Auto dealers around the country are trying to pick up customers orphaned by the major shakeup of the auto industry.
With an estimated 3,000 closed or closing in the past two years, many people who have been buying cars from the same dealership for decades have found themselves looking for a new home when their dealer was shut down.
An article in the Wall Street Journal today reported that dealers were offering anything from free oil changes to free car washes trying to lure those customers. Dealerships are purchasing the customer lists from closing dealers.
From the article:
In Woodside, N.Y., Brian Benstock, owner of Paragon Honda, has sent postcards to thousands of area GM owners seeking their business, using a customer list from a nearby Pontiac dealer that closed.
“We’re sending them an orphan letter that says we’d like to adopt them as customers, telling them that as a used-car dealer we service all makes and models,” Mr. Benstock says. “Eventually, they might buy a Honda.”
For dealers, attracting orphaned car owners could start a relationship that will eventually produce auto sales. But the potential service and repair business from those customers is also important. Service and parts generate $4 million in annual revenue for the average dealer, and they produce wider margins than sales of new vehicles.
Doug Pridgen, president of Haley Pontiac and GMC in Midlothian said that GM had told them that they were not to pursue customers from the closed GM dealers, although he thinks that will change.
“The theory is that GM will emerge from bankruptcy this week and we hope that things will start to loosen up in that area,” he said.
Pridgen said that GM has been tight-lipped about the future of the company, keeping the dealers in the dark. For Pridgen, that means that he can’t make any decisions about how to realign his business since GM canceled the Pontiac line.
“They’ve been quite busy,” he said, “but hopefully after they emerge we’ll know more.”
Haley Pontiac GMC has seen a slight rise in sales and that customers don’t seem to be wary about purchasing Pontiacs.
“We’re still in a recession,” he said. “But we’ve seen the usual summer bump in sales. We actually sold 26 Pontiacs last month, which is pretty good.”
Customers who buy Pontiacs will not have trouble getting service or parts for their purchases.
“If you are a customer, you will see no difference even though the line is shut down,” Pridgen said.