The new rules of automotive retail seem like stupidity run amuck. I'm confused and angered by the strange alliance between my government and big business. There is not much on the horizon to believe or invest in.
I understand the concept of giving a good idea a fresh start through bankruptcy. But throwing both money and bankruptcy protection at GM and Chrysler was excessive. It was like giving a street gang bullets and a “get out of jail free” card and expecting something good to come from it.
The New GM and New Chrysler got bailout money and a pass on their responsibilities without having to produce a single new idea. They took our check and gave a third finger salute to their dealers, vendors and 50 state governments before the ink had dried.
The unions, predictably, did not go away as easily. Threatening to break that finger off at the knuckle if GM or Chrysler pointed it in their direction, they deftly negotiated an ownership stake in NewCo, never mind whether or how they intend to deliver on their promises to both rank and file and equity shareholders at the same time.
And can anyone explain exactly how the same guys who are running GM are expected to negotiate a fair contract with competitor Ford?
Years ago in a zone office, a representative of one of the now-too-big-to-fail companies greeted a newly approved dealer at precisely the same time someone bellowing “Screw the dealer, screw the dealer” could be heard in the hallway.
A manager in a back office was lathering up his troops to push out a rail yard full of unwanted inventory not realizing (or perhaps not caring) that a dealer might be outside his doorway. Memories like that sear their way into your brain.
Was that “chant” unique to one bad manager, or one poorly timed meeting? Many auto makers held those pick-the-dealer's-pocket closed-door sessions.
Is anyone outside of Congress really simple enough to buy the notion that the main ingredient for a rebirth of American manufacturing lies in the systematic termination of 5,000 dealers, 100,000 jobs, and a few billion dollars of stakeholder value?
At risk of bursting the illusion, I will share my experience since it's obviously so different from what's believed within the Washington Beltway.
As for all that money auto manufacturers are swearing under oath they spend on dealers, rest assured it didn't happen in any of my stores. In my town, a factory guy rarely entered a store unless they were blowing the day off, pitching something too lame to sell without intimidation or looking for a favor.
It rarely took more than an e-mail or a phone call to get the important things done, and occasionally there was a regional or national meeting (usually with a fee attached to defray the factory's cost).
The entire inventory on my lot was paid in full before it left the factory. Rent, payroll, and advertising were my responsibility. My used cars (many of which were trade-ins from a new-car sale) were my risk alone. My computer system, which was required by the factory, as well as training, brochures, staff and supplies were all paid on my tab.
Not only was my manufacturer on a free ride, my customers were treated even better. Every new car I sold was subsidized by the other departments in the store.
Everything that went on in the dealership maximized revenue and volume for my manufacturer. Since this can't be the story that our Congress and the bankruptcy court heard, there must have been other dealers on the dole that I didn't know about.
In 40 years, I somehow missed the mysterious place where manufacturers actually pay out for dealer operations. But I saw dealers subsidize their manufacturers and cover for all of their poorest decisions.
Once manufacturers reach into the marketplace to really know their customers, that's when things will start happening. As long as executives run their businesses from spreadsheets back at the office, nothing will change.
Peter Brandow is a veteran dealer in Pennsylvania and New Jersey.