Auto Motives: Have I Got a Deal For You!

Usually lost in all of the hankie wringing over General Motors' ongoing death spiral is the role that its vast dealer network is playing in its immolation.

You know, the guys who dress funny, wear strong cologne, always have to check with their bosses before they cut you the deal of a lifetime, have the stupidest TV ads this side of Ginsu knives and are trusted less than even lawyers and journalists.

Well, The New Yorker of all publications takes an astute look at why car dealers are bad for the General.

An excerpt:

[I]t’s hard to believe that they could sway the decisions of global corporations like G.M. and Ford. But, collectively, they have enormous leverage. Dealers are not employees of the car companies—they own local franchises, which, in every state, are protected by so-called “franchise laws.” These laws do things like restrict G.M.’s freedom to open a new Cadillac dealership a few miles away from an old one. More important, they also make it nearly impossible for an auto manufacturer to simply shut down a dealership. If G.M. decided to get rid of Pontiac and Buick, it couldn’t just go to those dealers and say, “Nice doing business with you.” It would have to get them to agree to close up shop, which in practice would mean buying them out. When, a few years ago, G.M. actually did eliminate one of its brands, Oldsmobile, it had to shell out around a billion dollars to pay dealers off—and it still ended up defending itself in court against myriad lawsuits. As a result, dropping a brand may very well cost more than it saves, since it’s the dealers who end up with a hefty chunk of the intended savings.

More here.

THE CALIFORNIA CONUNDRUM

Robert Farago, head honco at The Truth About Cars, has been on GM's case for years through a series of posts titled "GM Death Watch."

He's now up to death watch number 88 and has remained unrelentingly vitrioloic in describing how a succession of GM CEOs, most especially a man he refers to a Rabid Rick Waggoner, have transformed the corporation from global colossus to whimpering candidate for bankruptcy through decades of making boring cars.

An excerpt:

For the first time, the California Motor Car Dealers Association published new car registration data listed by brand. In the second financial quarter, Toyota captured 24.4% of the Golden State’s automotive market. Honda scored second place, at 12.4%. Then it’s Ford at 9.6%; followed by Chevrolet, at 8.2%. If national sales follow California’s lead, GM is toast. There is no way The General can support its vast infrastructure, overhead and labor costs, there’s no way the company can downsize quickly enough, to survive on that kind of market slice.

The automaker’s California conundrum: the resale market. There isn’t one. Hundreds of thousands of California immigrants, first-timer buyers, commuters and elderly consumers swear by used Hondas and Toyotas. Their preference creates a vicious circle: buyers shun new GM products because they can’t unload them. In the mass market, big depreciation is a kind of living death.

MEANWHILE, ACROSS THE POND . . .

It's also tough sledding for Europe's big automakers, but in most cases it's not because of boring products. The culprists are sluggish demand and tough European Union emissions rules.

More here.

THE NEW FORD DIVORCEMOBILE

Then there's Ford Motors, which at the rate it is going may succeed in going belly up before the General does. This even with the announcement a new CEO to take over from the hapless William Clay Ford.

Seth Stevenson has run into some pretty weird ads while writing his "Ad Watch" column for Slate magazine, but never one as bizarre as this one:

A family drives through some gorgeous hills and along a pretty coastline, making picturesque stops at a roadside farm stand and a beach. "The Ford Freestyle crossover," says the voiceover. "More than 500 miles on a tank of gas." Then the SUV pulls to a stop in front of a housing complex, where the dad gets out with his luggage. "Thanks for inviting me this weekend," he says to the mom. He hugs his kids, they say their goodbyes ("See you next week"), and the SUV drives off—leaving Dad by his lonesome. "Bold moves. They happen every day," concludes the announcer.

Stevenson wonders what Ford hopes to achieve with this blend of generic car ad and social commentary. The answer, he says:

Has something to do with Ford's miserable balance sheet. Ford's market share has tanked, it may soon sell off some of its brands, and the company has announced an overhaul plan it calls—with a Maoist flourish—"the Way Forward" (which largely boils down to closing factories and cutting jobs). In the midst of this crisis, Ford has also launched a broad new marketing effort with another curious name: "Bold Moves."

According to John Felice, Ford's general marketing manager, the ad is meant to be a "celebration of family" and also an ode to "the versatility of life itself, as well as the versatility of the Freestyle." Felice says he's received letters from "nontraditional families" thanking him for making the ad.

Says Stevenson:

It really is nice to see a divorced family show up in a commercial. I hope it will start to happen more often. It's reality, and I've no doubt it's healthy for kids from broken homes to recognize themselves in the occasional TV ad.

Just not this ad. The wife invites her estranged husband along for a weekend with their kids? Won't that make the poor kids hope for a reconciliation? You'd better know what you're doing here, Mom! And while we see Dad's overnight bag, we don't see the inevitable argument over whether he and Mom will share a motel room. ("I can't even afford my own room with these alimony payments!"; "I told you this was about the kids, not us!"; "Emasculating witch!"; "Quiet, the children!" This is the sort of thing the ad leaves out.)

More here, including a video of the commercial.