Dealers To DC: Be Part Of The Solution For Part Of The Problem

by Edward Niedermeyer

Published: February 24th, 2009

dealers to dc be part of the solution for part of the problem

Despite the fact that all of the Detroit firms are actively trimming their dealer ranks, the National Automotive Dealers Association (NADA) is calling on the federal government to guarantee dealer floorplan loans. According to Automotive News [sub] NADA is requesting “anybody and everybody” in the government step up and prevent (once again) a necessary downsizing in the auto business. NADA spokesfolks say the auto retail industry’s $100 billion in annual floorplan credit is drying up, and “the cost to government for guarantees would be little or nothing.” Ipso facto. And yet the $25 billion in “136” loans took $7.5 billion to guarantee. NADA is bringing its somewhat short-on-the-details message of hope to Congress, the White House, the Treasury Department, the Federal Reserve, and the Small Business Administration this week.

Meanwhile, the California New Car Dealers Association is getting in on the action as well, sending their own “dear Mom, send money” letter to Treasury Secretary Geithner. California lost 137 dealerships last year, 23 have failed this year so far and the CNCDA says 131 others “could go out of business in the next six months without floorplan relief.” Finally some good news for Detroit! GM plans on losing 400 dealerships this year, Ford shed 269 last year, with more to come, and Chrysler seems intent on killing off every last one. Unfortunately for Detroit though, their ignoble bailout beggary has set the example. Instead of losing unwanted dealers, they’re gaining competitors at the bailout trough.

Edward Niedermeyer

More by Edward Niedermeyer

Comments

Join the conversation

4 of 19 comments

Johnthacker on Feb 25, 2009
If GM folds tomorrow, most dealerships will have a profitable used car business and probably reduce their employment by 50 %. But isn't this part of the answer to "who would take trade ins?" You've made a fine argument for the need for used car dealers, but not for new car dealers. (Though it's not clear that used car dealers have to be local, see CarMax, but it could go either way.) Some people seem convinced that direct to consumer sales wouldn't work. Well, if not, what would be the harm in repealing the laws banning them? It seems that by insisting on those laws, NADA and others are implicitly arguing that direct-to-consumer sales would work. No one's arguing that sales have to be direct-to-consumer, just to level the playing field, stop banning it, and give things a chance. Plenty of people buy at least moderately expensive devices, like computers, laptops, expensive A/V equipment, online, while others don't.

Like Reply
Robert Farago on Feb 25, 2009

I invite all commentators on this thread to our live blogcast on dealer - manufacturer relations at high noon today. Charles Territo from the Automotive Alliance (use the force) will be ready to take your questions.

Like Reply
Nemovosseducat on Feb 25, 2009

• No one’s arguing that sales have to be direct-to-consumer, just to level the playing field, stop banning it, and give things a chance. To level the playing field in purest terms would be to eliminate all state and federal regulations or to at least maintain an equal enforcement of these regulations to all parties, whether licensed or not. We might be left with the choice of returning to a state of nature in these things or to geometrically increase the number of people to referee auto transactions.

Like Reply
Joeaverage on Feb 25, 2009

Yeah, thanks I'll skip the dealer at every chance including buying a used car and selling my old car myself. VERY few times in my life have I had a positive dealer experience. Overpriced repair parts, bugged sales offices (LITERALLY), underhanded tactics, etc. I would be a MUCH happier consumer doing business with an individual or with a company that did business like Carmax - multiple brands on one lot, flat pricing, fewer games and gotcha's. Yeah the Saturn dealer concept fits my needs but I've never owned a Saturn.

Like Reply