my experience. What is the relationship between company and dealership?

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dkf

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Thu May-14-09 08:28 AM
Response to Original message

1. I read that because there have been so many protections for the

dealerships in the past that there are sometimes a slew of dealerships in the same area, making it easier to bargain between them for a very low price.

You'd think this would be good for the autos though because it cuts the dealership profits while selling more cars.

Yeah I don't get it either.

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islandmkl

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Thu May-14-09 08:37 AM
Response to Original message

2. check this out...it is a long read, but goes completely through the process...

read all of the 'New Cars Rule' part...

http://www.intellichoice.com/carBuying101/HowDealershipsWork

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JVS

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Sat May-16-09 02:10 AM
Response to Reply #2

3. Thanks. Makes sense now.

More dealers= more cars sitting around to ensure a full selection at each showroom = more money needed to float the the cost of the invoices until the dealer can sell and pay off the invoice. I now understand how this works to be a liability fo the car company.

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