Los Angeles Business Journal
Los Angeles Business Journal
Search last 90 days
ARCHIVES SEARCH
SIGN IN
WRITE US
Business Journal
 

INDUSTRY-SPECIFIC NEWS STORIES:
LABJ Poll
What do you think about increases in parking fines and traffic tickets, plus more red light cameras?
Los Angeles Business news
  That's OK. Just obey the law.
  No. Higher fines and increased enforcement are becoming too costly for too many people.
Los Angeles Business news
View Results
 

 

Toyota Revs Longo But Galpin Skidding

AUTOS: Domestic dealerships consolidate as imports drive sales.

Los Angeles Business Journal Staff

Camry, Corolla, Prius.

They are not only three of the five best-selling cars in Los Angeles, but also a huge reason why Longo Toyota in El Monte has been the nation’s largest automobile dealership for more than a decade.

But as the massive 64-acre dealership basks in the prosperity of Toyota Motor Corp., many of its competitors are not faring so well.

Galpin Ford, the North Hills dealer that had long held the No. 2 ranking on the list of L.A.’s top auto dealerships, slipped into the third spot for the first time in more than 10 years. Its new car sales dropped 17 percent over the last year. Longo, meanwhile, saw its sales climb 6 percent in that same period.

Galpin remains the country’s largest Ford dealership, but it is struggling as Ford Motor Co. and its Detroit contemporaries face a drought brought on by sagging sales and a glut of dealerships.

“The domestic dealers are in for a long hard slog,” said Mark Rikess, chief executive of Burbank-based Rikess Group, an auto dealership consultant. “There’s just too many of them and not enough customers coming in the door.”

Ford recently announced plans to eliminate about 200 of its 4,200 U.S. dealerships this year and hundreds more over the next few years.

General Motors Corp. has about 7,000 dealerships and Chrysler, which is owned by Cerberus Capital Management LP, has about 3,700 – and both companies are looking to cut back. Toyota, meanwhile, has just 1,400 dealers across the country.

“There’s a consolidation taking place,” Rikess said. “When you’ve got so many dealerships, then none of them are making any money.”

But closing dealerships is not easy. The law prevents car companies from shutting dealers down, leaving the automakers with two primary options: buying out dealerships – which can be costly – or waiting for the dealership to close on its own.

A relic of the days when domestic vehicles outsold foreign brands three or four to one, the abundance of domestic dealerships has exacerbated the troubles for American automakers as domestic brands have lost their luster over the past few decades. And today, the dealers are paying the price with what had been their core demographic: drivers between the ages of 25 and 40.

“They’ve really lost that generation,” Rikess said. The baby boomers that fueled the growth of Detroit’s automakers have moved on to luxury brands, he said, while younger consumers are increasingly opting for foreign rides.

In fact, only four of L.A.’s top 25 auto dealerships sell domestic cars.

Printer-friendly version E-mail to an associate Search Home
   

 
All contents of this site © 2010 Los Angeles Business Journal Associates. All rights reserved.
Los Angeles Business Journal, Los Angeles, CA 90036, USA. | Powered by FLEX360