Some Final Thoughts

Over the past 130-years, the U.S. automobile industry has evolved from a series of small, locally based enterprises to become an enormous international business force. A direct result of the 19th century Industrial Revolution, the domestic auto industry has brought the convenience and joy of driving to literally millions of people throughout the world. Although Detroit’s Big Three soon dominated the domestic market scene, other equally prolific car manufacturers also left their mark on this important endeavor. With very rare exception, these manufacturers relied on dependable, well-qualified local dealers to distribute their vehicles in a timely fashion.

Those service oriented distributors acted as business intermediaries between distant auto factories and local markets. Over the course of time, these same dealers assumed a far greater role than just acting as delivery agents for the various automobile companies they represented. In particular, their qualified sales representatives not only negotiated the individual car deals and arranged for all in-house auto repairs; but also, handled the many customer-related complaints and problems inevitably resulting from owning and operating such vehicles. In addition, those same salespersons also mastered the paperwork related to such things as car insurance and various state requirements. Working alongside them were equally competent managers, well-trained office workers, seasoned mechanics and highly sophisticated technicians. Each one of those employees handled a multitude of daily tasks considered essential in operating any successful domestic dealership. This model of economic efficiency, so carefully defined throughout the industry’s early years of development, continues to the present day.

As was highlighted throughout this writing, few other conventional retailers operate in such a fashion. The tradition of business excellence demonstrated repeatedly by auto dealers stems primarily from the nature of the commodity itself. Unlike most other retail establishments that carry a wide variety of differently priced items ready for immediate sale, car dealerships only stock automobiles and their related accessories, components and parts. Since the majority of domestic store owners promote a multitude of different products under one roof, they often place the responsibility for obtaining that merchandise in the hands of jobbers or in-house store buyers. Considered tough negotiators in their-own right, these highly trained professional buyers orchestrate the best possible deals on desired merchandise for the clients they represent. Any-and-all additional overhead expenses incurred during the buying and preparation of set items are automatically included in the final price. Shoppers who purchase those items, at full price, accept the aforementioned cost adjustments no questions asked.

If those items for some reason remain unsold, then those same retailers conduct special in-house sales or hawk them to outside vendors and wholesalers. In the latter case, vendors and wholesalers most often arrange to have those items sold through either domestic discount houses or overseas outlets. This continual cycle of buying and selling has proven very effective for the majority of conventional retail enterprise; however, it does not work very well when applied to the automobile industry. Unlike the domestic retail scene, which, for all practical purposes remains a seller’s market, meaning that nearly everything displayed sells quickly at a fair market value, the automobile industry is a buyer’s market, and that is where the potential problem lays.

The needs and wants of the buyer, not the dealer, most often dictate industry-wide policies. The buying public is fully aware of that business anomaly and the fact that most domestic retailers handle a wide variety of goods at different price ranges, while automobile dealerships exclusively sell and service one kind of expensive product. The enormity of the dealer’s investment as reflected in extensive new car inventories, numerous car parts and expensive technical services enables domestic buyers to exert great economic pressure on both automakers and distributors to provide them a wide assortment of high quality cars and top rated repair service all within the confines of one convenient location. The automobile industry is a grueling business taskmaster for anyone involved in it. Unrelenting high overhead expenses made worse by potentially uncertain profits differentiates this particular endeavor from other, less challenging retail pursuits.
Considered an indispensable part of the modern buyer’s market often places domestic car manufacturers and their affiliates in a rather awkward economic situation. Not only must they determined what auto buyers might want to purchase in terms of specific car models during targeted years, but also, how much they are willing to pay for those vehicles. In the early 20th century, it was much easier for domestic car makers and their individual distributors to calculate expected annual profit returns based on the workings of a much slower moving market. A less urbane buying public purchased nearly everything that was available even if those vehicles did not fully meet their present expectations. Owning a car was all that mattered in those days. That same kind of business trend repeated itself in the late 20th century when nearly everyone wanted to own and operate some kind of computer. Consumers rarely considered an individual computer’s durability or program versatility, at least not in the beginning.

However, as buyers became more familiar with how the automotive industry operated, they began to dictate to local dealers how much they were willing to pay for their new vehicles. They often ran a hard bargain. The same thing applies to the modern computer industry. Everyone in today’s market expects high performance, low cost computers with a host of popular apps. What has saved the modern computer industry, from the same financial perils that once plagued domestic dealers, is the fact that the number of shops that sell and service computers remains relatively small within a burgeoning market setting. That variance affords those proprietors the opportunity of periodically adjusting their costs and product availability to ensure low overhead costs and reasonably high profits year in and year out. The exact opposite holds true for the domestic automotive industry where the plethora of local dealerships often cancels out any of the inherent economic and financial advantages of being part of a highly animated, and at times, extremely versatile local business environment.

One of the most formidable business obstacles facing today’s dealerships involves keeping up with the latest technological breakthroughs and newest gadgetry. The actual costs incurred in owning and operating sophisticated vehicles in today’s market increases dramatically every year. However, that does not prevent the buying public from demanding the most up-to-date technology and gadgetry at the cheapest possible price. The battle for new customers currently waged between domestic and import dealerships, many of which sell and service similar kinds of vehicles often within the same price ranges, shows no sign of letting up. If anything, it is intensifying over time. Offering favorable leasing arrangements for new or slightly used vehicles affords a workable business alternative for most domestic auto dealerships in that it enables them to maintain high sales figures even during times of recession. Of equal significance, the many available leasing options further provide those buyers with moderate incomes the chance of driving some of the most prestigious automobiles found in today’s market. [1]
In the final analysis, most new automobile franchises do a remarkably good job when it comes to serving the public’s insatiable needs and wants. They handle a large number of customer-related issues in a very direct and efficient way. They also successfully deal with the endless torrent of corporate orders that cross their desks on a regular basis. These local dealers not only satisfy countless customer-related demands and fulfill ceaseless corporate ultimatums; but also, furnish innumerable buyers with the kind of high quality automobiles and desirable options they have grown to expect from them. These astute entrepreneurs have successfully come to grips with the many trials and tribulations that are an integral part of this markedly volatile local and national market scene. Having survived two world wars, the Great Depression and numerous other economic and financial challenges over its many years, they have developed a unique business perspective second to none especially when it concerns how the domestic auto industry thinks. They also have witnessed firsthand the pronounced affect that ever changing environmental and social conditions have had in radically altering their well-articulated business agendas, goals and objectives.

The long-term economic and financial success of the Detroit Big Three is a marvelous tribute to those many highly innovative and resourceful companies. Those manufacturers single-handedly shaped the destiny of the domestic auto industry for more than a century. Local car dealers represent the unsung heroes of the U.S. automotive industry in that they alone have met the challenge of providing the very best car deals and repair services possible, and they do it in a highly professional business manner. Their courtesy and in-depth knowledge regarding the latest business trends influencing the domestic automobile scene is indeed remarkable. They exemplify the kind of enduring enterprises that might well serve as a model for others to emulate in the years ahead.

  1. Anita Lienert, “As Car Prices Climb, So Does Leasing,” The Cleveland Plain Dealer, December 22, 1996.