Car dealers close as Ford, GM, Chrysler keep cutting

The big three automakers are weeding out dealers as they make fewer vehicles.

ByABC News
January 3, 2008, 1:05 AM

NORWALK, Calif. -- Instead of the stampede to inquire about year-end clearance sales, customers have been calling Ford dealer Norman Stutzke lately to offer condolences.

Stutzke shut down Keystone Ford this week after 39 years, one of hundreds of dealerships that face the ax around the country as Detroit's automakers downsize their retail operations.

In its glory days a decade ago, Keystone sold more than 3,000 new and used cars a year and drew crowds to watch the shooting of a live variety, Spanish-language, TV infomercial on the lot every week.

Now, with sales having fallen by about two-thirds and three years of losses, Keystone's demise as a Ford dealer leaves more than 100 employees wondering about their future, costs this city a valued component of its tax base and dashes Stutzke's dream of passing on the business to his son.

Keystone was neither one of the biggest nor most prominent dealers. But it is one of the many that are disappearing. GM has reduced its dealerships by 229 to 6,807 in the past year; Ford had shrunk by 139 to fewer than 4,140 as of July; and Chrysler had eliminated 142 to 3,607 as of October.

Auto dealerships are almost always privately owned, either by big chains or individual families such as Stutzke's. Automakers are forced to argue, pay off or otherwise persuade the feeble ones to give in.

Rolling with the punches

Dealers hitch their fortunes to the auto brands they sell. If an automaker cranks out unpopular cars, faces new competition or makes bad financial choices, dealers' sales plunge. Auto manufacturing is a cyclical business with sometimes deep lows and recoveries, and dealers are expected to roll with the punches.

Automakers complain that when they have too many dealers, sales can become so infrequent that an owner can't afford to reinvest in the dealership. The brand suffers when potential buyers see antiquated, cramped or poorly maintained showrooms while competitors sell from big, bright modern facilities.

For a long time, "The strategy was to have a dealership on every corner in order to drive market share," says Ford spokesman Jim Cain. Today, "The business model is very different."