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One of the biggest financial commitments that these companies have is providing health care to past and present employees. Anyone asking why a UHC is needed in America should watch American Companies going bust because of the old antiquated and extremely expensive Health structure in America. This is the tip of the iceberg.
What the hell does this have to do with John Maynard Keynes? Every single post you make is wost then the last and it has become abundantly clear that you haven't a clue what you are talking about when it comes to economics.
I read somewhere that the avg. dealership employees 46 people. 46 x 3400 dealers = 156,400 jobs lost at dealerships during the restructure of GM & ChryCo. Chrysler & GM combined have approximately 180K employees on the payroll. So we paid something like $40B tax dollar to save 180K jobs while flushing 156k jobs down the toilet.
What did we get for our money again?
You forgot the tens of billions flushed down the toilet in lost investors equity in GM alone since obama has been elected.
And how is the auto industry supposed to make a comeback ? Internet sales perhaps and you take a "virtual" drive in your new car ?
The problem is there are a lot more dealerships for the domestics then the foreign makers due to most of these dealerships being decades old and being licensed when the domestics had 90% of the domestic sales to themselves. The automakers are contractually obligated to provide each with training, financing of stock, grants to support advertising, etc... This creates a lot of additional overhead for the automakers as well as making competition cut throat between dealers selling the same line of cars. This means most of the domestics' dealerships tend to do much lower volumes of business and have a hard time competing against the much less numerous but higher volume dealerships the foreign makers have.
Call it the Walmart effect or just economies of scale but it means there is going to be consolidation and rationalization of the dealership networks. That way the surviving retail operations are more competitive and the automaker has less of a burden supporting that network. We're going to see fewer but much larger dealerships just like over the last 40 years the mom and pop stores have given away to the big box stores.
The problem is there are a lot more dealerships for the domestics then the foreign makers due to most of these dealerships being decades old and being licensed when the domestics had 90% of the domestic sales to themselves. The automakers are contractually obligated to provide each with training, financing of stock, grants to support advertising, etc...
I used to work at a large dealership, was never provided "training" but you bring up some interesting costs that I havent thought about. The question is, without dealerships around to help cover some of the costs like advertising, arent they pretty much cutting their throats and increasing advertising costs? (while Chrysler cuts advertising cost on top of this).
The financing of the cars is an accounts receivable from the dealers to the car companies, not an expense. Yes, they have to front the money, and then send the cars to the dealerships, but the dealerships essentially "rent" the cars until they are sold. I'm not sure this is not going to do anything but be harmful. Cutting out your sales channel would be like Coke pulling their inventory from stadiums, fast food joints, and the grocery stores and trying to sell direct..
What this appears to be is car dealerships cutting the fat, lowering the value, turning it over to the unions, who can then build the businesses back up. Payback for support at the taxpayers and investors expense.
I'll stick with my trusty Volvos, thank you. At 282K, the 82 is just getting broke in. And the 73 is being overhauled as I type. My 81 Chevy pickup, well, it's gold in my book.
Haha yeah. I'll stick with my Land ROver with 183,000 miles on it as long as possible.
"Too bad dealers could not have just stocked sample cars and only took delivery of cars they had already sold. That would have cut the dealers and manufacturers overhead considerably because it would change from a build to stock to a build on demand system. That would minimize inventory stocking and financial costs. It might have let really small "underperforming" (Lord, I really hate corporate crap speak) small town dealers maintain their franchise and make a living selling used cars while providing a useful service to the local community. Cutting dealers now is really destroying Chrysler’s future because these dealers will soon be cutting a deal with Honda et. al.
The thing that killed the auto industry was counting on making money off the loans while letting quality craftsmanship slip into the clunker category while charging luxury prices. The industry has been charging too much for too many years. I have heard that Chevy can build a ‘Vette for 10 grand and charge 80. I wonder how much it costs to build a Chevette." GregW
As I said above, why does a dealer have to stock more than a sample of the cars produced. Modern assembly line can produce on demand so why produce to storage? Why not have buyers come in and select a car, put down some money and wait a week for delivery? It seems to me that would cut a lot of waste out of the system.
FWIW - We have not bought a new car from a name brand dealer since 1974 when we bought a SAAB 99. I have not had my cars worked on by a dealer since then. I have bought used cars from individuals and had them maintained and repaired at independent shops at lower costs. As much as I would like to drive a new car, I will not buy what I cannot afford to own and maintain.
added for CPF - My '92 Buick Roadmaster Wagon is going on 190K and the '96 Subaru Outback is nearly 166,000. With new tires on the Buick I would take either on a cross country trip without expecting any problems.
Last edited by GregW; 05-15-2009 at 06:43 AM..
Reason: added line of text
"Too bad dealers could not have just stocked sample cars and only took delivery of cars they had already sold. That would have cut the dealers and manufacturers overhead considerably because it would change from a build to stock to a build on demand system. That would minimize inventory stocking and financial costs. It might have let really small "underperforming" (Lord, I really hate corporate crap speak) small town dealers maintain their franchise and make a living selling used cars while providing a useful service to the local community. Cutting dealers now is really destroying Chrysler’s future because these dealers will soon be cutting a deal with Honda et. al.
The thing that killed the auto industry was counting on making money off the loans while letting quality craftsmanship slip into the clunker category while charging luxury prices. The industry has been charging too much for too many years. I have heard that Chevy can build a ‘Vette for 10 grand and charge 80. I wonder how much it costs to build a Chevette." GregW
As I said above, why does a dealer have to stock more than a sample of the cars produced. Modern assembly line can produce on demand so why produce to storage? Why not have buyers come in and select a car, put down some money and wait a week for delivery? It seems to me that would cut a lot of waste out of the system.
FWIW - We have not bought a new car from a name brand dealer since 1974 when we bought a SAAB 99. I have not had my cars worked on by a dealer since then. I have bought used cars from individuals and had them maintained and repaired at independent shops at lower costs. As much as I would like to drive a new car, I will not buy what I cannot afford to own and maintain.
Americans are very much a now industry. If I'm paying $30,000 for a car, I want it now. I dont want to wait 30 days for it..
I agree with you in idealogy though, when I used to sell cars, the dealership I worked with got in an argument with me because the customer wanted a "color" that they didnt have. Dealerships argument, customer doesnt know what color they want, color doesnt matter.. and we should just ignore the request. This was some time ago, but I'm sure things havent changed.
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