Gerard Broshart is one of hundreds of dealers with a glum outlook this morning. He, according to an interview with CNN, was one of the nearly 800 dealers who received a letter from Chrysler yesterday, notifying him that his business must be shuttered by June 9. Today, GM is expected to follow suit by notifying 1,100 “underperforming dealers” that it will not renew their franchise agreements when they expire in 2010.
On the one hand, it seems alarming that two companies – by all definitions, two underperforming companies themselves – could make such a sudden, drastic decision that so adversely affects small businesses across the country. But on the other, it seems like an obvious decision, a righting of the wrongs formed over years of overabundance in their distribution networks.
No matter which side of the fence you sit on, though, such decisions only serve to fan the flames of the hotly debated dealer-manufacturer agreements that have been a point of contention, seemingly, since the beginning of time.
I wonder what the marine industry can learn from this news? Chrysler and GM have both complained for years of having too many dealers, and the numbers suggest they’re right. Chrysler said in a bankruptcy filing that Toyota, which has about 1,400 U.S. dealers, sold an average of 1,292 cars and trucks per showroom in 2008, while Chrysler, with more than 3,200 dealers, sold 303 vehicles per showroom.
For years, pundits have claimed that the marine industry has had too many dealers as well with about 5,000 or so dealers serving it. Some suggest there are more than 5,000. But even if we use the 5,000 figure and compare that to the 841,000 units sold in 2007 (the latest numbers available), those dealers averaged 168 units sold. In fact, if the marine industry only had the 3,200 dealers Chrysler has, they would average 263 units sold, or 13-percent fewer units than Chrysler’s 303.
The current economic climate and the state of the marine industry have already purged many dealers (and builders for that matter). When it’s all said and done, will we still have too many dealers for the number of boats we sell? Or will builders need to take steps similar to those at Chrysler and GM?