Does Closing Dealerships Hurt Sales?

The WSJ reported today that Chrysler and GM are close to identifying which of their dealers are going to be axed and should let the winners and losers know their status in the next few days. That’s hardly earth shaking news but it did raise a question in my mind.

Would the fact that a dealer might not be around influence my decision about what brand of car to buy? All other things being equal, I think it might. 

I would think twice about buying from a Chevy dealer that wasn’t going to be there in six months when I needed service. Not that I think I couldn’t get the car taken care of by another Chevy dealer but I might not like the prospect of driving across town for that service rather than taking it to a dealer a couple miles away.

I don’t suppose they’ll tell us who is going to be closed down — that would spell instant death to any of the losers — and I’m sure if I ask the dealer if they are one of the chosen that I will get a “yes” answer so I’m going to be put in the position of buying and hoping. The only way I’ll probably find out that I made the wrong choice is when I call for a service appointment and I get the recording that the number I’m trying to reach is no longer in service.

Now I could probably live with that, but here’s something that would concern me.

The transplants’ dealers have far larger territories than do their domestic counterparts. Their dealers physical plants are designed to handle the volume of service cases that their territories imply. Such would not be the case with a domestic dealer. In a lot of cases the survivors may be significantly undersized in their service operation since it was designed for a smaller territory and therefore a smaller volume of repair business. There might be some service issues there I just don’t want to touch.

Now I could have this all wrong, so if there are some pros out there that know the ins and outs of this end of the business let me know if I’m off the mark. And even if you aren’t an expert let me know if there’s anything about closing dealerships that would make you skittish about buying a GM or Chrysler product.

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