Car Dealerships Are GOING OUT OF BUSINESS at Record Speed | Episode 1017

It's noon here in snow-covered Ventner City, New Jersey, and our nation's capital, Washington, D.C.,

and this is Car-Edge Live for Monday, February 23rd, and the blizzard rages on.

Okay, maybe not so much, but it still looks like Whiteout conditions. Your hosts today are me,

Ray, in Ventner, and, well, my good-looking son, Zach, in Washington, D.C., how are you today, handsome?

Doing fantastic. Had an incredibly fun weekend, so grateful for that. Glad to be back here on this

Monday, February 23rd with everyone. Car dealerships are closing at a record speed.

They're going out of business, Dad. We're going to review that in just a moment. Before we do,

yeah, there it is, this head is exploding with suspense for this. A friendly reminder,

today's show is brought to you by CarEdge.com. We continue to run a promotion $200 off our

car buying service and 20% off CarEdge Pro for a limited time. As a friendly reminder,

we provide a car buying service at CarEdge.com that takes care of the research, dealer outreach,

and even negotiation. We learn what matters to you, connect with dealers, and compare real offers

to help you get the best deal without this stress. And for those of you that have been

following along, we still have a new product in beta, so seeking out feedback and input

in the chat and in my email inbox, caredge.com, dealer reviews, dealer ratings, just Google

search that. It should pull right up or go to caredge.com slash dealers, dealer, excuse me,

dash ratings. Dad, one of the new features we added here, again, this is a work in progress.

Name a brand for me, pops. Name something. BMW. BMW. So you can search for BMW dealers here.

It'll show you transparency scores for BMW dealers. I'm going to find a C rated BMW dealership.

We'll go to BMW of Tampa. And on these pages, y'all, once you create an account, you'll be able

to see a dealer's doc fee, how often they add add-ons, and what the average amount negotiated off

on a car deal is. And here's where things get really fun. Now, in the recent quote section,

Dad, you can click on the view quotes. It'll show you the negotiation history that we had

with that particular dealership. So you can see on this one, Dad, the original OTD here,

everything's redacted. There you go, $111,311. That was the first OTD from this dealership.

Scroll down, scroll down, scroll down. Final OTD, drum roll please. Okay, we do have a bug

that I have to fix because we did, we're pulling the wrong OTD for the last one. I got to fix the

bug, but we'll do it for the last two days. The damn bug. That's why it's in beta, man,

but it shows you the final quote, which is really cool. I'm so excited for this to be.

So it started at $114 and ended at $106?

It started at $114 and ended at $106. Not bad.

So anyway, this is the dealer ratings, dealer reviews. Checking out folks, again, it's in beta,

so please, please, please take it with a grain of salt. Dad, let's move in. Wow, that was a long

ad. Let's move into the day show. Yes, yes, let's do that because I was going to say,

we'll shop the dealers for you and not to sound hyperbolic, but there'll be less of

them for us to shop for you moving forward. At the rate of speed, many of these dealers are

going out of business. So Cox Automotive, excuse me, Automotive News just did their latest

Automotive Dealer Census and Dad, the results were pretty surprising. We have 442 franchise car

dealerships that have gone out of business, which is the largest number we'd seen in a long,

long time. We have many of them being Buick and Lincoln dealerships that are going away,

but Dad, we have car dealerships and you can see here the breakdown of different types of

dealerships on this census. You've got General Motors, 21 fewer, Ford dealers, 29 fewer,

Stellantis, 30 fewer, Total US dealership, but overall that 422 car dealerships are just gone.

They're gone. So what's going on then? Why are car dealerships going out of business at a record

speed? Could the economy have something to do with it? Could the fact that they have fewer

people to sell cars to have something to do with it? Could the fact that it's harder than ever

to find customers that have the wherewithal? Could that have something to do with it?

You know, there are any number of reasons, but those three seem like pretty big ones right off

the top of my skull. You know, the price of new cars is too damn high. The price of used cars

is still too damn high. The cost to finance them is too damn high. The average monthly payment

on a new car is $772, which is too damn high. The average monthly payment on a pre-owned car

is $550, which is too damn high. The cost to ensure them is higher than it's been.

So, you know, you start factoring all that stuff in and yes, some poorly run dealerships,

and believe it or not, there are some poorly run ones out there. Some poorly run dealerships

are finding themselves closing up because they haven't figured out how to, I don't know,

get into the 21st century when it comes to selling cars.

You and I have done videos ad nauseam about car brands that may go out of business, go extinct,

dad. It's not equal across all brands which ones are losing their dealer networks the fastest.

Buick, Lincoln, and Jaguar were among the brands with the largest declines in the size of their

dealer networks. Look at this, dad. Buick lost more than 180 locations in one year. 100 new

locations. They had 745 at the beginning of the year, down 20% year over year. That's not good.

No. And, you know, there was, to me, an even more interesting stat within the data.

And believe it or not, out of what was it, 745 remaining Buick dealerships?

Yep.

You know how many standalone Buick dealerships there are?

How many?

Seven. Seven. Okay. When, you know, there was a time when I worked for a dealership that was

called Sunpaniac. Yeah. Back in the 90s. And Sunpaniac at that time was one of, I believe,

it was 27 standalone Pontiac dealerships in the country. So what do I do by a standalone

dealership? Yeah, what do you mean? It was Pontiac only. It was not Pontiac GMC. It was not

Pontiac GMC Buick. It was strictly Pontiac. And so when you look within the stats and you see

things like, okay, there's seven standalone Buick stores, that tells you up front that Buick doesn't

think that a Buick store can survive if it is the only thing being sold within the confines of that

dealership. So you'll, you know, out of the 745, 738 of them are dueled up with something else,

whether it be GMC, whether it be Cadillac, whether it be Chevy Buick, whatever it is.

But there, you know, GM knows they can't stand on their own and survive.

Dad, and some of the data here for those that are even a part of those multi-brand dealerships,

look at this, Buick has lost 62% of their location. So even when it is a Buick GMC

dealership location, the dealers are just saying, you know what, screw it. We don't even want to

have the Buicks to sell. So Dad, Buick down 62%, obviously only seven of those franchises,

like you mentioned, absolutely crazy Lincoln dad down significantly. And then Jaguar has

under 100 dealerships in their network for the first time in a long time. So this is super

interesting to see here. There's a whole host of dealerships that may never exist again in the

future if the brands, the automakers choose to stop operating them. And that's what this data

starts to indicate a little bit. 420 dealerships going. Yeah, you would have to think to yourself

however remaining Jaguar stores there are. There's no reason to believe that that number is going to

go up anytime soon. And very well might continue. It's downward spiral. There are some issues,

let's say, at Jaguar where, you know, they bet wrong and they took a year off and it could

ultimately cost them having Jaguar sold the United States. So a lot of these brands make

mistakes. A lot of the manufacturers make mistakes. We see it all the time. We see manufacturers with

losses. So this is I have to believe this. This is an unsettling time for those who

own dealerships, especially if they are not part of a larger group of dealerships,

where perhaps if one of your franchises isn't doing well, you can still survive because the

others are and can carry that loser. If you are one of those seven standalone Buick dealerships

and things go south, well, you got nowhere to go. So that's what I was about to ask you.

As a customer, do I actually have more leverage going to, let's say I'm in the market for a Buick

and I go to one of those seven standalone Buick dealerships nationwide, that dealership is going

to be more desperate than a Cadillac Buick GMC dealership because the Cadillac and GMC parts

of the multi-brand dealership are supporting them, right? Exactly. So as a standalone Buick dealer,

you'll have two things you can count on. The sale of new Buicks to an ever-dwindling customer base

and the sale of used vehicles. You can't suddenly turn around and say, well, we'll pump more

advertising into the sale of our GMC pickup trucks because you don't got them. So if you

are a standalone Buick dealer and somebody comes in looking at a Buick, you are going to do whatever

needs to be done to sell them, to not allow them to go to one of your competitors and thankfully

for you, there are, what was it, 100 less competitors than there had been or whatever

the number was. Maybe it can be less, yeah. But yeah, if you're anywhere near a market that has one

of those standalone Buick dealers, you should be able to use that as leverage to get a deal.

Yeah, absolutely. All right, Dad, what's that? If I may, and then you'd have to say, well,

is there such a thing as getting a deal on a Buick? But that can be a conversation for a

different day. We're going to switch gears here in a second. But first, from Lego Joe,

Andy, thank you for the kind contribution. Our local General Motors Chevy dealership rejected

Buick's plan to go all electric vehicles and didn't want to spend $2 million on multiple EV

plugins so they let Buick go. Yeah, this is, yeah. Well, that was part of GM's plan is there was,

they were looking for on the Cadillac side of things, the Cadillac dealers that were willing to

relinquish their franchises so that Cadillac could have fewer distribution points and GM

did the same with Buick. They offered Buick dealers buyouts. If you'd like to continue great, if you

don't, we'd be more than happy to buy out your existing facility. And obviously, a lot of dealers

have taken advantage of that buyout because they recognize the fact that Buick, if it was in a

multi-point dealership, the Buick wasn't really a major contributor to the growth or the profits

of that multi-point dealership. So if General Motors was going to give me a couple hundred

thousand or whatever it was in dollars to give it up, then probably represented a couple years

worth of Buick profits are offset a couple years worth of Buick losses. So yeah, a lot of dealers

took advantage of it because they could see the writing on the wall. Yeah, 100% that and it is

interesting because again, as these dealerships go by the wayside, it could mean that the brand

goes by the wayside or it can simply mean that those few dealerships that do remain, you have

more leverage as a consumer. Let's give it to you. Say, Zach, it's not like General Motors hasn't

shut down brands that it's built in the past. Oldsmobile was around for a long time. Pontiac

was around for a long time. Saturn was around for a relatively short period of time, but there's

three brands off the top of my head that I can think of that General Motors just said, well,

the hell with it. Okay. They have that precedent, Dad. They have that precedent to call their brands.

Yeah. So if things don't go well for Buick, why would they continue with the Buick brand?

You know, I would not be surprised if at some point General Motors said, well,

Buick was great. We don't need it anymore. Most of our Buick buyers have died off anyway.

Well, it's... I know it's true. I know. They've tried to rebrand themselves and whatnot,

but yeah, this could be younger car company. But yeah, these dealerships going out of business

could be the indication of the brand old to me. Let's switch gears, Dad. Let's turn our attention

here to another mega automaker, Stellantis, that they are going to have their first annual global

loss since 2021 when the... I don't know. What do you want to call it? The merger, I guess, but

really the combination of all these auto brands happened. So take this into consideration, y'all.

Stellantis has actually never lost money since 2021 when they came together globally. They've

lost money here in the United States. We've documented that ad nauseam, Dad. But Stellantis

is going to lose money globally. And it's not a little bit of money that they're losing globally.

In the first half of this year, it's 3.2 billion euros. And for the whole year, they're expecting

another $19 to $21 billion loss. This is like... Yeah, but the good news is that they expect to be

profitable in 2026. And that's like saying in... Let's see, I was born in 51. So that's like

saying when I was 17 or 18 years old, when I was five foot six and a half, that was me like saying,

okay, in 1969, I expect to be 58. Okay? That expectation never happened. Okay? I have been

going backwards for years now. And so it's great to say we expect to be profitable this year based

on what? Based on hope? I want to pull up a couple other related stories to help frame the

conversation. One would be, Dad, so they're having this financial hardship. Part of that,

obviously, was their electric vehicle playbook. Other parts of it was like the Jeep raised prices

playbook that ultimately has yielded them fewer sales at the same exact time that they're announcing

this loss that they have had their Brampton assembly plant, which I want to be clear here,

employs over 3,000 workers. This plant has been idle since 2023. It was supposed to go be building

the Jeep Compass, which is a more affordable Jeep vehicle, but it's been on pots since 2023. So

this is another manufacturer I'm thinking back to some of our recent conversations about Nissan,

for example, closing down plants or other automakers like General Motors. We said last week we

caught them. Yeah, it was because their CFO came out and said we are intentionally going to supply

fewer vehicles to the market to hold back from having to incentivize the sale of those vehicles.

But you've got Stalantis here booking tens of billions of dollars in euros, excuse me, loss.

At the same time, they have these manufacturing plants that were supposed to produce affordable

vehicles, just idle on pause. And it's interesting that Brampton plant is in Canada. There's also

some new data that we have. There was data that was conducted or research that was conducted

on tariff effects on U.S. sticker prices for vehicles. And the biggest change in price we've

seen are on Canadian produced vehicles. So tariffs can play a role in this as well,

maybe as why Stalantis has kept that plant idle, but a big loss for them down their first one

since they've come together as a company. Yes. And anytime 3,000 people find themselves

unemployed, not because they want to be, but because their bosses can't figure out a way to

turn that plant into something that could be profitable, that's really an unfortunate

circumstance. And those type of situations have a trickle down effect. So if there's 3,000 workers

in that area that were left unemployed that are on pause, okay, and how long can you remain on pause

before you say, okay, I need to find a job somewhere and there's probably no jobs to be had,

that can destroy a local economy. And so it's very tough to see that.

And there's a lot of geopolitical stuff and I'm not trying to get into that at all.

But every decision that gets made impacts human beings. It's not just a black and

white thing on paper. Okay, it impacts lives. And you know, one of the things that I've never

forgotten that I was told by one of the general managers that I worked for, he said,

anytime we have to let somebody go, we are negatively impacting someone's life. So it'll be

certain of what it is that you want to do before you do that. For sure. I think that's one part

of the story. For sure. And I'm not trying to trivialize that. I would like to spend a little

bit more time on some of the info that we got out of this document, for example, accelerate

an inventory clearing in North America slash deliveries by 23%. So yes, there is an unemployment

story here and we should not think lightly about that. There's another huge story here, Dad, which

is automakers are wholesalers to their dealer networks. And what Solantis reported here is a

23% drop in sales year over year to their dealer network. This is the other big indicator here.

And again, I'm not trying to make light of layoffs. Layoffs are terrible. It's the reason for that,

because their dealers had been overstocked for years. Exactly. That's why they're not even

layoffs, excuse me. Why has the Brampton plant been paused since 2023? Because they're oversupplied

with inventory that they can't sell. So what did Solantis, it's like we're finally starting to see

some of the impact of their bad decisions at the corporate level. This is the first time they're

doing an annual loss. Dealers have been losing money that sells Solantis products. North America's

lost money for Solantis. But Dad, they had to cut sales, wholesale sales to their dealers by 23%

because the dealers just refused to take the inventory. That's why you're seeing plant closures.

That's why you're seeing layoffs. That's why you're seeing the whole trickle effect.

You don't want to buy their stuff to the tune of 23% decline year over year.

Well, if you've oversupplied your dealers for years and years and years and you

under-incentivized the sale of those oversupplied vehicles for your dealers,

then that's a recipe for disaster. So if at some point you have to make a correction,

well then the correction becomes we're going to produce fewer vehicles

because we need to cut inventory supplies. And that's what they've done. And one time

North America was their shining star as far as profits were. And today it's far from that.

I believe it's South America that produces more profits for Solantis than anywhere else at the

moment. So yeah, there were some incredibly poor decisions that were made, bad bets that were

made, and now they're suffering because of it. Now that's not to say they can't recover.

No, and there are some signs of hope. That's the other interesting thing here.

Shipments in the fourth quarter actually went up significantly, but they were replacing those

Ram 1500s with the V8 Hemi option. And so we've seen this resurgence of we're going to go back

to the basics, and it seems to be working to a degree already. And that's the positive sign.

Well, yeah, and their projection for 2026 is that there will be an increase of upwards of 100,000

vehicles produced with the Hemi engines that people wanted as opposed to the power trains that

they did not want. So a lot of this just comes back to EV playbooks. Like in another stone in

the chat, I'm very curious, would you be buying a 4xE or would you be buying the V8 Hemi? And I

think all of the data we see and the people we talk, it points to the V8 Hemi. That's what more

people want. This is a classic example of thinking that if you build it, they will buy it as opposed

to asking your customers what it is that you want. And what the customers overwhelmingly said,

at least in North America. In North America, yeah. But it came to the 4xEs and all that stuff,

they weren't in on that. You know, what people liked about the Stalantis products,

whether it had been the Ram pickup trucks or the Jeeps, whatever it was, they said,

we want it with the big ass engines. Okay, that's what they said. That's what people wanted. That's

why people gravitated towards those brands, dodge chargers and stuff. Why? Because people wanted

that. And did they kill the electric charger? Yeah. Did they kill the Ram rev, the electric

Ram pickup truck? Yeah. Why? Because they realized their consumers, their customers had spoken. And

they had spoken by not spending to buy those products, not showing a desire to buy those

products. So this is just a classic example of a manufacturer not asking their customers what it is

they want to have built. But the manufacturer dictating to the customer what it is we're going

to build and what you're going to buy. And the timing of it's really interesting. And I say that

because Stalantis dealers for the past year, two years have been in the hurt, but this is finally

showing up at the OEM level globally for them now a year or two years later. So again, because of

that wholesale to dealer relationship, these things don't show up on day zero. They show up a year

later, whereas they do show up on day zero at the dealership level. Walk into your local CDJR,

Chrysler Dodge Jeep Ram dealership a year and a half ago, and watch the four by ease pile up.

You'd know the alarm bells would start to go off. When we did the sale on Long Island two and a

half years ago, Staten Island, you could see it then. I mean, it was as plain as the nose on

your face. I mean, all you had to do was walk a lot, walk these dealers lots, and see all the

four by ease just collecting dust, weeds growing up under the chassis. It was just so plain to see

that it was willful ignorance on the part of upper management at that time. Carlos Taveras

and that we're not going to, we're going this direction whether you like it or not. Well,

the people spoke and said, you can go in that direction. We're just not going with you. Well,

that cost him his job, and it's costing Stalantis a profit for last year at least.

Definitely, and probably they say not next year, but we'll see what happens. Again,

y'all, we have a brand new tool. It is in beta. I just dropped the link in the chat, caredge.com

slash dealer dash ratings. I'm seeking your feedback both here in the chat, the comments,

and directly, Zach at caredge.com. Let's put this to the test. Dealers,

browsed by Grand. I don't know, Dad, we were just talking about them. Let's find one here, Ram,

and a Ram dealer. These are some good Ram dealers. These are some good Ram dealers.

Can I say one thing? Yeah, go for it. These are, this is a transparency score.

What that means to me is that these dealers are at least providing us with a transparent

interaction. Well, I want to be clear. I want to be clear, Dad,

this shows everything. It's not just dealers that are transparent, and those aren't. For

example, this dealership scored a 91.4 out of 100. You can see here why. Their fee transparency,

their dock fee is a little too high. They don't do add-ons. They're accurate with their prices,

and their data quality is high. So that's good. They get a high grade. If I go back here, let's

find a lower graded dealership. For example, yeah, this one. They have 100% of the time they

have add-ons. Their dock fee is above the Colorado state average, and you can see here the actual

add-ons that they're adding onto vehicles and how much they're charging for it. And to be clear,

here we show all of the data. So you can even come in here and view the original redacted quote.

So you can see, here's the add-ons that they're adding. So the project here, the dealer ratings,

dealer reviews, we're also calling it the transparency index. The point here is just to

provide data. You can do with it as they see fit. Dealers can do it as they see fit, just meant to

surface the data. I get it. And then look at that. There's a lot of dealers in California.

A lot of dealers in California. We've got Galpin Mazda here in Prescott, California,

Los Angeles. Yeah, there we go. Los Angeles. Yeah, so all sorts of good information here. And again,

in beta, so seeking your feedback, seeking your input, please share it in the comments

and in the chat. All right. Let's just call it a show. Let's call it a show. Let's call it a show.

Yeah. And for those of you who think that I might for a second consider going out and shoveling,

let me put your minds at ease. There's one thing I'm never doing that's shoveling. It's one of the

reasons I live in a condo. They have people to shovel. And it ain't 74-year-old out of shape,

old men. Okay, so I'm not going to be out there shoveling. Good, yeah. We don't want to see you

get hurt. That would be very bad, Doug. Yeah, I concur. I am 100% on board with that.

You know, it's very good though. We'll be back tomorrow with more Car Edge Live. No disruptions

this week. We're here Monday through Friday at 12 p.m. Eastern, 9 a.m. Pacific. If you enjoyed

today's show, please subscribe to the channel. We appreciate it. And yeah, let's do it again

tomorrow, Pups. I'll be here. I promise. All right. See you, Dad. Love you. Love you too.

Thanks, everybody, for being here.

Car Dealerships Are GOING OUT OF BUSINESS at Record Speed | Episode 1017

About this episode

add-ons

dealer fees

negotiation history

OTD

Cox Automotive

franchise car dealerships

Lincoln

Ford

Stellantis

Jaguar

Buick

Pontiac

standalone dealership

multi-brand dealership

Cadillac

GMC

Chevrolet

General Motors

electric vehicles

EV plugins

dealership buyout

multi-point dealership

brand discontinuation

Oldsmobile

Saturn

Jeep Compass

supply management to avoid incentives

overstocked inventory

plant pause

V8 Hemi engine

Ram 1500

OEM

CDJR

Chrysler Dodge Jeep Ram

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