Change Rules of the Game

Dealers, manufacturers and millions of Americans have gone on an economic diet. We're motivated to cut everything we can live without. Moreover, we're consumed with worry that our efforts will be too little, too late. In this failing economy, we are all looking for certainty in uncertain times. The pundits have named our country-wide diet a recession as if this downturn were just a temporary condition.

Dealers, manufacturers and millions of Americans have gone on an economic diet. We're motivated to cut everything we can live without. Moreover, we're consumed with worry that our efforts will be too little, too late. In this failing economy, we are all looking for certainty in uncertain times.

The pundits have named our country-wide diet “a recession” as if this downturn were just a temporary condition. The most buoyant among them think we're just reeling from a temporary national lapse of confidence. Industry leaders are pushing this optimism with suggestions that a few tweaks to fuel consumption and the trimming of a few internal costs will right everything.

The question is, will the things we cut ever return. With each thing we give up, we learn the measure of its importance. The more change we endure, the more we're willing to give up to achieve control over our economic lives.

Some of the things we've done away with may forever remain off the menu. Many of today's brands, models, and marketing formulas will not survive. I don't believe that a new product is the solution, no matter how green it is or how much quality is built into it.

I'm predicting change in the fundamental dynamics of how Americans acquire freedoms only made possible with cars in their driveways without their feeling vulnerable to all the variables to owning a car.

We have plenty of inventory and abundantly available cheap fuel, yet we do not have an equation that brings capacity in line with demand. It is not simply the price of buying a car; it's the total cost of owning one. To heal our industry we have to shore up all the risks that banks, dealers, and consumers are no longer willing or able, to shoulder.

The cost of transportation is an aggregation of depreciation, fuel, insurance, interest, repairs and alternative transportation when the car is down. Add to that all the costs of marketing, negotiating and distributing the vehicle.

I believe the important focus should be on who is going to take the big risks. Since suppliers, customers, labor and dealers are financially tapped, they cannot pay for the failures they've historically shouldered. Therefore, better products, minor discounts, and low interest financing will not fix this crisis of ability to pay and fear of the unknown.

We need a fundamental change in the rules of the game reacquainting manufacturers with all the costs that touch ownership and distribution of their products. We need to reduce the cost of vending cars by finding alternative ways to store, display, negotiate, finance and service those vehicles in ways that don't add thousands to the cost of each car sold.

This will require current boundaries to be crossed. Perhaps the rental industry can provide test drives, web sites, and exposure to new vehicles. Certainly, they can provide demo experiences for pennies on the dollar of what they cost today.

Likewise, bank branches have the capacity for handling money, financing and documentation. They too provide certain services for pennies on the dollar of today's costs. And then there are the many national parts and service centers that can partner with us to achieve certain efficiencies and convenience as well for our customers.

Imagine a product created from the collaborative effort of manufacturers, dealers, rental companies, banks, insurance firms and oil companies all partnering to provide a guaranteed cost per mile to consumers.

Instead of asking consumers to calculate that risk, we could offer an “all in” transportation product tailored to their needs, with responsibility on the shoulders of experts and professionals each in their area of skill.

If collectively we move beyond slogans, hype, smoke and mirrors and deal with the defining dynamics of our business, we can fix a broken industry rather than just bail out something too big to fail.

Peter Brandow is a veteran dealer in Pennsylvania and New Jersey.

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