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Old 05-09-2009, 02:13 PM   #1
AVANTI R5
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Default Dealers Plan to Test Strength of Franchise Laws

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Chrysler dealers are unhappy about Chrysler’s plan to eliminate dealers while in bankruptcy and are banding together to fight the closures. State dealer organizations and the NADA (National Automobile Dealers Association) have kicked off a strong PR and lobbying campaign to fight the closures.

Right behind the Chrysler dealers are the GM dealers who are nervous about GM’s announcement that the company has a goal of reducing dealer count at GM from 6,246 dealers to 3,605 dealers by 2010.

The NADA launched ads in select publications two days ago that stated, among other things, that, “Cutting dealers at this time would do absolutely nothing to make either GM or Chrysler more viable. So why is your automotive task force demanding drastic cuts in the number of dealers?”

According to NADA figures, the GM and Chrysler plans mean the elimination of more than 3,000 Chrysler and General Motors dealerships employing at least 150,000 people.
The NADA has also asked all their dealer members to lobby their elected officials against the dealership closings.

I will tell you right up front that I am an interested party as to how this all gets resolved. I am interested because I want changes in the dealer franchise laws and I am interested because I want to see how the federal bankruptcy court the Chrysler is in at this moment treats the state dealer franchise laws. My guess is that it will void Chrysler’s dealer agreements, and hold the company harmless against dealer suits brought under state law, but that is conjecture on my part.

Dealers, probably in class-action suits, will try to have state laws enforced against Chrysler, a defendant that is in federal bankruptcy court.

Scott Silverman, one of the attorneys at McCarter & English, a legal firm that specializes in dealer contract law, stated, “This is going to be the biggest week in the history of the U.S. auto industry as far as dealers are concerned”, in an article in the The Los Angeles Times earlier this week.
The outcome of this upcoming legal struggle is important, and I’ll tell you why.

GM is not in bankruptcy court yet, but if the bankruptcy court rebuffs Chrysler’s dealers, you can bet that will get GM’s attention. It is yet another compelling reason, on top of all the other reasons, for GM to file for bankruptcy protection.

The closing of Oldsmobile cost GM over a billion dollars USD just in settlement fees to dealers and the price tag for closing all of the dealers GM wants to close now would easily exceed that number. But, not if bankruptcy indemnifies GM against the dealer suits brought under state franchise law.

And if GM and Chrysler get new dealer agreements that are less onerous for them, the other manufacturers will also want the same.

It also may open the way for different types of retailers to sell new cars, retailers that perhaps are not stuck in the same retailing construct as dealers currently. This certainly would’nt happen right away, but perhaps further down the road.

In the past, dealer groups have been quite effective in having it their own way. Auto dealers in every state have, through campaign contributions and ceaseless lobbying of state politicians, made it impossible for anyone except a dealer to sell new cars.

In fact, in many states, it is a criminal act for any manufacturer to sell a new vehicle to anyone other than one of the state’s new-car dealers. And they have also been able to shape the legal language around just what constitutes a dealership and a new-car dealer, thereby ensuring that a “dealer” will look just like what a dealer looks like today.

Lastly, they have also been extremely successful in making it very difficult for manufacturers to terminate franchises and brands.
In effect, the dealers have their own monopoly on new-car sales, supported by state statute.

From my point of view, it is time for this retail system to be restructured in a way that will be beneficial to both the consumer and the manufacturer. As it stands now, the franchise new-car dealer system has obvious benefits for only one constituency – the dealer.

I’ve heard all the arguments for decades about why dealers need protection, why they require all these laws regarding their business, why the manufacturer owes them everything, etc. I am unmoved for the most part.

It’s not that I want dealers to go away, but rather, I want to expand the type of businesses that are eligible to sell new cars. I see these future suits as a potential door to that change. Against new competitors, the good dealers will survive, just as all good business owners survive when they are faced with new competition.

So, as dealers file suit against Chrysler and GM, it is going to be very interesting to see how the state courts, and then the federal courts, treat these suits. These legal machinations may have far-reaching implications for the retail auto business for years to come
http://www.autosavant.com/2009/05/08...ranchise-laws/
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Old 05-09-2009, 03:45 PM   #2
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The dealer is going the way of the dodo, and I hear nothing substantial about why they are a necessary part of the future.

Let people buy cars from the factory if they can pick them up from there. Sell cars at places like Costco and Wal-Mart (I'm serious) and then have garages that will carry out the manufacturer's warranty.
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Old 05-09-2009, 06:59 PM   #3
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Yes, I want to buy a car at Walmart
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Old 05-09-2009, 07:19 PM   #4
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I want to test-drive a car, then go online; pick the perfect option set; get a good no-haggle price and click buy - for the car to be delivered to my door in about 14 days or so.
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Old 05-09-2009, 08:16 PM   #5
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Then buy a Scion.
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Old 05-09-2009, 08:42 PM   #6
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Then buy a Scion.
No thanks, nothing I really like there
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Old 05-10-2009, 03:18 AM   #7
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Originally Posted by Eyeflyistheeye View Post
Sell cars at places like Costco and Wal-Mart (I'm serious) and then have garages that will carry out the manufacturer's warranty.
oh let me go walmart buy a gallon of milk and a car real quick

on the 29th day, hi there, i am here for a return, i got a receipt, i need a full refund, my car is acting funny after i did 100 back to back 1/4 mile runs and 200 donuts in a row


and did i tell u how much i trust the "techs" in walmart to change engine oil, not mentioning tranny problems, valve jobs ...

say hi to the future
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Old 05-10-2009, 07:45 AM   #8
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Originally Posted by sub9lulu View Post
and did i tell u how much i trust the "techs" in walmart to change engine oil, not mentioning tranny problems, valve jobs ...

say hi to the future
Reading helps, dude clearly said garages to do work on the car - not walmart monkeys
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Old 05-10-2009, 09:01 AM   #9
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agreed. I hope the current dealership "setup" dies off and something more practical, reasonable and fair takes its place.

I would be down to buy a car at costco or online.
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Old 05-10-2009, 02:45 PM   #10
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Quote:
Originally Posted by Eyeflyistheeye View Post
Let people buy cars from the factory if they can pick them up from there. Sell cars at places like Costco and Wal-Mart (I'm serious) and then have garages that will carry out the manufacturer's warranty.
They should only have demo models though, and not actually sell them out of a physical location. People should order them, off the Internet, then the company builds them. Dell is famous for this model of cash flow & production methodologies. More options could be offered then also, I'd assume...
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Old 05-10-2009, 04:29 PM   #11
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i just don`t like the fact that if i know what car i want to buy and i did my research i have to go and pay for the salesman`s commission. there should be a set price for a car, no bargaining, no BS, if you want help choosing a car, they can have separate businesses where you go and pay for advice if you want it.
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Old 05-10-2009, 06:41 PM   #12
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Quote:
Originally Posted by rypt View Post
I want to test-drive a car, then go online; pick the perfect option set; get a good no-haggle price and click buy - for the car to be delivered to my door in about 14 days or so.
Um, pay sticker? Seriously, if everyone paid sticker and no one haggled there would be no shenanigans. Problem solved.

As a former salesman and manager it'd make the salesperson's job much more valuable... they'd actaully have to sell the features-advantages-benefits of car, not the price. The salesperson is paid on gross profit, rather than try to be shady the goal would be to bump the customer into a higher trim level rather than try to be sneaky sneaky. Its a win win. [/flamesuit]
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Old 05-10-2009, 09:40 PM   #13
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Originally Posted by snowcat View Post
They should only have demo models though, and not actually sell them out of a physical location. People should order them, off the Internet, then the company builds them. Dell is famous for this model of cash flow & production methodologies. More options could be offered then also, I'd assume...
That's how it works in Europe for example. For a mainstream model you usually get like 10 different engines, 20 different colors, 10 different wheels and 30+ individual options.

Dealerships in the US are focussed on impulse buyers and quick sales, so the whole instant gratification thing is important.
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Old 05-11-2009, 10:59 AM   #14
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Dealerships should be owned by the manufacturer, just like a Macy's or a Walmart. They can open and close them at will. You also get the price they would have sold to a dealer plus costs needed to maintain the "auto showroom/repair center". You get no haggle "good" pricing and a pleasant buying experience.

Buying a car shouldn't be a competition on trying not to get stiffed. The manufacturer just wants to move as many units as they can, a dealer wants to soak you for as much as they can on each unit.
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Old 05-11-2009, 11:50 AM   #15
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Quote:
Originally Posted by Eyeflyistheeye View Post
The dealer is going the way of the dodo, and I hear nothing substantial about why they are a necessary part of the future.
Let people buy cars from the factory if they can pick them up from there. Sell cars at places like Costco and Wal-Mart (I'm serious) and then have garages that will carry out the manufacturer's warranty.
+1

Quote:
Originally Posted by rypt View Post
I want to test-drive a car, then go online; pick the perfect option set; get a good no-haggle price and click buy - for the car to be delivered to my door in about 14 days or so.
+1

Quote:
Originally Posted by sub9lulu View Post
oh let me go walmart buy a gallon of milk and a car real quick

on the 29th day, hi there, i am here for a return, i got a receipt, i need a full refund, my car is acting funny after i did 100 back to back 1/4 mile runs and 200 donuts in a row
and the problem there........?


Quote:
Originally Posted by fastwrx25 View Post
agreed. I hope the current dealership "setup" dies off and something more practical, reasonable and fair takes its place.

I would be down to buy a car at costco or online.
Smart.

Quote:
Originally Posted by design1stcode2nd View Post
Dealerships should be owned by the manufacturer, just like a Macy's or a Walmart. They can open and close them at will. You also get the price they would have sold to a dealer plus costs needed to maintain the "auto showroom/repair center". You get no haggle "good" pricing and a pleasant buying experience.

Buying a car shouldn't be a competition on trying not to get stiffed. The manufacturer just wants to move as many units as they can, a dealer wants to soak you for as much as they can on each unit.
An outdated process thats should be ended. +1 You guys are on point on this one.
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Old 05-12-2009, 12:47 AM   #16
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I'm tellin ya, sell your trade yourself and pay sticker... problem solved. No haggle means the consuer needs to not haggle. Car dealers "tricks" aren't that sophisticated and everything is spelled out on the paperwork, if you think you're getting screwed, don't sign anything.
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Old 05-13-2009, 04:22 PM   #17
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The day that I can walk into an American car dealership and order exactly the car that I want, color, options, etc., I will sympathize with the dealer "rights".

But as of today, dealers provide absolutely 0 service to me - they just have enormous parking lots full of cars that I don't want at prices I don't want to pay. If I get lucky I can find the oddball optioned out to what I actually like and then spend hours trying to get them down to what everyone else pays. What happened to the days when you can walk into a dealership and ORDER a car?? If I'm paying $20k, $30k, $40 and more for a car it needs to be exactly the way I want it, and yet every car dealer I've ever encountered pretty much turns away as soon as I mention the word "order".

So there will be no stimulating of the auto industry for me - I am hanging on to my money. I'll even pass on the Cash for Clunkers deal. If they want to see me back into the showroom big things have to change, and it needs to start at the dealers!
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