Heard tonight that MoCo is starting to evaluate their dealerships for closing. Supposedly no more multiple dealerships in one town. Not sure what time line is being presented but our dealer is hinting at losing one of his HD stores.

 

Sure they are , beside quoting all the standard rhetoric about the tough money times which is BS because dealers are franchises and the losses are the owners problems not the MoCo's how else do you think the mothership is going to continue to manipulate and maintain the high prices on this brand name ?

Hear that hissing sound in the background ? that's the bubble loosing air as we speak . It's going to pop just a matter of when .

MoCo will survive but what will the end product look like , where will be made and how much swag will still cost ?

 

106 balloons gonna pop
in a bit

 

A franchise is a written contract between the dealer and the supplier. HD can only unilateral end it's relationship with a dealer by buying them out. As always there is another way. If HD declared bankruptcy they can ask the judge to void the contracts. That is what GM and Chrysler did. Before GM went into bankruptcy they did close Oldsmobile dealers and they paid out about 2 billion to do so. One executive said that was a mistake and they would never do that again. He was right.

Dealers with low volume and no profit go under and close. They do try to sell their franchise first some are able to but most can't find a buyer.

Dealers with two or more dealerships consolidate into fewer locations.

Many dealers are improving sales this year. The poor dealers will still go under.

HD could with hold new inventory but they would face legal challenges that they were trying to do a constructive canceling of the franchise and would most likely loose in court.

If a dealer tells you that HD is closing him it is pure BS. He is failing financially or the profit is too low for the return and he can make more money on a different venture.

 

It's actually extremely difficult, and even then very expensive for a manufacturer to close a franchised dealer. This is due to various state franchise laws. Even eliminating a brand; such as Oldsmobile, Pontiac, etc costs hundreds of millions of dollars when a franchise closes as a result. OTOH it can make for a good sob story for a Dealer who is in financial trouble and can't keep the doors open because the bank will not lend them any more money and/or the manufacturer will not provide additional and more liberal terms on product or other merchandise (which is essentially a loan). The days are gone when a UCC1 could be used by an owner to underwrite a temporary down turn in their business.

 

Personally I would not hold my breath waiting for this to happen! If the MoCo tried to force more then worst performing dealers to close they'd find themselves on the receiving end of multiple lawsuits.

 

It is possible for a parent company to pull a franchise from a story if they do not maintain their standards. We had a local dealer a few years back that would not upgrade their small old store. Their franchise for awarded to someone else who put up large modern building off the interstate.

 

oh ya that worked for all Chrysler & Gm dealers didn't it ? not to mention 10's of thousands core company employee's and their benefits & retirement packages they'll never see .

 

And both Chrysler and GM still ended up in bankruptcy...

 

One of the dealers in our area closed its doors last year. The grand opening for that store was early 07, and it closed up shop about 3 and a half years later. Bad timing to open a dealership, I guess.

Now, there's only 6 Harley dealerships within 50 miles of where I live.