Franchising makes the difference
Keith Crain is publisher and editor-in-chief of Automotive News.
Its volume is the largest and it has a top level of sophistication. Other nations emulate the manufacturing and distribution system in the United States.
Yet it is the franchise system that sets the United States apart from other markets. The strength of the automobile industry in this country is 100 years of development of the American auto dealer.
For decades in the United States, automotive retailing has been the best opportunity for individuals to enter the automobile business and create great personal wealth, as well as serve their communities across the nation.
It wasn't too long ago that a couple of U.S. automakers decided they would begin to eliminate the dealer franchise system and replace it with their own management and ownership. The idea was a complete and dismal failure because there can be no way to replace the franchise system.
Today, when a new manufacturer is interested in selling cars and trucks in the United States, it uses the franchise system. With almost 20 new franchises introduced in this country in the past quarter-century, the franchise system has been the distribution method that allowed these brands to compete.
The ability to accept a trade-in and offer financing to a customer at the time of purchase has made the American dealer a real success. Equally important is the servicing of a manufacturer's automobiles. The distribution of parts for repair and service, not only in the dealership but also to independent service and body shops, is critical to complete customer satisfaction.
Franchises have changed. They are private and public. They are big and little, single-point and multipoint. They are all designed to serve the customer.
For more than 100 years, the franchise system has been the backbone of the American automobile business. It will continue to handle the distribution of manufacturers' cars, trucks and parts. The strength of an automaker depends on the strength of its dealer body.
The franchise system is alive and well. And to continue to supply and service the American motoring public, it will continue to flourish.