UNDERNEWS

Undernews is the online report of the Progressive Review, edited by Sam Smith, who has covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review has been on the web since 1995. See main page for full contents

May 25, 2009

WHY ARE CHRYSLER & GM DESTROYING THEIR CUSTOMERS, THE DEALERS?

George Spaulding, Post & Courier - As Chrysler and General Motors are being forced to cut costs by restructuring, a question: What are cost savings in Chrysler firing 789 dealers and GM 1,100?

Retail dealers are the only customers carmakers have. . . When it is now popular to "downsize," nearly 2,000 retailers are completely shut out in the key decisions affecting their business.

Another thought. I have been lead to believe stimulus packages involve "jobs." Chrysler will be axing 40,000 jobs; GM, 63,000 jobs. All of a sudden, "jobs" are unimportant.

What is behind this dealer-cutting, job-cutting strategy? An Associated Press report said, "While GM doesn't own the dealers, the company says its network is too big, causing dealers to compete with each other and giving shoppers too much leverage to talk down prices and hurt future sales.". . .

According to that AP dispatch, the key purpose in all of this is so that you, the buyer, will lose your negotiating advantage. By forcing potential buyers to travel more, the opportunity to "shop around" is reduced and purchasers will pay more. It's clear: thousands of customers are being forced to change their buying habits and, once again, the customer pays. . .

Why not allow the dealers to shake out representation through consolidations or buyouts? My impression is that a few large GM dealers have convinced the Government Motors Board to get rid of competing small dealers so that the big city guys can be more profitable.

Current dealers were appointed to handle a 16 to 17 million-car market. Now it is 10 million. Are the carmakers resigned to a 10 million market?

Several years ago Ford and GM tried to buy out and run auto dealerships, with disastrous results. My fear now is a similar government type of intervention in the auto industry . . .
posted by TPR | 10:31 AM | 1 Comments

1 Comments:

Anonymous Anonymous said...

It's clear that the Administration is talking one game, but playing a different one.

May 26, 2009 3:43 PM  

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