Wednesday, June 2, 2010

What's Wrong With Detroit in Orange County?

Orange County, the O.C., is the nation’s fifth most populous county with roughly 3 million residents, or 1% of the nation’s population. It is a county of contrasting, great affluence and barrios.

A fifth Mercedes dealership just opened in Orange County, while 2 Ford and 2 Chevy dealers closed their doors. Chrysler is down to 6 dealerships, having terminated a strong dealer during its bankruptcy. That site is now a Hyundai dealership. One of the 5 Mercedes dealerships is Fletcher Jones, the largest Mercedes dealer in America.

10,202 vehicles were sold or leased in April, up 7.5% from a year ago. A breakdown of the sales figures reveal that Chrysler and GM are still in poor shape.

Toyota/Scion, the Toyota of multiple recalls, sold 2,380 cars, an increase of 25.7% from last year. Lexus was up 13.4% to 532 vehicles. Toyota thereby captured 27.5% of the O.C. market with its three lines. Honda sold 1,515 vehicles while Ford was up 3% to 696. The Mercedes dealers sold 665 vehicles, up 12.9%. Nissan rose 41.8% to 685 vehicles, while Hyundai was up 39.5% to 417.

The Honda and Toyota sales once again show that owning one of these franchises in Southern California is a license to mint money.

What about Chrysler?

Jeep was down 24% to 133 Jeeps. Dodge dived 49.5% to 125, and Chrysler plunged 59.4% to an anemic 39 vehicles. Obviously, not many erstwhile profitable minivans and 300’s were in the sales mix. Chrysler needs a Hemi moment.

GM did better, but still poorly. It witnessed the bread and butter Chevy line dropping 13% from 370 cars and trucks to 322. The good news for GM is that Cadillac sales rose 48.6% to 110 vehicles. Buick though, one of the 4 preserved GM brands, dropped to 23 vehicles from 28. Buick couldn’t even outsell Chrysler.

GM once tried to save a number of franchises by folding them into a single Buick-Oldsmobile-Pontiac outlet, adding GMC trucks to the mix. Oldsmobile and Pontiac are now history. Buick was saved because of its sales prowess in the growing China market, not because of its marketability in the United States and Canada.

How did GMC do? It was up 9.8% to 112 trucks, but a doubtful omen for some of the older B-O-P-GMC dealerships. The savings grace for many of these franchises is that their owners also sell profitable, expanding import brands.

GM’s orphan brands of Saab and Saturn registered 0 sales, the once wide track Pontiac’s was down to 1, and Hummer stayed even at 6.

While Ford is doing well in the O.C., the same cannot be said for the Lincoln Mercury dealers, two of which closed in the past couple of years. Lincoln sales were essentially flat at 38 vehicles, down 1, while Mercury was down 3 vehicles to a minuscule 9. The Grand Marquis has lost it. No wonder Ford is planning to pull the plug on Mercury, thereby joining Oldsmobile and Plymouth in the non-bankruptcy closures.

In summing up, Toyota, Honda, Ford, Mercedes, and Nissan outsold GM, while Lexus was close.

Detroit, that is, Chrysler and GM, are dying in Orange County, continuing a decades long trend. Their bankruptcies threw them a lifeline, but they’re still on life support in Orange County. One by one, drip by drip, their dealers are closing.

Watch more dealerships close.

An interesting twist in Pasadena is that the family owned Ganahl Lumber and Building Materials Company of Orange County purchased for $10 million the site of a Chevy Dealer which closed in April. Ganahl believes they will generate almost as much in sales tax revenues for Pasadena in lumber sales as did the Chevy dealer.

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