Scary article in the WSJ:
LAD is still leveraged heavily with Chrysler stores. Their 32 franchises represents about a third of their dealerships. An average of 142 days to sale is crazy. If your inventory is perfect you will still pay 82 days of extra flooring...
Would LAD be better off to close these stores now? Maybe turn them into L2 stores?
Days supply is a symptom. Vision and execution was the problem here. Take a hand full of managers from any of these stores and ask them how many salespeople on their staff is a ten. Then ask them what a ten is. You will get a hand full of answers and all different. If your captains don't know who the heck is making sure the sales people are getting paid? Believe me it comes down to just that, if the sales people aren't getting paid, nobody is.
They should close all but the Oregon stores...do you actually know they have stores in Wyoming and Montana???? That's gotta be the biggest losing proposition since as I undertstand it many people in those states won't even buy from out-of-town dealerships - they prefer locally owned and operated...a matter of trust in the best of times...
Lithis will have to close more stores to survive. Simple as that.
<<Would LAD be better off to close these stores now? Maybe turn them into L2 stores?>>
Not enough transparency to really know. It depends if they are losing more money at those locations than property taxes, insurance, and utilities would be if they sat empty. But if the point closes, there is nothing to sell.
The only problem I see with turning them into used car points is that there may not be enough talent inside the company to run the operations. It's much easier to make money on used cars when you can trade for them rather than standing in the ring at the auction and pay top dollar. IMO the per deal averages would not even be close to the company's objectives.
A large part of the reason L2 failed was that much of their inventory was stale overaged units from other Lithia stores. Anything that wasn't selling that they had too much money in got shipped to an L2 store.