Monday, January 7, 2008

Be Careful What You Wish For

By Peter Brandow
Ward's Dealer Business

Be careful what you wish for. The domestics Big Three (General Motors, Chrysler and Ford) are hoping for new dealers, new plants, new workers and new vendors. They want to replace what they have with what their competition has. They're sure those guys would be better.

The Import Big Four (Toyota, Hyundai, Nissan and Honda) want to conquest all of what the domestics are giving up in an effort to grow to the next level. They predict those dealers and customers will become raving fans.

It just doesn't seem that simple to me. Conquested customers and dealers will not be a bunch of raving import fans; many have had all the loyalty and trust beaten out of them. They feel abandoned.

As importantly, the domestic holdouts are not going to be examples of survival of the fittest. Domestic survivors may just be desperate hangers on, very lean, and mean (angry at the least), but not necessarily fit. The domestic three are not becoming stronger through combat.

The domestics may not yet realize that the dealers they are shedding have the right coping skills for the opportunity they offer.

These are dealers who accept margin squeeze, and customers who want products for cost and service for free.

These dealers brim over with inventory that sells to the public at the same price dealers pay the manufacturer in the first place.

They're dealers who do not get depressed over the knowledge that that they need the next customer more than that customer wants their vehicles. They faithfully contribute to manufacturer advertising cooperatives after years of false promises and poor results.

Moreover, domestic dealers manage massive red ink and hold on with devotion.
Given the selfless support of such dealers, I am confused why the likes of Cerberus, excuse me, Chrysler, are so hell bent on dumping so many of them.

The Big Three see their declining dealer wherewithal as a good thing.

It seems to be their wish that weak dealers will give up and that wealthier import dealers will buy in. I get it that old franchises wallow in the self-pity of having old dealers and that they long to conquest new dealers rather than create new opportunity.

I don't understand why the next group would support them as well as the replaced dealers have.

The old dealers had a reason to hang on to the hope that their sacrifices would be rewarded in the future. Many of the new dealers are the living proof that there is no reason for trust. Domestic manufacturers should be careful what they wish for.
Looking past this domestic quagmire, I wonder what the triumphant import manufacturers think they are inheriting by conquesting the domestic cast offs?
Do the Big Four understand the consequence of replacing the Big Three? Without the domestics to kick around, our national attention will be undistracted from a riveted focus on those imports.

That spotlight will signal the end of the import's American honeymoon. Gone may be cherry picking for states that will give them tax relief; workers that will give them union relief; dealers that will give them new facilities; and customers that will pay more.

Hanging in the balance is whether the Import Big Four are ready to consent to what Americans want from home industries. Will they employ our huddled masses, give them healthcare and retirement, educate their children, provide for their homes and give cheerful Christmas bonuses?

As the domestics and imports pursue their wishes, will the newly downsized domestics become fit or simply learn that the dealers they abandoned were the ones they needed? Will the imports like the responsibilities of industry dominance or will they yearn for the autonomy they enjoyed before they crushed their competition?
And for American consumers, will their interests be better served with the Big Four or the Big Seven? Be careful what you wish for.

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

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