On Thursday, Lowell's will release the Bluegrass Vehicle Report, which will look at the kinds of cars central Kentuckians drive.
One surprise finding: Toyota is now the top brand (or "make") of vehicle on the road in Lexington, surpassing both Ford and Chevrolet. Obviously, as Toyota specialists we're pleased.
We'll have all of the details in the Report later this week.
[where: Lexington, KY]
In January, the Wall Street Journal ran a page one story about the troubles facing two dealerships in southeastern Kentucky. One of them, Johnny Watkins, had filed for bankruptcy.
At the time, we predicted that there would be a lot more dealership closures in 2009, especially in smaller towns.
Then, a couple of weeks ago, we received an auction notice to liquidate the assets of Maysville Ford.
Why is this happening to dealers in small towns? There are a few key reasons:
- There really isn't enough critical mass of car sales to support a dealership in a small town. So dealers have to draw customers from nearby cities, usually with discounts that squeeze their profitability.
- The most profitable part of the dealerships come from service to vehicles after the sale. When out-of-town customers purchase from a small-town dealer, they tend to have their cars serviced somewhere else, as the dealer is too inconvenient for frequent maintenance. So small-town dealers lack the service customers that larger dealers have.
- The heavy reliance on car sales (and the lack of substantial service sales) means that small-town dealers are much more sensitive to economic downturns. As car sales plummet, the service business is what has sustained many big-city dealers. The smaller dealers just don't have that cushion.
The economic realities of being a dealer in a small town mean that a lot of them won't survive over the next couple of years.