By on September 30, 2009

Make no mistake: GM and Chrysler went into bankruptcy horrendously over-dealered. GM was carrying more than twice Toyota’s 1500 dealers (with a lot less than twice the market share). The automakers’ needed to cut their franchise network down to size for reasons elucidated here on numerous occasions. The fact that the culled dealers are dogging the federally-subsidized carmakers for cash—well, you, really—is neither here nor there. It’s on YouTube! In their own words . . .

Videos posted here are true stories of private Auto Dealers that had their dlshps [time is money!] shut down for no reason by the “Car Czars” (Auto Task Force). Hear their stories. As many as 3389 dealerships are proposed for closure affecting 169,652 Direct Jobs. We are fighting for our rights in a free enterprise country. Congress has introduced House Bill HR2743 & Senate Bill S1304 to Restore the Rights of Auto Dealers. The outcome of this matter will impact the lives of EVERY privately capitalized businessman/woman in America and will effect communities everywhere forever. Government can not sit back now and support and economic model  that abandons proven successful business models. This is their chance to restore 169,652 direct jobs for FREE. Not only is there the ability to right this wrong, but there is a duty to do so to protect economic freedoms that every American deserves. Please contact your members of Congress to encourage their support !!

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31 Comments on “Rejected GM and Chrysler Dealers Launch YouTube Channel...”


  • avatar
    rnc

    I wonder if somewhere, in some multi-000’s page bill floating around congress, there is a sub-sub paragraph related to a “terminated franchise support program” (as long as that franchise was related to consumer transportation).

  • avatar
    alfred p. sloan

    Cull the herd.

    Too many dealers means fewer dealer sales.

    Fewer dealers for appropriate market share makes good sense.

    Quit your whining Axed Dealers.

  • avatar
    porschespeed

    Sing along, everyone!

    “You deserve a job today, at McDonald’s”

    The entire dealer model needs to be superceeded anyway. Most, if not all of them exist because the franchise laws for auto dealers are far different than the franchise laws in any other industry.

    I’m sorry that your family has been in the ice business for decades. I’m sorry that all the people cutting ice on the lake will lose their jobs. I’m not sorry that you may lose everything because you ignored the fact that household refrigeration was invented.

    If you’re not part of the solution…

  • avatar
    alfred p. sloan

    …But who will chip the ice out when your ee-lec-trick icebox goes kaput, huh? Who?

    Yeah…

    The ice delivery union will one day rise again.

  • avatar
    ajla

    Sorry dealers, but there is a $800 non-negotiable document fee and a $200 telephone prep fee that must be paid before I contact my Congressman.

    But, I’ll tell you what, I’m going to go back and talk with my manager and see what we can do. Just wait right there in one of your glass negotiating boxes until I come back.

  • avatar
    Gardiner Westbound

    Been there, done that! I always feel badly when a business goes south and takes hopes, dreams and investment with it.

    I’m working hard to reconcile that with the times car dealers mistreated me.

    Nope, still don’t feel sorry for them.

  • avatar
    ohsnapback

    Let the manufacturers set up small kiosks, with demo cars and flat wage employees (who work for the manufacturer) where the consumer can buy directly from the auto maker.

    This would result in the lowering of new car purchase prices by probably at least 10% to 15%.

  • avatar
    psarhjinian

    @ajla: Nicely put.

  • avatar
    Dynamic88

    I fee sorry for the dealers (which in turn makes me feel dirty) but this is what bankruptcy is all about. No other way to get rid of the burden of too many dealers.

    I will call my congress critters and ask them to vote against these bills.

  • avatar
    jacad

    Can someone direct me to where I buy a computer that allows me to look at multiple examples in the flesh of the next car I wish to purchase, allows me to test drive it, and takes my trade? It also needs to stock parts, train technicians and fix my vehicle under warranty when it breaks.

    There are too many of a lot of different businesses in many fields. The weak ones go broke. It is unprecedented that our Government sanctions a plan where thousands of profitable businesses with each having millions of dollars invested are arbitrarily chosen to close with no remuneration. It is a fact that most of the closed dealers were profitable.

    Some of you folks need to study the industry a little closer and learn how it actually works. We are seeing the same kind of ideas here that ultimately bankrupted GM and Chrysler who obviously don’t understand how to sell cars either! Instead of lowering their costs by eliminating their dealers, they have simply raised their own profit margin while telling the remaining dealers they will sell more units. Instead of a 10% cheaper car, we ultimately are headed to a 10-15% more expensive transaction.

  • avatar
    yankinwaoz

    Jesus… what a bunch of misguided babies.

    Helloooo…. the company that you were a franchise of went bankrupt. How did you not see that trainwreck coming years ago? Did you know that BK law is in the US Constitution? It is as American as apple pie.

    I love how they try to twist this into blaming the government for interfering in private business.

    On the flip side, some dealers are still in business. If it wasn’t for the bailout, then 100% of you dealers would be closed.

    Life is tough. It is even tougher when you are stupid.

  • avatar
    porschespeed

    @jacad,

    Think that one through. Just a bit. Even Apple has given up distribution networks even close to the automotive model.

    Parts, service? There are 20 more efficient ways to skin those cats than the one still used by the auto industry.

    Apparently you have never tried to get a part at a dealer. Unless it’s something incredibly high volume, it’s getting ordered and shipped. Same distibution model as just about repair part for every consumer appliance on the planet.

    See and drive a car? Easily solved as well.

    Factory trained mechanics? Heavens forfend, that’d be tough to solve…

    As much as we love them, cars are appliances. They are machines that exist to fulfill a need.

    We DO understand the car business. It’s just like *any* *other* *business*. Do it right and you succeed. Do it wrong and you get to find a new job.

  • avatar
    motownr

    Jacad has it right: the consequence of fewer dealers–and higher overhead surviving dealers–is HIGHER prices for consumers.

    The big mistake was in not letting market forces dictate who survived. Meddling only will serve to increase the cost to the taxpayer–watch how many dealers get taken down by the coming demise of Saturn.

  • avatar
    jacad

    Porshespeed, while I appreciate your comments, they are utterly simplistic. While for decades unacknowledged folks have dreamed up ways to replace the dealer distribution system, none of the plans have come close to working. We have been through factory owned stores, selling them at Sears, selling them on Ebay, etc. but they have all failed miserably.

    The difference is in being the only business where the dealer takes back what he previously sold and the need by the public for timely service of a very large piece of equipment that requires a huge investment by the servicing party.

    While true enough that GM and Chrysler went bankrupt, fact is it is still business as usual. The difference being they took the “loophole” to shed thousands of dealers they either didn’t like solely to gain more control over the ones left and to increase their profit margin and price to the consumer.

    When some of these folks in affected areas start buying their next vehicle and the dealer who was a part of the fabric of the community is gone, we will soon see if they are loyal to the manufacturer or start looking at other offerings.

  • avatar
    CamaroKid

    I love these guys…

    Let me get this right… It goes like this…

    “How can we let this happen in a free enterprise country? The Government are a bunch of meddling socialists! *cough* Err ah umm where is my bailout.”

    Ya, good luck with that.

  • avatar
    gslippy

    +1 ajla!

    These affronted dealerships need to explain why their existence helps C/GM become more profitable, and not less.

    I hear crickets.

  • avatar
    FreedMike

    ajla :
    September 30th, 2009 at 2:56 pm

    Sorry dealers, but there is a $800 non-negotiable document fee and a $200 telephone prep fee that must be paid before I contact my Congressman.

    But, I’ll tell you what, I’m going to go back and talk with my manager and see what we can do. Just wait right there in one of your glass negotiating boxes until I come back.

    Take a bow for that post…:)

  • avatar
    porschespeed

    jacad,

    While I appreciate your comments, they are the same old “this is different” rhetoric put forth by anyone operating with a failed business model.

    The ONLY reason that the failed model keeps “working” is a very byzantine set of deliberately crafted franchise laws that only apply to automotive franchising. Nobody else gets those protections.

    This industry would have self-corected two decades ago, were it not for that legislation, and that fact that, yes, there are some people buy into that kind of story spinning.

    As someone who has spent a chunk of his life repairing cars, I know how easy it would be to replace the current system.

    I also have enough friends in the industry to also be aware that there has never, ever, been a serious attempt to change. Ever. The few who actually believed were subverted, sabotaged, and their carers derailed.

    Sorry if you’d have to go out there and be accountable to your customers like the rest of the business world.

  • avatar
    YotaCarFan

    I certainly dislike dealers as much as the next guy, and agree that GM and Chrysler had an excess of franchises leading to higher operating cost than competitors. However, the jilted dealer managers do have a point about being unfairly shut down. During a “normal” bankruptcy process, creditors have a significant (primary?) say in what assets get sold (to include closing of stores), and make decisions based on economics. That is, they close the loss leading stores and keep the stronger ones open. In the case of the GM and Chrysler bankruptcies, the Obama and his personally chosen unconstitutionally-sanctioned “czars” selected which dealers to close, how much money to lend, where to get the money from (taxpayers), etc. When a politician selects which businesses to close, it’s safe to assume at least some (lots?) political bias crept into the decision process, so the terminated dealer honchos have a reason to be suspicious and angry.

  • avatar
    FreedMike

    jacad :
    September 30th, 2009 at 4:24 pm

    There are too many of a lot of different businesses in many fields. The weak ones go broke. It is unprecedented that our Government sanctions a plan where thousands of profitable businesses with each having millions of dollars invested are arbitrarily chosen to close with no remuneration. It is a fact that most of the closed dealers were profitable.

    OK, so what’s your solution?

    By the way, the Chrysler store in my town made perfect sense for shutdown. At the time of shutdown, they had 2006 model cars on the lot, plus a smattering of ’07s and ’08s. I understand the product was tough to sell, but any dealer that can’t figure out how to get rid of a three-year-old car (c’mon, guys – ever heard of Ebay Motors?) wasn’t one worth keeping.

    I shopped them once early this year, looking at a 300, and got into a conversation with the sales manager. I observed that the only 300 they had on the lot with the hemi was a 2007. He told me that if they depended on new car sales, they’d be gone tomorrow, but they turned a profit because of used car sales.

    THAT, and service/parts, is how most of these places stayed in business.

  • avatar
    FreedMike

    YotaCarFan :
    September 30th, 2009 at 7:45 pm

    When a politician selects which businesses to close, it’s safe to assume at least some (lots?) political bias crept into the decision process, so the terminated dealer honchos have a reason to be suspicious and angry.

    No, politicians didn’t decide which stores to close – the companies did. I’m sure there are cases of political bias, but I have a feeling the politics are between the automaker and the dealer, not between the automaker and Washington.

    In Denver, there’s a dealership chain that lost one Chrysler and one Chevy store. The owner of the company is Hispanic, and he’s a Democratic contributor to boot. Meanwhile, the nearest Chrysler and GM stores are both owned by well known GOP boosters. I don’t see any political favoritism there. The fact is that the nearby Chrysler and Chevy stores that stayed in business are far larger and higher volume than the ones who got shut down.

  • avatar
    Accords

    Christ…

    Man… I know and have heard thousands of horrible horror stories about how bad Chrysler dealerships are.

    Shit..
    Ive heard for years about how bad the interiors and how inferior the products are even against the lowliest of Honda’s and Toyota’s..

    Ive also known..
    For the longest time.. that there are FAR too many Chrysler shops to support the shitty market share they have.. in addition to the shitty sales lineup they have.

    In addition..
    They have been trying to cut down vehicles so now to have overlap being sold through 1 company..

    And I know all about the conferences they have.. where they get told.. they have to wind down SOME dealerships.. and they all say, “Fine with me.. as long as its not me.”

    But shit..
    I spent the past hr going through the dealerships listed on youtube.. and many of the points that Chrysler stresses, Have to have a Chrysler / Dodge / Jeep shop, have to be top in sales and customer satisfaction, have to accept the shit along with the good stuff.. = 10 unwanted Commanders for 2 or 3 Hemi Charger Daytonas..

    But these people.. (god I cant believe I’m saying this) HAVE done everything that’s been asked.. and then they still go through and take the dealership away.

    That’s just wrong.. 1000 times.. WRONG.

    Worst part.. is giving the shop to the nearby Chrysler / Dodge / Jeep competitor.

    I can only hope.. something fierce happens to Chrysler’s management (whomever is still accountable) left.

  • avatar
    John Horner

    Daewoo came to the US promising a different kind of distribution system. College kids were going to sell cars to their friends or something like that.

    Saturn set up a fixed price and regionally rational dealer network, but failed for lack of a coherent product offering.

    Alfred Sloan was not an idiot when he set out the parameters of the franchised dealer network we still have today. Read his book sometime. He talks about the different distribution models which were considered and why the locally owned franchise model was settled on. The big thing which has changed since then is that more and more of the dealers are owned by massive national companies. The latest round of dealer culls pushed that trend even further as most of the culled dealers were either locally or regionally owned.

    Ford, by the way, is still by far the healthiest of the US based auto makers and has not participated in a wholesale dealer slaughter. Ford is slowly whittling its dealer network down, but isn’t doing it with a meat axe. I believe this is one of the reasons Ford is increasing its market share at the expense of GM and Chrysler.

  • avatar
    sgirl5

    It makes sense to me that once you lose a huge market share that you must downsize instead of operating at a loss year after year. Why you think GM stock went down drastically and eventually both GM/Chrysler declared bankruptcy even after billions were given to them by unwilling taxpayers? It is was because of insolvency and negative revenue for years.

    I’m with ajla on this one. You want me and my friends to support you, you need to pay up. This isn’t a charity. It is as the dealers said all along, this is business! Unwilling taxpayers should not be forced to support failing companies. I see in the end the taxpayers will lose around 90 to 120 billion of their hard-earned money on car companies that trade the debt with useless assets.

  • avatar
    ZekeToronto

    As a former franchised dealer (of four European and Asian manufacturers) who grew up in family-owned domestic dealerships prior to that, I’ve given a lot of thought to how new vehicle distribution could be overhauled. I’ve also examined many alternate systems in a variety of other countries. And I came to the same conclusion that John Horner and Alfred Sloan did. You can consider it a necessary evil if you wish, but there is simply no better system than having franchised new car dealers.

    Without even getting into the whole after-sales service issue, right at the start of the relationship someone’s got to handle local marketing and prep the cars … but even more importantly, someone’s got to buy the trade-ins … with their own money. As many manufacturers who’ve attempted to distribute their own products (i.e. bypassing franchised dealers) have found out to their chagrin, it’s difficult–if not impossible–to get a fairly low-level employee of a multinational company to buy trade-ins as prudently as a guy who’s doing it with his own dough. Keep in mind that anyone can low-ball (and walk customers) and anyone can buy sales (by overvaluing trades) and both practices will put you out of business very quickly. Even if a manufacturer-owned store does manage find someone with the requisite skills, chances are he’ll be off before long running his own used car lot, making more money than they can afford to pay him. And this is just one of the problems with corporate-controlled distribution.

    For years I did think it would be possible to eventually do away with the franchised dealer system. And lord knows a lot of car companies would love to keep that last 1-2% of the transaction value for themselves. But now that I’ve no longer got a horse in the race, the logic of the present system is even more clear to me.

    I also agree with John about Ford. Back in my hometown market, where there were once 5 Ford stores, there is now one (and its viable). But Ford accomplished that over about a decade, with minimal grief to the ex-dealers and their customers. Smart.

  • avatar
    escapenguin

    See a lot of poo-pooing and not putting anyone in the same position.

    What would you do in his position? Seriously. I’m really curious.

    This site has me torn more than any other.

  • avatar
    jacad

    GM, by their own account, must maintain a 15-18% market share to break even in the current market. The only customer GM has is dealers since in all fifty states it is illegal to sell direct to the public. GM has never been able to support with real numbers that dealers cost them anything but rather produce revenues in car sales and parts sales. They have now eliminated 50% of their brands and 40% of their dealer representation.

    Unless you subscribe to the less is more theory of mass marketing, all of this is counter intuitive and somewhat backward. While shedding four brands certainly can result in huge monetary savings and better concentration on the remaining brands, firing 40% of your customers defies basic logic. In case you were wondering how the largest producer of cars in the world can possibly go broke, study this scenario for awhile. GM logical management at its finest!

  • avatar
    Power6

    @jacad you bring up some great points, and I have to agree that this process seems to have been done arbitrarily which is the tragedy, although I can’t really think of any other options that would have worked better.

    Wouldn’t starving the dealers until the strong ones survived resulted in just as much uproar and claims of unfairness? I don’t know too much about the dealer biz, but I do understand what “channel stuffing” is, and I know that part of the wonder of badge engineering for decades now has been done to appease dealers screaming for a product in every niche for their brand. I also know that the required investments for ongoing business with these franchises often requires great expense for renovations and beautification of a dealership.

    How fair would it have been for GM to come down and tell the dealers of the remaining brands they will not be getting a full line for their brand, they will have a hard time getting hot products, and by the market share, they likely will not survive. GM would have to have a crystal ball to tell dealers to invest in anything new when they don’t know if they are going to make it or not. The complaints would have been just as loud, and probably a much stickier situation, because all of the dealers would have had franchise agreements to cry about, rather than a portion of dealers not getting renewed.

    You are mistaken to say that GM will lose “customers” when the dealerships go away. If the Dunkin’ Donuts’ down the street closes, I will go to the other one to get the same coffee, unless maybe that franchisee was a buddy of mine who DD treated unfairly.

    Maybe that is the lesson here, GM has too long been building cars for dealers, and forgetting who the customer really is. Case in point, look who got their Camaros before the pre-order customers did…the dealers.

  • avatar
    porschespeed

    The only customer GM has is dealers since in all fifty states it is illegal to sell direct to the public. GM has never been able to support with real numbers that dealers cost them anything but rather produce revenues in car sales and parts sales. They have now eliminated 50% of their brands and 40% of their dealer representation.

    You’ve already admitted that the dealer system is a matter of law. You do realize who wrote those laws? Dealers and their lobbyists.

    If a consumer wishes to purchase a product that is only available at, say Best Buy, then Best Buy captures that sale. Doesn’t matter if there is one Best Buy or ten. So, if you can serve your consumer with 2 outlets instead of 10, you become more efficient. More efficient for the seller and more eficient for the producer. Sony can much more efficiently/cheaply serve 2 retail outlets than 10.

    If you need service, you go to a factory service center. Warranty work, factory service center. Sure they can be franchised outlets. Put ’em against a factory operated unit in the same market, see who wins.

    Parts? Kidding right? There are already national auto parts chains. Not really difficult to distribute product in factory boxes right down that line.

    Just like business is supposed to be done.

    As to Sloan, those who support his theories apparently miss that his principles are the ones that have led GM to where it is today.

  • avatar
    jacad

    “Factory service center”. Now there is the pure definition of oxymoron!

  • avatar
    porschespeed

    “Factory service center”. Now there is the pure definition of oxymoron!

    Vis-a-vis “dealer service”? Perhaps the same side of different coins.

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