AutoNation CEO Mike Jackson is right, although many dealers won't like to hear it. The dealership networks of each of the traditional Big 3 have shrunk during the past five years. But General Motors, Ford Motor Co. and the Chrysler group must accelerate the pace for the good of their dealers and themselves.
Closing poorly performing dealerships in major metropolitan markets would benefit the domestic automakers and their dealers, many of whom are hurting. Dealers say their profitability is worse than it was last year, when it was the lowest in five years.
A look at sales-per-dealership data shows why stores that sell domestic brands are faring worse than those that handle import brands. Last year, the average Toyota dealership in the United States sold 1,613 cars and trucks. The average Ford dealer sold 696 new units. At Chevrolet, the average was 643 and at Dodge, 408.
Jackson reasons that at the retail level, automakers compete for talent, location and capital and that the Big 3 have excess retail capacity.
To be sure, GM and Chrysler have active programs to consolidate dealerships, while Ford is doing it on a case-by-case basis.
But falling market share has outpaced the rate at which GM, Ford and Chrysler are trimming their retail networks. The Big 3 must pick up the pace and be willing to spend what's required to eliminate excess capacity in the retail sector, just as they do in manufacturing.