You cant dual with competing makes. That means imports. Get those ##***&% imports out of your showroom.
You gotta sell more cars and trucks, so you gotta order more. Well let you know how many more.
Sounds like a factory field rep haranguing an auto dealer in 1955, doesnt it? But its not. Its a conversation that might have taken place this year in a General Motors or Chrysler dealership.
Reading of the drastic recent cuts in dealership totals at GM and Chrysler and the ensuing upheaval reminds me of the fall of 1955 and early months of 1956.
Today and a half-century ago, factory-dealer relations were in the spotlight. But, oh, what a difference in how those matters were approached.
Among GM executives, 1956 became known as Be nice to dealers year. By contrast, 2009 may well be termed Let the so-and-sos know whos boss year.
In the fall of 1955, GMs friends and foes trekked to Washington to testify before an antitrust and monopoly subcommittee chaired by Democratic Sen. Joseph OMahoney. GM was the whipping boy of the hearings because of its dominance of the auto industry. GM had 50.8 percent of the 1955 car market; nobody paid much attention to trucks (8.5 percent market share) in those days.
New pacts, good-faith law
Former dealers, retired dealers and terminated dealers paraded to the witness stand to tell of coercion by factory reps to order more cars than they could sell profitably and a general refusal by GM to listen to any dealer complaint, no matter how justified.
Only one active dealer took the stand -- M.H. Doc Yager, a Pontiac merchant in Albany, N.Y. Yager became a dealer folk hero.
GM listened and acted. It completely rewrote its dealer franchise in a manner that was much kinder to dealers, including a five-year contract rather than a single year. Other automakers followed suit. Today, it seems that GM wants to undo some of the gains dealers won 50-plus years ago.
Those 1955 hearings also led to the passage of the Automobile Dealers Day in Court Act, or good-faith law, which permits a dealer to sue the manufacturer if the manufacturer does not act in good faith with dealers, including pressuring them to buy unwanted vehicles. The law is not invoked often, but it remains on the books as a warning to the makers.
Todays franchise documents are much the same as those adopted in 1956, with alterations to recognize changes in business conditions. The agreements dealers will sign in the fall of 2010 may not be quite so favorable to the retailers.
For example, GM wants to ban non-GM makes from GM showrooms. Doesnt GM realize that competing brands (read imports) have enabled many of its dealers to keep the doors open? A GM franchise is no longer the key to riches that it was.
One answer: Bootlegging
Dualing was in the news in the 1950s, too. In an effort to survive, American Motors and Studebaker-Packard dealers were hooking up with Big 3 outlets. The Big 3, especially Chrysler, didnt like the idea, but the court told each of the big players to back off, that their dealers had every right to take on the vehicles of the smaller manufacturers if they so desired.
This time around, dealers will be asked to accept higher sales targets, but they havent been told what those targets are. Talk about buying a pig in a poke.
Last time, factory reps leaned on dealers to buy, buy, buy. The dealers countered by bootlegging their surplus vehicles; that is, selling them to used-car dealers for resale.
The factories huffed and puffed, but they couldnt stop the practice. The dealers owned the cars and could sell them as they wished. Of course, it kicked the props from under the used-car market. The bootlegged cars had usually been purchased at big discounts, and they brutalized late-model used merchandise acquired in the conventional manner.
During their independent bankruptcy court proceedings, Chrysler terminated 789 of the 3,250 dealerships it had on Jan. 1 and GM selected some 1,350 dealerships for termination. Those stores have until October 2010 to exit. About 4,100 GM dealerships will survive.
More blood will be spilled, and more rhetoric will be expended before the next franchises are signed. But it is safe to say that this is not an ideal time to be an auto dealer.