A long time Chevy dealer in Vancouver is calling it quits. But his Mazda dealership will be expanding.
Long article from the Vancouver Sun, Aug 16 Business Section. The things that caught my attention:
-declining Chevy sales, and healthy Mazda sales.
-maybe tip of the iceberg for dealerships here in BC as profit margins are squeezed tighter by the manufactures.
-increasing quality has eaten into warranty and after sales service, an area that dealers used to be able to make lots of money at.
cars are too stinking good
-half the cars bought in BC are compact or sub-compact. Us west Coast greenies know how to put our money where our mouth is I guess, unlike some others who like to talk but can't seem to do the walk
After 56 years, car dealership calls it quits
Wolfe Chevrolet plans to expand its healthy Mazda business Fiona Anderson
Vancouver Sun
Friday, August 15, 2008
Dropping sales and the rising price of Vancouver real estate are causing a well-known Chevrolet car dealership to close its doors after more than half a century.
Wolfe Chevrolet at Boundary Road and 1st Avenue will put the brakes on its Chevrolet franchise at the end of the month after 56 years in business, its president and general manager Frank Wolfe said in an interview. The move will enable the company to sell some of its now-valuable real estate and expand its Mazda dealership next door.
Sales have been dropping and the building needs to be upgraded, Wolfe said.
"When I weigh the cost of spending money on the building versus what I could get by closing it and selling it, it makes more sense to close," Wolfe said.
While Chevrolet sales have been shrinking, Mazda sales have been healthy, Wolfe said.
Vancouver has always been an import market, with Asian buyers and "the Yaletown-type people," he said.
So about one acre of the 3.5 acres of the land now occupied by the Chevrolet dealership will go toward expanding the Mazda operations, which currently sit on 1.5 acres next door, he said. The enlarged Mazda dealership will also house the service centre and the company's car-leasing business.
Wolfe said his age may have also played a role.
"I'm 61 years old, kind of burnt out. I just don't know if I've got the energy to make it go any more," he said.
Glen Ringdal, the outgoing president and CEO of the New Car Dealers Association of B.C., expects more dealerships to close in the future, but not because of declining car sales.
Despite the dismal numbers in the United States, people are still buying cars in both Canada and British Columbia, Ringdal said on Friday.
General Motors - which sells Chevrolets, Pontiacs, Buicks, Cadillacs and Hummers - still leads sales in the province "by a fair margin," he said.
Those sales are almost evenly split between trucks and cars. GM's Cavalier was the top-selling car in Canada for eight years.
The price of gas isn't to blame either.
"The truth is we have been pretty good here in British Columbia for a long time at buying small cars," Ringdal said. "Almost half the cars we buy are compact or subcompact."
That's especially true in the cities. Elsewhere in the province there are more trucks and larger vehicles, but "people drive trucks because they generally need them," he said.
"And nowadays, with the growth of hybrids into all sizes and shapes of vehicles, you don't have to drive a small vehicle to get efficiency," he said. "You can get it by changing technology."
What is hurting dealers is shrinking profit margins. In the last 10 years, profits have been squeezed by manufacturers who set both the retail and wholesale prices for vehicles, Ringdal said. So to keep profitable, dealers have to sell more and more cars, which requires more and more space to showcase them.
Money made from servicing vehicles has also dropped dramatically because of increased competition and better quality cars.
"Dealerships used to actually be able to make almost their bread, if not their bread and butter, out of warranty work," Ringdal said. "Well, they don't anymore because cars are too stinking good. They just don't break."
With the value of property increasing and profits decreasing, the return on investment just isn't there, he said.
So Ringdal expects to see more and more consolidation in the industry in the future.
Wolfe Chevrolet is just the canary in the coal mine, he said.
