American auto industry suicide plan
Destroying two companies in order to "save them"
By Walter Brooks
GM is mimicking Chrysler in obeying the Obama administration's auto task force, a majority of whom do not own cars and those who do, own foreign autos.
These savants have decided that imitating the Japanese auto dealership model in America is the way to salvation for GM and Chrysler, and they hold their decision like a sword of Damocles over those seeking further bail-out funds paid by American taxpayers.
Essentially these government wizards have ordained that by GM and Chrysler drastically reducing the number of sales people selling cars, they will sell more of them, perhaps assisted by the tooth fairy and the Easter Bunny.
Cutting sales people is the last thing the Obama administration should propose doing. Massachusetts' 96 GM dealers operate 200 locations. Our state has a grand total of 460 new-vehicle dealerships for all brands. Collectively they employ 20,000 Bay Staters and account for about 20 percent of the retail economy in Massachusetts, according to the Mass. Auto Dealers group.
When business is down, a company needs more sales people, not less, but this is the typical bean-counter's response to the need to cut a budget, and it has destroyed thousands of businesses for decades. It will not destroy both GM and Chrysler.
No savings to auto makers but a huge losses to thousands of communities
A smaller dealer like Stagg Auto Mall in East Harwich routinely sends hundreds of thousands of dollars every year to GM and Chrysler. The Detroit auto makers charge local dealers a large monthly fee for everything from a rental charge for their corporate sign out front to hundreds of dollars each month for charges like being linked on their national website plus charges for every lead the website generates, plus online auditing charges, charges for being connected to the manufacturer for ordering parts, charges for operating the diagnostic equipment to say nothing of interest on every car on the floor plan.
In fact, auto makers like GM start getting money from dealers before each car leaves the factory and even charges dealers $2 to $5 for each brochures.
But auto manufacturers pay nothing to the local dealer, most of whom are major supporters of local charities, Little League, schools etc.
How in the name of common sense and Economics 101 can GM and Chrysler be better off without all this revenue flowing to Detroit every month?
From those wonderful folks who brought you Pearl Harbor
Such decisions can not help but remind us of every other imbecile decision our auto industry have made since the introduction of Japanese autos in America a half century ago.
The end of World War 2 found our car industry king of the hill, and they began their fifty years of shoving mediocre autos down our throats and wondering why more and more Americans bought foreign cars instead of theirs.
First Detroit employed a technique named "Planned Obsolescence" which built cars designed to fall apart in a few years to force you customers to buy another car, and ask your father about Ralph Nader's book "Unsafe at any speed" in the 1960s to get a real chill.
While Detroit was doing everything wrong, the Japanese recovered from a ruined economy after WW2 and began building cars which were better, cheaper and got better gas mileage.
GM and Chrysler's problem is not too many dealers - it's too many cars which no one wants to buy.
More billions in taxpayer bail-outs won't change any of this.
The flea report
All this reminds me of the experiment of cutting the legs out a flea to determine it's agility and hearing.
The apocryphal story has it that a scientist placed a flea in front of a miniature hurdle and made a loud noise by slapping the table behind the flea which promptly leaped over the hurdle.
He repeated the procedure each time pulling off one of the flea's six legs, and each time he slapped the table the fleas continued to jump over the hurdle until there was only one leg left, and the poor flea toppled over on its side.
This time when the scientist loudly slapped the table the flea didn't jump over the hurdle.
The scientist submitted his report which he claimed proved scientifically that if you remove five legs from a flea, the insect becomes deaf.
Almost as deaf as Mr. Obama's auto task force.