What It Means to Have Fewer Dealers


2011 Chrysler 300
Chrysler figures that closing some dealerships will strengthen the remaining dealers. A computer-generated image of the 2011 Chrysler 300 is shown here.

While many news reports have focused on the people who unfortunately lose their jobs when a dealership closes down, along with communities that would now be without any Dodge, Chrysler, or Jeep stores, the company is apparently convinced that discontinuing 789 underperforming dealers will strengthen the remaining 2,393 dealers.

In support of its decision, Chrysler points out that its average dealer retailed 405 vehicles during 2008. By contrast, the average Toyota dealer retailed 1,292 vehicles. Another fact: Toyota and Chevrolet sell about the same number of vehicles per year, but Toyota does it with roughly one-third the number of dealers. Since a surging Toyota overtook a declining Chevrolet as the best-selling nameplate in the U.S. during 2008, the surprising and often painful truth could be that the strategy of having fewer dealers selling more cars is not without merit.