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Like Crain, I hail the manufacturers’ efforts to help us sell vehicles under current conditions. Their actions serve the manufacturers, the dealers and the economy.
But for Crain to imply that dealer grosses are increasing at the expense of factory incentives is way off the mark. In September, those incentives brought us back only to an average month in terms of new-car sales. When dealers are challenged to make their numbers, gross is the first thing to suffer.
Obviously, when payments on a new vehicle become lower than on a used vehicle, the price of the used-vehicle drops. Dealers are now faced with pre-existing inventories that are worth much less than they were prior to those incentives. That is the dealership’s burden alone.
Also, a payment buyer is very much influenced by the drop in the value of his trade. That serves to drive down the price of the new vehicle just to make the deal.
Inventories are growing for almost every domestic dealer, putting very real pressure on the pricing of new vehicles. Surely, if it were not a problem for the manufacturers, too, we would never have seen the incentives that we have now.
These are hard times for all of us. Dealers are by no means “unscathed” by what has happened. Again, I praise General Motors for what it is doing to “Keep America Rolling.” Crain calls for a better balance between the manufacturer and the dealer, but the balance is there, built into the process. As the manufacturer goes, so goes the dealer and vice versa.
Right now, we all must sell every vehicle we can at whatever profit we can muster. We must keep the factory people and our own people working until this thing runs its course.
America will be just fine.