It don't have to be that way, indeed those dealers are stabbing each others.
But its STIL win win win for the manufacturer.
Why?-
Say there are 3 Chrysler dealers near each others. A car shopper interested in a Chrysler stops at the dealers, then chooses from one of them. Now if those dealers targeted Ford or Chevy shoppers, the odds are less that they will close a deal. After all, those shoppers were not originally looking for a Chrysler product.
So Chrysler DOES come out ahead- the Chrysler shopper finds a deal/ dealer and buys a Chrysler anyways, since there was more than 1 dealer to choose from.
Now personal experience, though it goes back 30 years. My grandfather owned a Ford dealer in a small midwest town pop. 1,000.Had been in the family 62 years, assigned personally by Henry Ford. In a 2 county area, population 20,000 there were 5 Ford dealers. My cousin and I were being trained to take over that dealership. BTW we did not/ could not steal customers from the other towns. In a small town, you better run a reputable business, of any kind- and we all did.
Our place was paid for, and turned a profit, and we had 12 employees.
Ford wiped us and 2 other dealers out within a year. The zone rep tried to get us all to merge, and build a new facility 'on the highway', not in a downtown.
At that time, we had about 75% of the car market in our town. Grandfather refused to back us with the buyouts and new building[[don't blame him). To keep the jobs after we lost the Ford sign, he put up a Dodge sign. 1979- what does that tell you about what we had to sell? Within a year we bailed- in a small town you can't sell junk like those late 70's Dodges.
Forward 30 years. Small farm towns, ya gotta love em'- very few Toyotas or Hondas. But also very few Ford's. There is a Chevy Dealer surviving in that area, and he sells alot of cars. All 5 Ford dealers are gone. Those of us that won all the sales and service awards were dispensible.
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