Despite the fact that all of the Detroit firms are actively trimming their dealer ranks, the National Automotive Dealers Association (NADA) is calling on the federal government to guarantee dealer floorplan loans. According to Automotive News [sub] NADA is requesting “anybody and everybody” in the government step up and prevent (once again) a necessary downsizing in the auto business. NADA spokesfolks say the auto retail industry’s $100 billion in annual floorplan credit is drying up, and “the cost to government for guarantees would be little or nothing.” Ipso facto. And yet the $25 billion in “136” loans took $7.5 billion to guarantee. NADA is bringing its somewhat short-on-the-details message of hope to Congress, the White House, the Treasury Department, the Federal Reserve, and the Small Business Administration this week.
Meanwhile, the California New Car Dealers Association is getting in on the action as well, sending their own “dear Mom, send money” letter to Treasury Secretary Geithner. California lost 137 dealerships last year, 23 have failed this year so far and the CNCDA says 131 others “could go out of business in the next six months without floorplan relief.” Finally some good news for Detroit! GM plans on losing 400 dealerships this year, Ford shed 269 last year, with more to come, and Chrysler seems intent on killing off every last one. Unfortunately for Detroit though, their ignoble bailout beggary has set the example. Instead of losing unwanted dealers, they’re gaining competitors at the bailout trough.
One thing is for certain. When my Chrysler 300 reaches trade-in age, I’m getting another Benz.
I don’t know if losing dealers would be better. I tried to buy a Caddy SRX last year. Two dealers, within 10 miles, both totally mis-handled my deal, so poorly that while I was ready to buy, I ended up with an Acura MDX. If there had been only one dealer, I doubt the service would have been better.
Considering the shabby treatment that these dealerships have dished out over the years I just can’t muster up much sympathy – or cash.
Oh, yes, there are some good one and it’s not fair, blah, blah, blah but I get treated pretty good at Wal Mart and Target so why not give them a shot at selling cars?
Oh that’s right, the anti competition laws that dealerships have pushed thru the various state legislators. Hopefully the successor dealerships have a better business model.
Free my market.
Per the viability plans, the gov’t is being asked to fund the car companies on the premise that dealers will be slashed … but the dealers want gov’t money in order not to be cut. Oh boy.
The sooner the whole dealership system goes down, the better it will be for consumers. I look forward to when companies can sell directly to the consumer. No games. No haggling. Buy your car the same way you buy everything else.
Demetri
A Car and a House are the most expensive and important financial investments a person can make.
I wouldn’t trust the internet to buy direct from a factory without actually going to a place where I can drive it and experience it before hand.
I couldn’t buy a house that way or a car.
@Demetri:
I’d really like to believe, but I deal with Comcast, Verizon and AT&T all the time. Mostly un-happy experiences with those gargantuan semi-monopolies. I’m highly doubtful that manufacturer-direct car sales will be different.
OK, new rule: Everyone pro-bailout will be forced to only drive Chrysler or GM cars for life. Including their families. This would be the perfect punishment for their crimes. A crime to reward companies for building horrible cars. In addition they only would be allowed to bring the cars to the (frequently visited) shops with union employees. Then they would have to pay the shop without getting anything fixed (job bank?).
If they give all my money away, at least I want to see them suffer driving a Sebring for life! And their wives giving them a hard time for making them drive Sebrings.
kaleun,
I am with you, but let’s be fair and include every auto company that has accepted community largess: BMW, Honda, Toyota, Nissan . . . have all suckled at local and state teats. Now it does not sound so bad, does it?
@PickupMan – but those semi-monopolies are geographically based (i’m assuming you are talking about internet and cable tv companies). with the multitude of car manufacturers out there, there would be no monopoly.
@Flashpoint – definitely try before you drive, but these days the “keeping the car over night”/”100+ test drive” is non-existent anyway. the manufacturers would just have to come up with a way to allow test-drives of vehicles – that one problem with the “straight from the manufacturer” business model shouldn’t hold back a decent idea.
ruckover:
BMW, Honda, Toyota, Nissan . . . have all suckled at local and state teats. Now it does not sound so bad, does it?
Nice try…
The D2.8 have suckled nicely when it comes to training funds, tax breaks, and state unemployment insurance laws that help enable crap like the job’s bank.
Michigan and the People’s Republic of (upstate) NY are major domestic subsidy pimps for the D2.8.
treehater (even the oak?)
I know they have. I am just saying that no manufacturer has “clean hands;” they all take what they can get, and they play state against state, city against city to get the most money from the public coffers.
“I wouldn’t trust the internet to buy direct from a factory without actually going to a place where I can drive it and experience it before hand.”
There would still be places to go to test drive vehicles and go for service, they just wouldn’t be like a traditional dealership.
I say Big3 should change the whole car buying/manufacturing process. Trim dealers down to about 500. Make them full service repair facilities and showrooms – no inventory. You can either come in and order a car or do so on the Internet (basically the same thing). Cars would be built as systems. Engines, transmissions, body etc. completed for the expected next month and only assembly required to meet the customers build sheet. In 10 days to two weeks, the car can be picked up at the dealership of better yet – delivered to your home.
Now that’s my kind of car company.
Car dealers aren’t evil; they’re a necessary evil
I have begun to ponder the “Why can’t we just buy our cars at Walmart ?” theory and have concluded that until we come up with a better plan to handle the trade in of our present vehicles, Walmart would have to rent the State of Indiana to park all the trade-ins. They would have to determine how to make the payoffs in order to get the titles to resell the vehicles. They would have to hire “experts” who can determine the worth of each trade in and to allocate enough resources to fix them relocate them and prepare these vehicles for remarketing, and set aside enough money to hold these vehicles until they get paid for them by the next customer.
Then there is always the “I sold my car dot com” philosophy whereby each of us as an independent agent sells our own trade, because we feel Walmart didn’t give us enough allowance. Craig’s list and e-bay are great ideas and work for many of us but how many of us have the time and patience and financial wherewithal to bring the sale of our vehicle to a tidy conclusion. Don’t get upset when the person who wins the bid doesn’t get the necessary funds because she is in the process of selling her vehicle, Too bad you have already paid off your trade at the bank and your bid winner pulls out at the last minute.
Upon closer examination of the retail industry, one realizes that the car dealer, not unlike the turkey vulture and that little beetle that cleans off the flesh of human skulls for medical schools” have proven themselves to be integral and necessary component of the American auto industry. You NEED us at the wall! You WANT us at the wall!
Whoever solves the trade in conundrum will rule the industry.
Believe me, The states want dealerships because at least the collection of sales tax and basic consumer concerns can be tracked in 200 entities instead of 30,000 plus.
If GM folds tomorrow, most dealerships will have a profitable used car business and probably reduce their employment by 50 %. I suppose their laid off employees could apply for a job at Walmart.
If GM folds tomorrow, most dealerships will have a profitable used car business and probably reduce their employment by 50 %.
But isn’t this part of the answer to “who would take trade ins?” You’ve made a fine argument for the need for used car dealers, but not for new car dealers. (Though it’s not clear that used car dealers have to be local, see CarMax, but it could go either way.)
Some people seem convinced that direct to consumer sales wouldn’t work. Well, if not, what would be the harm in repealing the laws banning them? It seems that by insisting on those laws, NADA and others are implicitly arguing that direct-to-consumer sales would work.
No one’s arguing that sales have to be direct-to-consumer, just to level the playing field, stop banning it, and give things a chance.
Plenty of people buy at least moderately expensive devices, like computers, laptops, expensive A/V equipment, online, while others don’t.
I invite all commentators on this thread to our live blogcast on dealer – manufacturer relations at high noon today.
Charles Territo from the Automotive Alliance (use the force) will be ready to take your questions.
• No one’s arguing that sales have to be direct-to-consumer, just to level the playing field, stop banning it, and give things a chance.
To level the playing field in purest terms would be to eliminate all state and federal regulations or to at least maintain an equal enforcement of these regulations to all parties, whether licensed or not. We might be left with the choice of returning to a state of nature in these things or to geometrically increase the number of people to referee auto transactions.
Yeah, thanks I’ll skip the dealer at every chance including buying a used car and selling my old car myself. VERY few times in my life have I had a positive dealer experience. Overpriced repair parts, bugged sales offices (LITERALLY), underhanded tactics, etc.
I would be a MUCH happier consumer doing business with an individual or with a company that did business like Carmax – multiple brands on one lot, flat pricing, fewer games and gotcha’s. Yeah the Saturn dealer concept fits my needs but I’ve never owned a Saturn.