Anyone still positive about the economy going forward???? Where are 137,000 on top of the 13 million already unemployed going to find jobs, do you actually think this economy is going to be able and create jobs with the economy in the shape that its in, get real people, this whole job creation talk is just nonsense talk to make you believe we can jump start the economy once again. No one understands that the economy goes through cycles and that recessions are good, always putting the brakes on a recession will always lead to a false sense of economic recovery. General Motors closing 1,200 dealers Jonathan Berr Apr 29th 2009 at 9:30AM Filed under: Company News, Earnings Robb Brown's roots with General Motors Co. (GM) run deep. His grandfather, Willis E. Brown Sr., founded Toledo's Brown Pontiac in 1926, which is currently the oldest seller of the GM brand in the U.S. The decision by the beleaguered automaker to kill Pontiac surprised Brown, whose first Pontiac was a 1971 LeMans with a GTO hood. "I thought we were doing well," Brown said in an interview with DailyFinance. Brown argued that Pontiac sales were doing better than Buick, which GM is keeping. Nonetheless, Brown does not think that GM did right by Pontiac. Resources that would have gone to Pontiac went to Saturn. Pontiac models suffered. "Here we are trying to sell the same old car to the customers," he said. "People are not stupid. They figured it out." The picture for many GM dealers is bleak. As Bloomberg News noted, GM "intends to cut dealerships by 42 percent to 3,605 from 6,248 at the end of last year to help reduce liabilities by $44 billion and keep $15.4 billion in U.S. loans." The plan will lead to the elimination of 137,330 jobs at a time when the economy can afford it least. The ramifications are huge. Newspapers and local television stations count on car dealers to buy advertisements. That's not to mention the impact on smaller businesses and on employment. Many of these firms, such as Brown Pontiac, have deep roots in the community. Like most car dealerships, Brown does sells more than one model. He hopes to be able to find jobs for his Pontiac workers at his Honda, Mazda and Hyundai dealerships. Brown, though, is not sure what he will do. His grandfather, who guided the business through the Great Depression and World War II, would be shocked by what happened to Pontiac. "He is rolling over in his grave," he said.
I was speaking with someone who is fairly high up in one of the foreign company's US headquarters recently. She told me that they expect that between 50-65% of all dealers in the US (domestic and foreign) will close in the coming years. There has been a paradigm shift in people's mindset as to what one's real needs are in a vehicle. Having a sparkling new Tahoe every 24-36 months and being upside down on the payment is no longer considered a great way to spend one's money. Having a paid for 8 y/o honda is now considered cool. I expect that mindset will remain, long after the economy recovers.
I would'nt doubt it, dealerships near me have closed up left and right, with only about 10 million cars being sold in the US down from 16 million each year there is no need for the thousands and thousands of dealerships that are in this country at this moment. I totally agree, I knew of one guy that within 5 years had about 4-5 different new cars, he was completely upside down owing tens of thousands, within that time frame I paid off my car which is now around 7 years old, he is still paying off his car plus the other 5 he rolled into as one big fat payment. People are finally about saving rather then spending, we went from negative savings rate to a +5% savings rate over the last 6-12 months, why it takes an economic downturn to realize the value of a single dollar is beyond me.
My guess is that many of these 137,000 people were not making much money, since they were GM dealers and sales were down so much from a year ago. GM needs to become like Honda - dealerships are limited not plentiful; and focus on a few models of cars and make them with fantastic reliability (longterm, not initial). I expect a Civic to go 200,000+ miles. I expect a GM to go 100,000+ miles. I have owned several of both.
If every person that bought a car drove it for 200K miles before they traded it, all auto makers would be out of business. The problem isn't how long they last, it's how much they cost. The automakers have priced themselves out of the market. To remain profitable they need people to trade every 3-4 years. With prices as they are, that can't happen anymore. With every trade people became a little more upside down and you can only roll so much of that in to the next vehicle. At some point you've got people with a 500 dollar a month car payment for a f'n Grand Am. Until prices come back to a place that reflects what the average worker can afford the entire industry will see poor sales. OR, wages need to increase and reflect the rising cost of living.
This problem will eventually take care of itself, but unfortunately in the mean time, the US tax payer will offset the structural problems with this industry. The fact is there are WAY too many manufacturers, brands, models and dealers to fit the lower demand. If Ford and GM each produced around 10-12 models each (including cars, trucks, suv and vans), along with all of the foriegn auto makers, there would still be plenty of models to choose from. Eventually, we will probably get there, but only after a couple more bailouts and bankruptcies. 10 years from now these companies could be on a viable track, but right now, we're not even close to that point.