Stellantis dealers warn of brand degradation; company scolds them to keep dispute in house -Detroit Free Press

CKN said:
Won't happen Jeff. Too many State Legislators are in the Car Dealers Associations pockets in any given state. How many states can Tesla sell direct in? IDK-maybe you do.
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Current laws are a patchwork.

Only a small minority of states still completely bar direct-to-consumer automobile sales. I believe the official number is 10.

The number of states used to be far larger but many states have adapted laws to allow automakers who only offer EVs to sell directly to consumers or that only automakers established after a certain date may offer direct to consumer sales.

This allows legislators to stay in both the good graces of their constituents by allowing them to buy a Tesla and also remain in the good graces of their corporate donors by not threatening their established dealer franchises. Of course, this comes at the handicap of established automakers and, by extension, their vehicle owners/purchasers.
 
CKN said:
Won't happen Jeff. Too many State Legislators are in the Car Dealers Associations pockets in any given state. How many states can Tesla sell direct in? IDK-maybe you do.
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That plus how do you break the news to franchise owners? They're going to just disappear leaving businesses worth millions behind. I doubt it. Buy them out? At what price?
 
harbor said:
Whether you love or hate dealers, strong OEM/dealer relations are critical. While Stellantis struggles to understand this dynamic, Toyota, Mazda , KIA/Hyundai and others continue to scoop up market share.
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I disagree that the dealer model is required any more. At one time absolutely. Now, not so much. Its a dated model, before even a fax machine existed. Most other industries have gone away from a exclusive dealer model.

Having said that, I don't think Fiat/Chryslers current issues have anything to do with their dealer network. Fiat has nearly gone bankrupt on their own multiple times in their history. They were all but given Chrysler for free because no one else wanted them. Literally true - it was that or liquidation in 2008.
 
demarpaint said:
That plus how do you break the news to franchise owners? They're going to just disappear leaving businesses worth millions behind. I doubt it. Buy them out? At what price?
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Capitalism. Winners and losers. Everything changes. The direct sales model continues to take market share, especially for those who grew up with the Internet; it is the great disrupter.

I am pretty sure you and I pay for those big beautiful dealerships. And what do we get for our hard earned dollars?
 
gfh77665 said:
And the full force of the current administrations safety/enviro/EV mandate police will soon knock on your door.

But yeah, that would be cool.
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No it won't. The US took a much slower and different step toward this than the EU did.
You will still keep ICE. Now, a different thing is that some manufacturers just cannot/don't know how to deliver engines that are competitive.
We had this discussion with catalytic converters when GM said that it is communism, that it will kill car industry etc. and everyone else just kept going developing new engines.
 
demarpaint said:
That plus how do you break the news to franchise owners? They're going to just disappear leaving businesses worth millions behind. I doubt it. Buy them out? At what price?
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Therein lies the rub. Franchise laws are controlled by the state. They would all end up in court just like GM in 2008, and somehow supposedly neutral courts always seem to rule in favor of the local party. Coincidence I am sure.

For example, I am certain Toyota would love to get rid of their master distributor Southeast Toyota - but they can't, or can't afford to.

Another issue is back in the day the hometown dealers had someone's name on it. That someone probably came to work there everyday and was a pillar of the community. I worked for such a dealer when I was 16. The owner was demanding but treated his employees like family - even me, the wash kid. Now its a bunch of rich schlebs that own 1000's of dealers for every brand and could care less what any individual customer or employee thought of them.

No new car company would start now with a dealer model.
 
SC Maintenance said:
I disagree that the dealer model is required any more. At one time absolutely. Now, not so much. Its a dated model, before even a fax machine existed. Most other industries have gone away from a exclusive dealer model.

Having said that, I don't think Fiat/Chryslers current issues have anything to do with their dealer network. Fiat has nearly gone bankrupt on their own multiple times in their history. They were all but given Chrysler for free because no one else wanted them. Literally true - it was that or liquidation in 2008.
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And Marchionne did wonders out of that junk. Where he failed was that he did not work on developing a culture that could resist one or two bad CEOs.
 
The question is, what value to the customer does the dealership add? At what cost?
For you manufacturing business gurus, what are the carrying costs of new car inventory?

Key components of new car inventory carrying costs:
  • Depreciation: The primary cost, as a car loses value the longer it sits on the lot.
  • Floorplan interest: Interest paid on loans taken to purchase the inventory.
  • Insurance: Cost of insuring the vehicles against damage or theft.
  • Storage costs: Rent or cost of maintaining the space where the cars are kept.
  • Maintenance costs: Costs to keep the car in good condition for sale, including detailing, battery replacements, and tire maintenance.
  • Opportunity cost: The potential profit lost by not using the capital tied up in unsold vehicles for other investments.


Important points to consider:
  • Impact on profitability: High carrying costs can significantly affect a dealership's profitability.
  • Inventory management: Dealerships strive to manage their inventory levels to minimize carrying costs by selling cars quickly.
  • Market conditions: Factors like economic fluctuations and vehicle demand can influence the carrying costs of new car inventory.
 
JeffKeryk said:
Capitalism. Winners and losers. Everything changes. The direct sales model continues to take market share, especially for those who grew up with the Internet; it is the great disrupter.

I am pretty sure you and I pay for those big beautiful dealerships. And what do we get for our hard earned dollars?
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You're missing my point. If you owned a dealership would you want to lose it because the automaker you or your father bought the franchise from decades ago decides to sell direct? They offer you half or less than you think your business is worth. My bet is you or anyone else here would not be happy campers, and try and fight it. Do I like dealerships? No. Would I like to see the model change? Sure. Do I think it is going to happen anytime soon? No, because the owners aren't going to go down without a fight.

I doubt the state would want the hassle of the fight either, and as far as I know they aren't in business to determine fair prices for a buyout of the dealerships.
 
riverblue said:
Tavares has the same taste for annihilation that Ghosn did; he is a destroyer of companies. Poor Sergio must be spinning well beyond redline.
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Not very familiar with Tavares, but hopefully he at least learns from crook/criminal Ghosn and won't end up in a box and a fugitive from justice

I watch a former car sales manager and his son on YouTube frequently talking about Stellantis. Father said he'd take the job as CEO if the current guy fired. What I gather, they all get Paid. Sounds like nice work if you can get it.
 
JeffKeryk said:
Capitalism. Winners and losers. Everything changes. The direct sales model continues to take market share, especially for those who grew up with the Internet; it is the great disrupter.

I am pretty sure you and I pay for those big beautiful dealerships. And what do we get for our hard earned dollars?
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If manufacturers did move to direct-to-consumer sales how would buyers have the vehicles they bought worked on and maintained? I thought a large part of dealer showrooms was the repair facilities.. Or would there be manufacturer garages built that did nothing but work on cars, with no salespeople?
 
Cheetah-kins said:
If manufacturers did move to direct-to-consumer sales how would buyers have the vehicles they bought worked on and maintained? I thought a large part of dealer showrooms was the repair facilities.. Or would there be manufacturer garages built that did nothing but work on cars, with no salespeople?
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Either or, both, hybrid.

The sales / marketing side technically has not real connection to maintenance / repair. OEM's could have their own (like Tesla) or outsource it like they do now - but to someone that focused on service.

The current model is broken because the objectives of the two entities do not match. The OEM's want to move the maximum number of units. That is why they stuff the channel. They make money by keeping the factories full.

Dealers wish to maximize profit - hence "market adjustment" pricing as well as "Ram's rotting on the lot" instead of trying to move units. Dealers also want to maximize service profit - so they promote un-needed wallet flushes and try to get customers to pay for work that should be in warranty.

There objectives do not align. I think at one time they did. If an owner had a GM dealer, he wanted that brand to have a good reputation in his local market. He wanted many on the road to be seen driving around. He wanted people to tell their neighbours about the excellent service they received.

Now, No one talks to their neighbors, they spend hours on internet forums like this :ROFLMAO: . At the same time Rick Hendrick owns 100 car dealers of all different brands and could care less about anything other than profit.

A new model is needed.
 
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