Saying Yes To Good Sense

Maybe it's because of the hot summer with temperatures pushing past 100 degrees, or maybe because I've been suffering rising interest expenses and falling interest in domestic cars. But I'm predicting a record rise in the divorce rate. No, not divorces between married people. Rather, divorces between manufacturers and dealers. Over the years, there have been plenty of more upbeat words than to describe

Maybe it's because of the hot summer with temperatures pushing past 100 degrees, or maybe because I've been suffering rising interest expenses and falling interest in domestic cars. But I'm predicting a record rise in the divorce rate.

No, not divorces between married people. Rather, divorces between manufacturers and dealers.

Over the years, there have been plenty of more upbeat words than “divorce” to describe a dealer-auto maker breakup.

“Right-sizing” was cute. “Down-sizing” sounded a bit less optimistic, but, strangely efficient. “Project 2000” sounded so promising, you could almost missed that its focus was the systematic elimination of dealers.

I cannot envision a separation from my manufacturer wrapped in a euphemistic banner. Not after 30 years of dealering. To me, a business breakup feels like divorce. It feels wrong.

But there are times when I think about getting out because staying doesn't seem to make sense.

I admit I've not always been the best partner to my manufacturers.

I haven't always given them unqualified and blind devotion.

I've used the teachings of the industry to calculate the profit or loss of their programs, and acted accordingly, even though my factory rep may have lost brownie points for failing to sign me up.

I've trimmed my inventory when the public failed to respond to it. I've only taken some of the many cars that overflowed from my manufacturer's failure to ‘right-size’ production.

I suppose it was selfish that I sometimes put paying my son's tuition above easing my manufacturer's production excesses. I'm sorry if I demanded a positive return on new-car sales.

Currently, the disconnect between profitable return and the demands of my manufacturers is at an all-time high. Five- to 10-month inventory levels and multi-million dollar facility upgrades are being requested, with an attitude that suggests it would be ungrateful of me to resist.

But even when my rep assures me that selling more cars is just a matter of stocking more, I struggle to quiet that nagging entrepreneurial voice in me that says I have a responsibility to make money.

I think about all the good employees who depend on my good reasoning and how many customers have supported me because I've given them fair treatment.

Adding to this confusion is how to balance my sales rep's confidence that I should stock more cars with the caution of my captive floor plan lender that I shouldn't.

It might feel good to just say “yes,” then wash it down with a heavy dose of TV, radio and newspaper advertising.

I can see in my mind's eye the admiration of my zone manager. I can imagine how great it would be to get a call from Detroit asking my opinion on important matters of the day.

I swell with pride at the thought of new franchise opportunities that would be offered to me. Just by saying “yes,” I'd become one of the boys.

But wait. I seem to have forgotten that after saying “yes” to that load of inventory and before being wined and dined by Detroit's elite, I'd have to pay for those cars.

Somehow, I'd have to cover the interest on that inventory. I'd probably have to hire tough sales people to put the heat on customers to buy. I'd have to pay spiffs to the slickest of those salespersons to keep them when the profits dipped. After all, it isn't their fault I said “yes” to too many cars.

Still later, I'd find myself over-allowing on some trade-ins to make the really hard deals that were beyond the talent of even the craftiest of my gang.

Ultimately, I'd probably have to get a bigger mortgage to cover the losses.

Yes, sometimes — during the bleak, dark times — I think about getting out, because it has stopped making sense to me.

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

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