sates protect dealers

[Michael White]

There seems to be a growing trend on states changing dealership to manufacturer relationships to protect dealers from getting their franchise pulled. Now Nevada is on the list. Do dealers really view this problem as a major concern? Also what is the feelings about this trend growing to states like California? It appears the state legislatures that have passed the new bills have voted in favor of the dealerships rather substantually.

In our market area, Ford is trying to buy all the major dealers. I believe they are concerned about about public held companies buying dealers up like crazy. They have already successfully bought out markets in many locations. Gm is also buying franchises. Saturn recently bought out a large group to take control in our area.It is interesting to think what our business will be like in 5-10 years.It is also interesting to see/here what Eastern based public companies want to do with new acquired dealers in high priced areas with shortages of trained people such as techs.
I am interested in hearing what others feel
Mike White

[This message has been edited by Michael White (edited 07-30-99).]

[jrcal]

This is indeed a very interesting subject as it applies to the future of our business. If enough states allow dealers warranty reimbursement at retail rates, the manufacturers will be contributing to changes that have been a long time coming by paying fair rates for the warranty repairs. This will help one of the biggest problems (from the techs side of things) with warranty repairs: fair time allowances for the repair. Fair time will appeal to more techs entering the business and help the tech availability problems we have now. Dealers will be in a better position to offer better pay and benefits to line techs instead of losing these highly skilled people to other industries with more to offer in pay, benefits and social status. As a former tech myself, I have been waiting for these changes for a long time. Technicians in Europe and other countries are highly respected for their skills.

What do you think the impact of Division owned dealerships will have on these changes?


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JC

[Michael White]

What happens to he independant dealer who is surrounded by mega dealers as they try to squish the little guy? What happens when the mega dealers gets so big they begin to dictate to the manufacturers what to do. I think all the manufacturers are very concerned they will loose control over the mega public dealers.

What happens when a manufacturer owns a dealership and begins to "wholesale" cars for retailt to put the independant dealer out of business. Walmart has done this kind of thing successfully.

When some companies become so large and overpowering the once useful and successful independant expires. Look at the radical reduction in the small family hardware stores when the Home Depots of the world take over. Granted there is financial benifit to customer many times. However, finding someone at Home Depot who knows what they are doing is unique.

The Public held back east dealer groups do not have a grasp on areas that are considered high expense. Recently one of the Public held groups put the word out that cashiers should not be paid over $XXX. that might be find in Arkansa or Mississippi, but in San Francisco that person will starve. Loosing the "local personal touch" is easy to do when the home office is 2000 miles away and accountants begin to look only at dollars and cents. Do not get me wrong, it is critical to any organization to operate as lean and efficient as you can. But work force conditions and quality poeple do make a difference and this should be considered when establishing pay structures.

How about a scenerio where a public held organization purchases a moderately successful dealership that is unionized and has hourly techs. They decide they want the techs to be flat rate. This might get them a half percent increase in gross profit. A Large group can afford the $300K to $1,000,000 in lost revenue and expenses and 1 to 3 years of rebuilding the dealership. A independant person would never consider this task becasue he/she has way too much invested. A Billion dollar corporation would think nothing of this, and could build a very convincing case to their stock holders as to th long term importance of the changes, even though there will be short term disasters.

There are hundreds of scenerios to think about. Some really good, and others quite scary. One thing is for sure; we will all have to operate leaner and and more efficient as times go on to stay healthy and always be looking for a better way.Employee satisfaction
is equally as important as customer satisfaction. The next 5 to 6 years should be a wild ride.
Mike White

[sallen1]

Good topic!

Our great state of California has a bunch of laws that protect the dealer-mfg relationship however, the mfg has succesfully challenged various provisions on a case-by-case basis. Here's a couple of examples: Pontiac wanted to put a new Pontiac-Buick-GMC dealership 5 miles from where an existing Pontiac dual was located. The state has a 10 mile rule, but its the existing dealer's responsibility to show how the new franchise hurts competition. If you think about it, another store actually has competitive benefit to the public so the existing dealer will almost always lose the protest. In fact, there have only been a couple of succesful protests against the 10 mile rule.

And what about the San Fernando Valley project General Motors put together. While on the surface the deal looked like a factory store in violation of state law, the DMV says otherwise.

What's the point, here? Have you seen any succesful factory stores? We've got a factory Lincoln store across the street from us and they don't do much.

If the factory finds that additional franchise density is neccessary, then they should expect less-than-ethical dealing in that area. Happens all the time...

By the way, the dealer with the old Pontiac store gave it up (it's still dark) and the 'new' B-P-G store has changed hands a couple times and is now a 'factory' (Motor's Holding) store too. Figures...

scott

[sallen1]

xx

[This message has been edited by sallen1 (edited 07-30-99).]

[sallen1]

another duplicate entry, maybe it's time to upgrade my 386 machine !

[This message has been edited by sallen1 (edited 07-30-99).]

[Michael White]

Scott, your area is not the only factory run problem store. GM was in partners in a Pontiac Olds GMC store with a rather aggressive dealer that moved alot of sheet metal and had decent CSI. However, he was a non conformist and did not want to do it all GM's way. So GM bought him out. Now the store is in the toilet. They use it as a stepping grounds for minority dealers as I understand it. Poeple have told me they will put 2 minority potential dealers in the store at the same time and they all know they are short timers. There are constant struggles going on with very negative CSI and profitability concerns

Scotte, there seems to be some positive things coming down with the new deville and in a couple of years with a conversion to RWD, and the new 2 seater, could make some big differecnes with Cadillac, if they can make the cars a high quality vehilce that will retain its value as good as a Lexus, Mercedes or BMW. We'll have to keep our fingers crossed for a couple of years to see it they pull it off
Mike White