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Government and business

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    Posted: 04 December 2009 at 12:15am
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The short version is GM and Chrysler are considering reinstating dealers they quit doing business with to save money because if they don't reinstate them on their own congress will probably make them do so.

This is the reason that government needs to stay the heck out of business.  Now that they have money in the car companies they are treating them like a government jobs program as opposed to a business.  Neither company will ever be viable without government support if they are forced to take on additional expenses/networks that they don't need and previously shed in order to improve their business model. 

While the dealerships may have some valid concerns, the big picture is that the dealerships won't have much to sell if the company they get their cars from goes under.  If prices become bloated because the government forces the companies to maintain what they consider to be an inefficient business model, the dealerships will have cars that are not competitively priced.  If the government decides to support the car manufacturers that they have a stake in with tariffs/taxes, we're all going to be paying more no matter what vehicle we choose.

Everyone who thinks the government can run anything efficiently needs to think about this.


Edited by Mack - 04 December 2009 at 12:29am
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Post Options Post Options   Thanks (0) Thanks(0)   Quote __sneaky__ Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 12:17am
/facepalm.
 
I hate you sometimes government.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote ammolord Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 12:20am
Originally posted by __sneaky__ __sneaky__ wrote:

/facepalm.
 
I hate you sometimes government.
 
Definatly this.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Reb Cpl Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 5:12am
Originally posted by Mack Mack wrote:

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Everyone who thinks the government can run anything efficiently needs to think about this.


Nah, they've got the health care thing in the bag.


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Post Options Post Options   Thanks (0) Thanks(0)   Quote oldpbnoob Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 7:50am

I remember seeing an article/segment on this a few months ago. I will have to admit that it seemed rather arbitrary sometimes as to how they chose who closed and who didn't. In the peice there were two GM dealerships across the street from one another, one was family owned and had been there for 60 years or something and the other had just been purchased by some huge auto group.  They had pretty similiar lines, and the decision was made to take away the franchises from the family owned operations and give them to the conglomerate owned competitor across the street. Didn't seem very fair. According to the owner of the family run business, they were profitable and have no issues other than just slow economy hiccups. I think if they are going to force closures, it seems like there should be more openess about the criteria, which partially sounds like what GM is trying to do.

I would kind of like to see the showdown though between Obama and the Senate on this.
 
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote FreeEnterprise Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 7:54am
the article glosses over the travesty of what actually happened.
 
Here I'll give an example of two dealerships near me. I was considering buying a Jeep. There are two Dodge/Jeep dealerships in my immediate area, one in Oxford, and one in Hamilton. The Oxford one is closest.
 
The "closure" plan has been very suspect, they wouldn't release the data on how they chose what dealers to close, and many family businesses that were multiple generations old died on this decision.
 
But, there is lots of evidence that the dealers that stayed open were ones that supported Obama for President...
 
Here read it for yourself...
 
 
Anyway, the two dealers near me lost their dealerships, they had to sell the cars at a loss before they lost their rebates, as once the deadline passed, they couldn't sell them as "new" anymore.
 
One became a used car lot, and laid off 3/4 of the employees (oxford) and the other just closed for good, and eliminated every job... (the one in Hamilton).
 
 
The closest jeep dealership is now 34 miles from my house... When the oxford one was 5 miles, and the hamilton was 15 miles.
 
 
But, the government knows better...
 
 
Personally, I wouldn't own a GM, Dodge, Jeep, or Chrysler ever again...
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote slackerr26 Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 11:48am
Originally posted by FreeEnterprise FreeEnterprise wrote:

the article glosses over the travesty of what actually happened.
 
Here I'll give an example of two dealerships near me. I was considering buying a Jeep. There are two Dodge/Jeep dealerships in my immediate area, one in Oxford, and one in Hamilton. The Oxford one is closest.
 
The "closure" plan has been very suspect, they wouldn't release the data on how they chose what dealers to close, and many family businesses that were multiple generations old died on this decision.
 
But, there is lots of evidence that the dealers that stayed open were ones that supported Obama for President...
 
Here read it for yourself...
 
 
Anyway, the two dealers near me lost their dealerships, they had to sell the cars at a loss before they lost their rebates, as once the deadline passed, they couldn't sell them as "new" anymore.
 
One became a used car lot, and laid off 3/4 of the employees (oxford) and the other just closed for good, and eliminated every job... (the one in Hamilton).
 
 
The closest jeep dealership is now 34 miles from my house... When the oxford one was 5 miles, and the hamilton was 15 miles.
 
 
But, the government knows better...
 
 
Personally, I wouldn't own a GM, Dodge, Jeep, or Chrysler ever again...
 
 
hmm?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote agentwhale007 Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 11:52am
I didn't know car dealerships took political stances.


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Post Options Post Options   Thanks (0) Thanks(0)   Quote FreeEnterprise Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 12:09pm
Slacker you are a one trick pony. And it has gone round and round and round and round and round already.
 
Give me the $5 you owe me and try, TRY to post something that actually resembles YOUR opinion instead of spamming after every one of my posts...
 
Here is REUTERS take on the story... Does that pass your "test" of good sources?
 
 
 
As with any story... Its best to see what actually happened. I would guess most dealers are republican...
 
Michelle Malkin had a good take on this, and below you can see all the articles from all over, with tons of opinions.
 
 
 
 
 
It is far from over, as these businesses were TAKEN by the government, with zero restitution. Which is completely illegal. But, it happened, that is why it is still being looked at after all these months.


Edited by FreeEnterprise - 04 December 2009 at 12:14pm
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Post Options Post Options   Thanks (0) Thanks(0)   Quote slackerr26 Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 2:39pm
Originally posted by FreeEnterprise FreeEnterprise wrote:

Cry moar...
 
this is "thoughts and OPINIONS"...
 


Edited by slackerr26 - 04 December 2009 at 2:42pm
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Post Options Post Options   Thanks (0) Thanks(0)   Quote SSOK Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 2:45pm
Im suprised I havent read "zomgz japan is teh awesomez toyota is teh reel amerikans!" yet.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote ParielIsBack Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 3:01pm
I have a vague recollection that this is the same man who once criticized people for buying foreign cars.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote ThatGuitarGuy Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 3:42pm
Mack, it sounds to me, and please correct me if I"m wrong, that you think that GM is losing money by keeping open some of the dealerships that it was considering closing?

Let's look at how GM (and I'm assuming Chrysler too, but I only have GM experience) operates their dealership network.

If I owned a dealership, for me to buy a car from GM, I would buy the vehicle from GM before they ship it from the factory (They get paid long before I sell the car).  I am also renting the signs and images on my dealership, (they get paid yearly) and the tools that they require me to have to work on some of their vehicles (They get paid pretty much anytime I need a new tool for a new vehicle of theirs).  If my dealership isn't selling cars, it makes no difference to them, they're still getting my dealership licensing fees, and my rental fees, and many other fees, it's me, the small dealership that isn't selling cars that's suffering.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote jmac3 Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 3:56pm
Lol@saying car dealerships were picked to close for political stances...
Que pasa?


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Post Options Post Options   Thanks (0) Thanks(0)   Quote Mack Quote  Post ReplyReply Direct Link To This Post Posted: 04 December 2009 at 5:19pm
Originally posted by ThatGuitarGuy ThatGuitarGuy wrote:

Mack, it sounds to me, and please correct me if I"m wrong, that you think that GM is losing money by keeping open some of the dealerships that it was considering closing?

Let's look at how GM (and I'm assuming Chrysler too, but I only have GM experience) operates their dealership network.

If I owned a dealership, for me to buy a car from GM, I would buy the vehicle from GM before they ship it from the factory (They get paid long before I sell the car).  I am also renting the signs and images on my dealership, (they get paid yearly) and the tools that they require me to have to work on some of their vehicles (They get paid pretty much anytime I need a new tool for a new vehicle of theirs).  If my dealership isn't selling cars, it makes no difference to them, they're still getting my dealership licensing fees, and my rental fees, and many other fees, it's me, the small dealership that isn't selling cars that's suffering.


A little more explanation is in order.  While they do not directly support the dealerships, a standard duty of the franchisee (there are several but I'm using this as an example) is to provide marketing support.  Specifically, consider the ads that you see on TV; some are for such-and-such dealer and others are for a specific brand of vehicle in general.  The one's for specific dealers are done by the specific dealers while the one's for a brand in general are purchased by the manufacturer.  In many cases the level of advertising is, by contract, directly related to the amount of franchisees being supported.  (It's actually more complicated than that, but this works for our purposes.)  Additionally, oversaturating an area with franchises tends to be bad for the franchisees because of the increased competition (and such oversaturation is actually forbidden by certain contracts.*)  It can also be bad for the manufacturer because of increases in overhead associated with supporting such a dealer network.  (A bloated network is very counterproductive to running a lean business when it comes to stocking repair parts as it tends to significantly increase the size of safety inventory.) 

There are probably issues I haven't covered, but the big thing to consider is this:  When the government (wisely, in my opinion) directed the downsizing of dealership networks there was a lot of whining.  It came from dealers, those who fear big government and even some in government who saw their constituent base taking a hit; very little of it came from the manufacturers.  They knew a smart business move when they saw it.



*This was a standard feature of BK contracts and was the basis for a lawsuit where I live.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote ThatGuitarGuy Quote  Post ReplyReply Direct Link To This Post Posted: 05 December 2009 at 1:18am
Mack, but there again, and I'm just looking at your repair parts example here, all GM has to do is get the parts from the manufacturer.   The dealership is buying the parts before they reach the dealership inventory.  It's up to each individual dealership to keep stock on hand and how much, and if you look at all the parts that GM contracts out, they're probably losing very little money there, as all they're doing is putting in an order with one of their suppliers, and sending them directly to the consumer/dealership.

(This last part I'm a little shady on, my father and I didn't get into too much of that, as he doesn't work in the parts department*, but generally know enough about the dealership he works at to know the day to day/month to month running of it)

*He's an Finance and Insurance manager at the local Chevrolet dealership, and has been there for more than 25 years.
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