Put Dealers on Boards

The issue of dealer and factory relations remains on the front burner.

It has been there for quite a while.

The National Automobile Dealers Assn. was founded in 1917 when there were more than 80 auto makers in the U.S. They were 100% domestic, of course, all hoping to copy the success of Henry Ford and the Dodge brothers.

Image what factory-dealer relations were like in those days. Franchises were bought and sold by gas-station operators, former horse-and-buggy dealers, bicycle shops or whoever had a bit of skill getting cars to start and had a little extra money on hand.

Auto makers were dominant in the public mind, and also as controllers of the franchises they handed out to fledgling dealers. True auto dealers ponied up life's savings for the hundreds or thousands of dollars required to land a Ford or Buick franchise back in the day.

The lines of dealer applicants were long, and the money auto makers received for franchises bankrolled ever-growing manufacturing and distributing costs.

It was a sellers' market, because any World War I veteran was eager to buy a Model T or something like it. The gravel roads leading out of the big cities were filled in the 1920s with Merry Oldsmobiles, Ford “Tin Lizzies” and Jordan Playboys. (The latter were poorly-made cars that became famous from their legendary ads, the first to sell automotive passion).

Ford had nearly 12,000 dealers, filling every American town of any size. Chevrolet, bound to locate a dealer wherever Fords were sold, helped dot the landscape in the first quarter of the 20th century.

The legacy of dealerships in any American city with a population of 3,000 or more has served those communities well. Their service departments keep the police cars, ambulances, hearses, school buses, utilities and supermarkets operational. They are often the largest employers, with good-paying jobs, even when other businesses have downturns.

Dealer principals or their spouses serve on town councils, hospital and school boards, zoning commissions. They happily sponsor junior league baseball and football teams, high school bands and July 4th parades.

“No two dealers are alike,” a celebrated dealer once said, “except for a skill for making money.”

There isn't a dealer around who hasn't dealt with adversity as well as prosperity. Unlike many auto maker executives, they view the world from a broader perspective as a result of the conditions they experience in selling and servicing vehicles to a fickle consumer base.

They can spot hits before the auto makers — and misses, too.

It is safe to say many Chevrolet and Ford dealers saw the current problems facing their manufacturers long before the factory guys did. The dealers spotted disenchantment with fullsize SUVs and trucks because, for reasons of vehicle ordering, dealers have to look backward and forward at the same time.

Had General Motors Corp. CEO Rick Wagoner checked with his dealers early on in 2005, he might have been alerted to what was coming in the greater market.

He says now that GM was unable to react soon enough to prevent a cost overrun on fullsize SUVs and trucks, leading to GM's multi-billion dollar losses last year. Ford experienced the same vision failure, and it too dove into red ink.

Not anxious to be an I-told-you-so, but this veteran observer of dealer-factory relations has steadfastly urged automakers to seat a dealer or two on their boards of directors.

The input on marketing which would flow through to the auto makers from dealer 20-Group meetings, NADA board sessions or simply the report of a dealer-director from heartland Findlay, OH, or hip Santa Monica, CA, would be as useful and foresighted as that of any astute industry player.

After all, what auto maker is any better than its dealers?

Mac Gordon is the dean of U.S. automotive writers. He is at [email protected].