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Tuesday, August 02, 2005

Denouncing the Dealers

One of the blowbacks from employee pricing for the Big 3 has been further ostracization of dealers. It's probably the biggest reason why employee level discounts are not a good idea. According to Automotive News here (sub. required), dealers are ticked.

Why is this bad? Because many dealerships if not most dealerships are not one brand sellers anymore. They usually have a foreign competitor or two, as well as a Big 3 marque in their stable. Further ostracization means dealers leaving for greener pastures.

I think GM has done a lot for their dealerships in the recent past, and arguably too much. Giving every dealer who has a GM marque a minivan and SUV is stupid. Instead of giving dealers what they want shortsightedly, and then hurting their bottom line, GM should just concentrate on making great products.

Marketing gurus, and product gurus will always debate and debate over which is more important to the success of the company. Marketing execs will try to prove that even if the product is crap, if you have a clever enough ad campaign, the car will sell. I just don't believe that. For the time being GM's vehicles are selling well. But can GM keep this pricing up forever and turn a profit? Of course not. When you look at 4th quarter sales and profits in the next few months, they will still be disastrous for GM. Very, very few people buy a car on the basis of an ad alone. These aren't candy bars we're selling. These are enormous expenditures for most people, and a gimmick alone won't draw them in.

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