Closing auto dealers: Dumb move

[pauldun170]

Originally Posted by Homeslice

We all worked in Sales & Marketing

Considering the condition the US automakers are in, this comment helps explain your responses.

[goof2]

Originally Posted by pauldun170

Yet you seem to know nothing of basic economics nor do you appear to have any clue of the auto industries troubles over the past 20 years.

I know people who work at Northrop\Grumman and have flown on an airliner.
They haven't a clue on the aerospace industry and they don't even understand how airplanes fly.

Basic economics is fine but, at least in the case of GM, the reality is the structure of their dealer network had very little to do with the company's bankruptcy. Making shitty cars with a shitty cost structure, a lot of which was labor cost related, did. GM lost over $70 billion from FY2004 to Q3 of FY2008. For a frame of reference those losses are over $65 million for each dealer cut in less than 5 years. How much of that do you think was tied to the dealer network being unsustainable?

[pauldun170]

Originally Posted by goof2

Basic economics is fine but, at least in the case of GM, the reality is the structure of their dealer network had very little to do with the company's bankruptcy. Making shitty cars with a shitty cost structure, a lot of which was labor cost related, did. GM lost over $70 billion from FY2004 to Q3 of FY2008. For a frame of reference those losses are over $65 million for each dealer cut in less than 5 years. How much of that do you think was tied to the dealer network being unsustainable?

Your argument is that dealers were not responsible for for the automakers condition. Are you concluding that in pursuit of reorganization and creating a model that would leave to increased market competitiveness, it is unreasonable for manufacturers to sever contracts and obligations to existing under-performing dealers and pursue a distribution model that fits existing market conditions?

Is it improper for the auto manufacturers to control their distribution using the strategy they desire?

US manufacturers have a legacy dealership network that does no longer fits their market share. More dealers do not equal more sales and when a manufacturer has a brand equity problem (in some cases aggravated by points in your distribution network) in addition to pricing issues due to internetwork competition there is a valid case to redecorate your map.

[goof2]

Originally Posted by pauldun170

Your argument is that dealers were not responsible for for the automakers condition. Are you concluding that in pursuit of reorganization and creating a model that would leave to increased market competitiveness, it is unreasonable for manufacturers to sever contracts and obligations to existing under-performing dealers and pursue a distribution model that fits existing market conditions?

Is it improper for the auto manufacturers to control their distribution using the strategy they desire?

US manufacturers have a legacy dealership network that does no longer fits their market share. More dealers do not equal more sales and when a manufacturer has a brand equity problem (in some cases aggravated by points in your distribution network) in addition to pricing issues due to internetwork competition there is a valid case to redecorate your map.

They can do whatever they want. They aren't even a public company anymore so they don't have any shareholders to answer to. Either way their dealer network structure may have been loosing them money but it couldn't have been more than a drop in the bucket. Farting around with their dealer network while essentially transferring ownership to the American and Canadian governments and most ridiculously to the UAW is like re-carpeting a house that fell in a sinkhole.

[pauldun170]

I'm going to have to put some serious thought as to why terminating franchise agreements with dealers that don't meet the standards set by the manufacturer is a good thing.

Maybe get some powerpoint presentations on why having too many dealership is a bad thing when your are trying to build brand equity and increase profit margins.

I tried seeing it from the other side, that keeping an abundance of overlapping franchises benefits the automaker by increasing exposure but since we're not talking about fucking starbucks I can't get that simplistic

[pauldun170]

Originally Posted by goof2

They can do whatever they want. They aren't even a public company anymore so they don't have any shareholders to answer to. Either way their dealer network structure may have been loosing them money but it couldn't have been more than a drop in the bucket. Farting around with their dealer network while essentially transferring ownership to the American and Canadian governments and most ridiculously to the UAW is like re-carpeting a house that fell in a sinkhole.

drop in the bucket yes.
the point isn't about expenses.
Its about generating revenue.

[pauldun170]

I've gone on one my tangents again.
Damn...i got problems

[Homeslice]

Brand equity, you say? Let's take the extreme case, if there was only one Chevy dealer every 500 miles. What kind of brand equity are you going to have then? Chevy isn't Ferrari, people don't worship their cars, so they can't get by with as few dealers as Ferrari can.

And yes, the manufacturers do regularly review dealers for standards and such, and do often threaten them with the loss of it, but.........When I was at Ford, it was mostly due to customer service issues, as well as lame attempts to get them to order more cars ......Not due to costs of doing business. The amount of time spent on each dealer is not as much as people think. When I was with Ford, the small rural dealers were treated to maybe 2-3 phone calls a month. Does having fewer dealers make things more efficient, yes, but for you to say that it will automatically help sell more cars?? Jigga pleaz....... that's where I called bs.

And when this is a Democrat administration that is allegedly supposed to care about jobs........

Seems like the only jobs Democrats understand are factory (union) jobs......Not dealership jobs, which are small businesses that the average big-city Democrat doesn't appreciate, other than spouting off a few pandering soundbites during election time. BOTH parties are sacks of shit that are just guessing WTF they are doing.

[pauldun170]

Originally Posted by Homeslice

blah blah blah Does having fewer dealers make things more efficient, yes

Glad you finally get the point

Originally Posted by Homeslice

yes, but for you to say that it will automatically help sell more cars??

Oh yeah...here is where I said that

Originally Posted by pauldun170

Dumbass

[Homeslice]

Originally Posted by pauldun170

Glad you finally get the point

Except those efficiencies are very minor, since the manufacturer doesn't own the dealer, and only helps him with a teeny bit of his expenses.

Oh yeah...here is where you said that:

Originally Posted by pauldun170

I don't know, I thought the point was to sell cars, not create sales jobs.