Forty years ago, a General Motors executive summed up the retail automobile market with the phrase, "There are two types of automobile dealers, Chevrolet dealers, and those who would like to be Chevrolet dealers."
Big Three dealers were as prolific then as corner drug stores. In the Greater Boston area, there were 34 Chevrolet dealers. Now there are a dozen.
Selling agreements among all manufacturers were for one year. I remember the ridiculous process attached to signing each year. There would be several desks across a large room where a dealer would be required to sign up for various costly "Mickey Mouse" factory programs before he was presented with the actual selling agreement to be signed.
Payola was rampant, and during the Christmas season factory reps drove station wagons as company cars in order to accommodate the gifts dealers were sending in to the local office. I knew of one higher-echelon manager who kept a check-off list of dealers sending gifts.
Company cars were excellent sellers and often used to entice dealers to perform favors for factory agents. Many reps would sell their company cars for a couple hundred dollars profit to neighbors and friends, putting the paper work through a cooperative dealer.
The New York and Boston Chevrolet zone offices were investigated for soliciting and accepting bribes for hot model cars. Car distributors accepted payoffs for Corvettes and other hot models. The entire illicit operation and subsequent investigation were termed "Motorgate." GM acted swiftly and purposefully in dealing with this blemish on their reputation.
Dealers were interviewed as to their involvement. Zone personnel were invited to individual interrogation sessions at a local motel and confronted with any evidence of their involvement. If they were adjudged guilty by the team of investigators, their company cars were immediately forfeited, and their employment terminated. The process was so sudden, the distance to their homes was calculated and they were each given cab fare to get there.
Another significant effect on domestic dealers who signed import franchises was the cooperative attitude of the Japanese manufacturers' toward their dealers. Without exception, domestic manufacturers' attitude and treatment toward their dealers was arrogant, self-serving and generally intolerant. (The passage of individual state franchise laws was a big plus in subsequently changing the domestic treatment of their dealers.)
Merle "Doc" Yager, an Albany, NY Pontiac dealer single-handedly faced the mighty GM in testimony before a Senate subcommittee on anti-trust violations and corrected many abuses theretofore accepted as standard operating procedure by domestic dealers.
A direct result of these hearings was the extension of dealers' getting agreements from one year to five. In addition, many warranty reimbursement issues were addressed. Some were legislated by state franchise laws.
Warranty reimbursement was a constant battle between Boston dealers and their respective manufacturers. The current factory attitude of customer satisfaction and high product quality did not exist in the '70s.
Primarily, the domestic products required a lot of post delivery warranty attention. This, coupled with an arrogant defensive posture manifested by local factory personnel set up a combative scenario that did not portend a positive resolution. The consumer was caught in the middle of an explosive situation, which became fertile ground for ambitious consumer watchdog groups looking for prey.
Dealer warranty audits were commonplace with thousands of dollars being charged back to dealers for petty procedural errors as well as warranty operations that were never performed. On the other hand some unscrupulous dealers were conducting phony private warranty campaigns netting their service departments megabucks.
Frank Smith was a Chevrolet area service manager who was performing a warranty audit in a high volume Chevrolet dealership in Lowell, MA.
During the audit he discovered gargantuan warranty infractions and voiced his intention to alert the dealer (an absentee owner) and Chevrolet of the situation. All of his dealings in the dealership were with the service manager, a man with an extensive criminal record.
Subsequently, Mr. Smith's body was found in a local river and the service manager was tried and convicted for the murder. This incident was certainly not a common occurrence, but is an extreme example of the tension and adversarial atmosphere of dealers and their relationships with their manufacturers during the '60s and '70s.
