GM dealer Jack Fitzgerald is not happy about losing some of his franchises. Unlike GM CEO Fritz Henderson, Fitzgerald has set forth a graphic-laden argument (PDF viewable online here) defending his position on the dealer cull. Here’s why Jack reckons we need H.R. 2743, mandating car dealer-protection:
As Congress and the Administration consider various proposals to restore the rights of affected auto dealers, I want to share with you the context for making such decisions. We believe that there was a fundamentally flawed analysis of the domestic auto industry that led to a misguided decision to close numerous dealerships and which will add to the nation’s unemployment misery.
Right now, Congress has before it a legislative proposal that would restore dealers’ economic rights and permit a case-by-case assessment of our dealerships. It is the best way to correct what has occurred and to put our industry on a path to growth and employment opportunities instead of the path of cannibalism, economic dislocation, and a downward spiral for the U.S. auto industry as a whole as consumers react to being abused.
This map depicts very expensive data. It was provided free of charge this past Friday, by R.L. Polk, as a public service. It depicts Domestic and Import cars in operation in each state as of December 2008 (VIO means passenger cars and light trucks in operation). It explains graphically why Toyota has fewer dealers overall, but more in the densely populated coastal areas.
The yellow boxes are by me. Careful study of this map shows that the Task Force was significantly off base in its decision to reduce dealer counts. They are exacerbating the east and west coast Domestic brand losses and potentially dissipating the Domestic lead in the rest of the country.
This is a recipe for failure. I have attached data showing state by state reduction and the results including potential job losses, etc. But the ultimate loss will be the failure of the ‘Plan’.
Reducing dealers in the blue states amount to conceding those extremely high volume markets to Import cars forever! Detroit can not rise again without reclaiming some of what it has lost there. They can, “yes we can, and yes we can”! The maps show the potential, 40 to 65 percent of all the cars on the road even in the blue states are Domestic brand cars (trucks too). Most of these owners will buy another one if Consumer Reports recommends it, but not if you reduce service for the cars they already own and if you make it easier for them to buy an Import. And not if you overcharge them on purpose. Main St. doesn’t work like Wall St. People know more about cars and they will not be deceived. Consumers deserve better treatment and they know how to get it.
Please do what you can to save the country from this bad plan! Time is running out. We must act now. A first step is prompt enactment of H.R. 2743.
H.R. 2743 has over 120 House co-sponsors, but we need more. And, we want to develop the same support in the U.S. Senate. So, on Monday, June 15, please contact your Congressman/Congresswoman’s offices in your town and in Washington (202-224-3121 main number) and ask specifically that he or she co-sponsor H.R. 2743 and that he or she tell Speaker Nancy Pelosi to schedule the Bill for consideration. Please contact your two Senators and ask them to co-sponsor the Auto Dealer’s Economic Rights Restoration Act as soon as it is introduced in the Senate.
Congress will leave Washington in 12 days for its Independence Day recess – we can’t let them leave without restoring our economic rights as automobile dealers. July 4 is a celebration of the perseverance of our forefathers, who fought for their rights, primarily economic rights. How timely would it be for Congress to restore our rights and to permit us to continue our tradition of consumer service and employment throughout the nation.
That is, at least on the surface, an interesting argument. I’m not sure how much I buy into it, but at least it is well presented.
I would have expected all his charts to be in the traditional ‘4 Square’ format.
The problem with his interpretation of the data is that imports and domestic brands are all lumped into 2 data sets. It makes the incorrect assumption that brands do not compete against each other ie: Honda vs Toyota, etc, etc.
It also conveniently overlooks the country of origin for any vehicle. Is a Kentucky Toyota an ‘import’ while a Mexican Ford ‘domestic’. It is in his world.
Blue states buy imports? What are you getting at here!
Sure, I sympathize with the guy, but I don’t agree with him, or buy into his plan.
I can barely read the visual aids, but I my BS detector is going wild.
The falacy in his argument is the classic “co-relation equals causation”. What he is essentially saying is that more dealers mean more car sales.
This has a small amount of logic behind it, but think about it. Dealers may hold customers, but they do not “create” them, they must attract them first. Adding more dealers is not going to to magically create new people wanting that brand, at best it will mean they scoop up a larger total percentage of the “pool”. For an automaker, the point of diminishing returns arrives a lot faster than it does for a dealer.
Second, he’s playing the “the imports will move in if we don’t!” card. First, so what? (heck maybe he can swing the franchise), more likely “says who”. The imports have generally stuck to a smaller number of larger dealers even in their strong markets. Removing a few small towns tax cows (the BIG imputus for all this), isn’t going to change people’s car preferences overnight, it just means HE isn’t getting his cut.
Here in Columbus (an anomoly in “Red” Ohio certainly) imports hold something more than a majority with a grand total of 4 Honda dealers (2-3 more within 30 miles). BMW does fine and they are even thinner. Chevy TRIPLES Honda’s number of dealers and doesn’t match the sales.
People buy cars at dealers. More dealers doesn’t make more people buy cars.
Jack,
Two of the D3 just went bankrupt. You helped. Things are, necessarily, going to change. Deal with it.
regards,
KixStart
There are good dealers, bad dealers and mediocre dealers. I’ve run into examples of all three types flying the banners of just about every brand on the market.
I’ve never met Jack Fitzgerald, nor have I ever been in one of his dealerships. People should be careful of throwing stones when they don’t know the character of the person they are throwing them at. If you want to argue with his reasoning, fine, but ad hominem attacks are meaningless at best.
I still firmly believe that the massive dealer culls at GM and Chrysler are going to result in much bigger revenue losses for those companies than the executives behind these decisions realize.
Hitachi power tools are available at Lowes but not at Home Depot. Dewalt power tools are available at both places. Do you really think Dewalt would be better off if Lowes or Home Depot dropped the Dewalt product line?
People go to Lowes or Home Depot to buy “power tools”. Most people don’t go to “a dealer” to buy “a car”. By the time they go to a dealer they’ve already narrowed the field (sometimes you can switch them a little on the lot, but they’ve got to decide to go to your lot).
The other looming question.. GM’s lost a third of its market share in the last 25 years. There was almost no change in dealer numbers during that time (barring the last year or so). If dealers drive sales, why wasn’t lack of sales driving out dealers?
A few points.
First, I also think the dealer cull is oversold. If you do not like one dealer, you may go to another. For example, I will not do business with a certain Subaru dealer near me. If the next closest dealer closed, I would not keep Subaru in my consideration set. Since I would not go to the dealer near me, and it would be too far to the remaining dealers, I would choose another brand of car. Do you think that less competition will make the remaining dealers more responsive to the customer?
There are many good cars on the market. In fact, there are very few really poor ones. There is not a car made, at least in the mass market price range, that would cause me to inconvenience myself to purchase and service it.
Second, I’m pleased that at least someone is using data to argue their point.
Speaking of questionable data, Jim Press goes before Congress and suddenly has numbers re the dealer cull that didn’t seem to exist when Chrysler sent out the “Dear John” letters. The most interesting number? That the 789 dealers Chrysler cut loose had cost Chrysler $1.5 billion in lost sales.
How do you suppose Chrysler came up with that number?
I for one dont have ‘brand loyalty.’ I do not have the money to purchase a new car, but if I did, one brand over another would not have any bearing on which car I might buy.
I hate to defend a car dealer, but I bought a Toyota from this guy last year and he’s a straight shooter. Yeah they push the aftermarket stuff, but you can see his lowest price on the internet, and as an out of state buyer who did his own registration, they actually sold me the van for exacly what his website listed it as. The salespeople don’t work on commision.
I’d listen to this guy before any other dealer. He owns several import dealerships as well.
I have also dealt with fitzgerald (Specifically his VW/Cadillac dealership in Annapolis MD) for service and while looking at a new VW a few years ago. Their prices seem to be fairly good, and it really is no haggle/no commission, but you may be able to find a better price elsewhere.
His quote “Most of these owners will buy another one if Consumer Reports recommends it, but not if you reduce service for the cars they already own and if you make it easier for them to buy an Import.” is true, but disingenuous.
He seems to assume that everyone takes their car to a dealer for all service. In my case I was at the dealer for a warranted repair. While I was there they tried to sell me a rear brake replacement for almost $800. Now less than a half a mile down the road is a Porsche/VW specialist who will do the job for a third less than that price, in the same strip mall is a national chain tire store/mechanic that would gladly do the job as well, for some amount less than the quoted price. My Local “I’ll fix anything with an engine” mechanic will do it for less than half. Finding a good trustworthy independent mechanic isn’t easy, but finding someone to fix your car is.
Getting the warranted work done might be a little harder, but for the most part, the dealers tried to get out of those repairs anyway. What’s he complaining about?
The imports “moved in” already, how are more dealers or the same dealers going to reverse this?
Maybe, just maybe, the dealers were part of the problem as well. Domestic dealers were not known for customer service. Acura, Lexus and Infinity dealers jumped on customer care early, and these megaplex dealerships that carry 12 different brands proved to be indifferent to the buyer.
I’m sorry, I don’t have sympathy for the dealers or many of the employees. Unlike most workers they saw this day coming for many years and should have prepared for it. The rest of America got laid off with little notice to prepare.
Just to keep it real, click on the Jack Fitzgerald link in the main post. You’ll see that his Fitzmall dealerships sell many makes(“foreign” and “domestic”). So he is not simply defending his “domestic” brand turf: he’ll make out either way. He is defending his position as an independent businessman.
+1000 regarding comments on lost market share over the last 25 or so years even with the same (overbloated) number of dealers! Do dealers really expect that GM and Chrysler will simply regain this lost market share by hanging on to such a large dealer network? Seems Honda, Toyota, et al are doing just fine with a smaller dealer network. Here’s a novel thought…build cars that the American buying public actually desires and can trust and maybe (just maybe), the numbers will turn around…some. Maintaining a GM dealership at every corner won’t increase sales.
I’d like to have a Fitzmall dealership in my town. No BS from the salesman and closer, and all the prices (quite competitive, BTW) are posted online. It appears their Toyotas don’t have the ridiculously priced distributor add-ons we see here. I don’t mind saying No to dealer add-ons.
How can GM be hurt by a car sold by Fitzmall? Don’t they charge him the same price as other dealers pay?
I suspect Fitzgerald was included in the dealer cull because other GM dealers were complaining “we can’t compete with him!”
The charts are quite interesting and RL POLK data is actually info you want to see. If Fitzmall ends up only with foreign brands that will end up hurting Detroit sales. They can hurt him but they can’t put him completely out of business. People prefer to buy cars the way he sells them. Prices listed no haggle. Click on his website on the link in the story with his name and see for yourself or google fitzmall and follow a link to one of his dealerships
Sherman Lin reminds me of a question I’d like to ask… Why would R.L.Polk give Fitgerald this expensive data?
I’d like some free R.L.Polk data. I’d like to know, by year, the number of each year and model of car registered on the road.
select model, make,model_year, registration_year, count(*) from registrations group by model, make, model_year, registration_year
Can I have that? It would answer, authoritatively, a lot of questions. In particular, which cars last longest? That would be the car from, say, 1995 that was still on the road today in greatest proportion to initial sales.
And I’d really like to know the answer to that.
A lot of people would like to know that answer to that question, I think. If R.L.Polk is in a giving mood, giving out that information would be a real public service.
If the administration should have enlisted the dealers to sell the auto bailout to the American taxpayer: “So you want a shiny car industry? How much do you want your payment to be? Hey, we’ll even ‘pay off’ what you owe from our existing bailout.”
I have bought a Subaru from a Fitzgerald dealership in Maryland and would buy another from them.
I suspect that Chrysler decided that his Dodge dealerships in Rockville were a bit too much of a sideline to selling Subarus and Hyundais nearby.
As for Wheaton, MD, the changing demographics would make selling any new cars difficult right now. Those residents left with the money to buy new cars gave up domestics after the second transmission failure on the ’92 Caravan.