Tuesday, May 5, 2009

Sad State Affairs for the US Auto Industry

2003 Pontiac Bonneville

When I was in the Mount Vernon, WA area recently, I decided to drive by the dealer where I bought my Ford Crown Victoria in 2005. This dealer was about 40 miles away from my home, but I purchased the car there because it was a left-over new 2004 that they still had in their inventory the next model year. This dealer, Skagit Motors, gave me a very steep discount on the car to move it out. When I bought it, they gave me a nice calendar with a picture on it they made when I took delivery of the car. The calendar was designed to be used over again, year after year with a new refill pad. That's what I went by the dealer for today, to get a new refill for my calendar.

This car dealer was built north of town on some river low-lands, and was located in a complex that was promoted and developed as a kind of retail auto mall. There were many dealers located there, and the idea was a person could come to one location and shop around among all the brands offered to find the one car they wanted. The whole area was new, big, spread-out, and filled with new cars. When I have been in this complex a few times before, it was always bustling with activity. They even built a shopping area across the road from the car mall where you could go to get a meal and buy other things while you were in the midst of your car-buying spree.

Today, I visited this same car shopping mall for the first time in a couple of years (since the last time I needed a calendar refill). What a change has come over this place. The Ford dealer was still there, but there wasn't a single customer on the lot anywhere that I could see. There were five unhappy looking salesmen in the showroom with no customers to show cars to. They did give me a calendar refill, but it's a very cheap version of what I'd been given before.

Worse, the General Motors dealership that had been located across the street was closed and the lot was completely vacant. The Dodge/Chrysler dealer that had been next door was no longer a franchise dealer, but had been set up as a used car lot. Next door beyond that, the former Lincoln-Mercury dealer was closed up and a used car lot had replaced it. The Dodge and the L-M signs were still up on the lots, but only because it costs money to take them down and nobody in this business is spending one dime more than necessary. There were some other vacant lots around, but two import dealers were still open a little way to the north. The shopping area across the road from the auto mall was nearly all vacant, with businesses closed and just empty rooms behind the plate glass windows to look into. This former hive of commercial activity has had the flame turned down very low.

I noticed the Ford dealer had seven shiny, new Lincoln MKS sedans lined up out front. In the past, this dealer was not franchised to sell Lincoln-Mercury products. Since the L-M dealer nearby folded, I wonder if the manufacturer needed a place to shuffle these $50K cars off to and the Ford dealer was a convenient solution. I'll bet the manufacturer gave them a hefty incentive to take them; and I imagine that you can get a steep discount on one -- if you need a flashy car like that. Well, the factory has to do something with them. When the L-M dealer closed, these expensive cars had to go somewhere, and you can't expect another dealer to take this distressed merchandise onto their books easily without something to make them attractive in the way of making a profit.

It's ironic that at the time the American auto companies are in deep trouble, some of their stuff is the best they've ever made. Ford products, which I am fairly familiar with and have looked at new models of over the past year, are the highest quality they've ever made. Plus, they have a number of innovative new models both available and more coming shortly. One of my personal favorites is the new Ford Flex.

The legacy of Daimler-Benz's short involvement at Chrysler is still showing with their rear wheel drive cars, like the 300 series, the Dodge Magnum, and the Dodge Charger which are all good products and help me to forget the many years of shoddy front wheel drive cars they built that you had to put a couple of new trannies in before you hit 100K miles. Those nice, sturdy, economical Sprinter vans are a Euro legacy too. But, D-B has been out of the picture for a while now and it makes you wonder what Chrysler is going to do for new engineering and styling.

General Motors quality is still a bit behind, especially on their lower-priced cars. They have a number of innovative cars coming down the pipeline that show promise, but the question now is, will the company last long enough to see them have an impact on the market. I can't wait to see that stinkin' Cadillac Escalade hit the skids; it's a symbol of all that has gone wrong with America. Unfortunately, there are probably enough over-paid basketball players and other posers around to keep them in production. So, G.M. has to down-size, and they keep Chevrolet as the mass production brand (rental companies still need them) and they keep Cadillac because the profit margin on each unit is high. I can't figure out for the life of me why they picked Buick to retain and let Pontiac go. I don't know what the production figures were, but Pontiac had a full range of product, from small economy cars up to luxury sedans, plus they had the sports cars and even an SUV (the butt-ugly Aztec might just be the reason they decided to kill the brand!!) Buick doesn't have that breadth of product, and in this area at least, that share of the market. I see tons of Pontiacs around here but not that many Buicks. Well, maybe G.M. wanted to get rid of the very diversity of product that Pontiac had and concentrate on a narrower share of market. If that's the case, they must realize that they have surrendered a certain amount of market share to concentrate on another.

As bad as the situation is with the manufacturers, the plight of the dealers around the country and their workers tends to get forgotten as a part of the problem. Not only do the sales personnel suffer due to lack of new car sales, but the service department employees have less work to do as fewer and fewer cars are sold, and add to that the lousy economy keeps some people from bringing in their cars for repairs. A lot of the mechanics in the business, and in particular in rural areas, are walking around with their hands in their pockets.

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