On Demand
Dealer No Deal
Tuesday, November 18, 2008
Mark Schienberg, President of the Greater New York Automobile Dealers Association, on how local dealerships are reacting to the economic climate and the possibility of an automaker bailout package from Washington.
"I'm Changing My Name To Chrysler" performed by Arlo Guthrie
"I'm Changing My Name to Fannie Mae" performed by Tom Paxton
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Can you explain the relationships individual dealers have with the auto makers? I thought I heard that there are contracts that are hard to get out of, a sticking point that might be hurting rather than helping the situation.
The make-work bias is best illustrated by a story, perhaps apocryphal, of an economist who visits China under Mao Zedong. He sees hundreds of workers building a dam with shovels. He asks: "Why don't they use a mechanical digger?" "That would put people out of work," replies the foreman. "Oh," says the economist, "I thought you were making a dam. If it's jobs you want, take away their shovels and give them spoons."
Give them GM cars!
If illegal immigrants were suddenly welcomed into the country legally would this instantly turn your business around (because of that new influx of money)?
And what role did immigrants play in the past decade for car dealers?
I do not understand why the union contracts are being blamed for the auto makers' crisis, The workers are not making fortunes. The problem is that the big 3 are not designing and producing good, reliable cars that people want. Union workers are not in charge of those decisions.
Here is a thought: Why doesn't Exxon Mobil bailout the auto industry?
Good story Tony/3...and naturally the dam should be shoddily built so they can build it again and again! (New Jersey Turnpike joke)
The Big 3 have resisted CAFE standarfs for decades... where do they stand on this going forward?
retrain workers.
let the market take care of the old big 3.
look for 21st century technology
Having seen my share of American car ads, bailing out the auto industry so that ads can continue to be made is a bad, bad argument.
Please ask your guest what concessions dealer are willing to make to help out this situation. Auto dealers have been given the upper hand over manufacturers through several state and federal laws.
From manufacturing to selling, the whole process has been inefficiently run. And this bogus business model has been protected by our ignorant government.
If people in this industry believe in free markets, lets hear from them what creative thinking can help THEIR business and THEIR jobs besides taxpayer bailouts.
What I would love to know is why we can't have regular prices in the show room. I would buy a new car much more often if I could just walk into a store and get the true price.
Why do we have to go through this bargaining game with every deal?
Bailout or no bailout, if people keep buying cars:
1) We will have dealerships
2) There will be jobs building cars
3) There will be manufacturing supply chain jobs
The dealershps may be toyota, the jobs may be in the south but SO WHAT.
I am 37 years old and I can't ever remember the big 3 being run well. I just can't get behind a bailout here and I am a very liberal democrat.
Everyone seems to agree that some kind of support or bailout is needed.
Why are the auto companies refusing to design a detailed plan that Congress can support?
So the takeaway from Mr. Schienberg is redundancy is good? Cars put a lot of blacksmiths, wheelwrights, carriage makers, horse groomers, et al. out of business. Good American jobs were lost. Should we feel bad? The supremacy of the big three and their decisions ultimately put to death nameplates like Duesenberg, De Soto, Hudson, Nash… Good American jobs were lost, parts manufacturers and dealers went out of business. Should we still mourn?
This guy is wrong. Honda is up in sales because they make well-priced, efficient cars that people want to buy. No bailout without laws without requirements for more fuel-efficient cars and raising the minimum fuel efficiency standards.
Part of Detroit's problem is that they have too many dealers. Even if the Government lends them money many many dealers will need to close.
It will be much easier for the Big Three to figure a work out in Chapter 11.
Have you ever been to Detroit, the city?
It's a hell-hole because the same people who run GM and gang are the governing power brokers.
The point is to cushion the blow to the workers and not to proven failed business entities.
This guy is wrong. Honda is UP in sales because they make well-priced fuel efficient cars. No bailout without requirements for greater fuel efficiency and an overhaul of a greedy system.
It's the finance guy who's the pit bull in the dealership!
The trick is to get the price down then arrange your own financing on the cell (such as through USAA). Worth it just to watch the finance guy blow their gasket.
Dealerships seem to make their $ from financing and service.
We have an industrial sector of the economy.
The companies are huge. They are not good at innovation. They are horrible at forecasting demand. Their products have long had massive subsidies (e.g. defense spending to keep the price of oil down, government spending on roads, etc.). Many believe that they cannot be allowed to fail because of how many people they employ. Many believe that the employees have too much rewards (i.e. salary and benefits) for the work they do.
And we are talking about propping them up with more direct infusions of cash from the government, despite the fact that there is no indication that any of these problems might change?
If bailing out the banks was similar to socialism, then this is just like Soviet style communism.
What on earth ever happened to anti-trust laws? Nothing should be to big to fail.
Detroit will never make and we will never buy the right cars until we have to pay Europe prices for gas.
Your guest seems like a P.R. rep for the auto industry. I agree with your caller who said he had no sympathy for the industry. It's a business - one that they've run poorly for a very long time. There's a reason my last five cars have been Hondas. It might be somewhat better now, but we all still remember when buying an American car often turned into a nightmare. And the gas guzzlers! OMG. Please, I can't even bear to hear another word from your guest. And finally, who is next? When can I get in line?
My husband I bought 2 hondas on October 12th Columbus day (as part of our patriotic duty - just kidding about that sort of ) but the show room was packed and it took less than 5 minutes to get approved for a loan. I think American car manufacters need to dismantle their business model. Their retirement issues are killing their companies not americans who buy their cars. Stop giving so much away. Stop! What are they willing to give up to keep their companies going. Why don't they buy themselves like some airlines did?
So what will America do with all these newly unemployed workers. The problem is that people dont have money to buy things so we fix this by putting another 2-3 millon people on the unemployment line.
Brian,
Can you ask your guest to tell us jus how much have the Big Three spent in the past 5 years alone lobbying and litigating against fuel efficiency standards? - I assume it has to be in the 100's of millions
He's saying that some of the culpability for the bad rap that delaers get lies with the media??? No wonder why these guys are facing a tough crowd. He must be in an alternate universe.
this is akin to economic blackmail from organizations who have never had the broad public interest at their core; turn them into non-profits with the mission of affordable econo-friendly transportation with profits aimed at mission --- not dividends
Oh and stop with this whole nonsense about Toyota and Honda making cars people wanna drive when they have had to cut back on production in the last couple of months.
The US car companies were so worried about making cars that 'consumers wanted' yet they still couldn't keep up... why are we so distracted by what consumers want? Consumers want a lot of things that they can't have like illegal drugs and labor. At some point the gov't steps in and says 'No, you can't have that'... transportation issues are too important to be left up to consumer whims, which are subject to change far more quickly than auto makers can redesign car models and re-tool manufacturing. We need policies that extend far enough into the future to allow industry to plan and make the appropriate investments.
My stepfather was a Chevy dealer -- He sold a car to my aunt and uncle and cheated them. He used to talk about the scams he used to put money in his own pocket by offering to get things for people "as a favor" when those things were already in the contract (and the cost was included in the price of the car). I'm sure nothing has changed.
BTW, the WNYC website is often painfully slow.
I can't believe how Pro government intervention this country turns the moment the big guys run into problems
but if it is actual people needing help . . . forget it!
let them fall
I seriously doubt the President of the Automoile's Dealers statement that 90% of people buying cars report that it was a 'positive experience'.
I leased a 2005 Honda CRV 3 years ago and I bought a 2008 Honda CRV two months ago, and if I was asked to name one of the most stressful experiences in the past few years, that would be it.
Dealerships make a small return????
Griffin in Greenwich, CT with Ford & Lexus dealerships has a collection of 100 classic and rare cars. He 'shows' at car events nationwide.
Pace in New Rochelle,NY with Honda & BMW dealerships has bought a new yacht in each of the last three years. Latest cost more than $1.2 million.
I guess their mechanics must not be paid more than minimum wage.
why do auto representatives continue to blame the product line on consumers when the design of autos is years in advance of what we see in current ads. I remember when trucks were first pushed as a substitute to an ordinary vehicle, I thought it was the most ridiculous thing ever; but all you'd see on tv was red carpet event attendees dressed in gown & tux alighting from their gm trucks. It was their choice, let them fix it.
lets talk about the auto makers needing to give back fuel efficient cars for the bail out money.
ridiculous they have not made more energy-savvy cars by now.
Brian, it’s official… your show’s jumped the shark. Along with other notable one-sided interviews this month, this guest just claimed (and I’m sure I heard him correctly) that a dealership typically makes only 1.1% on a $20,000 automobile. That’s $220. I suppose this includes the profit on the vehicle and money made on financing. Imagine the sales volume they’d have to have for all of the newspaper advertising, TV and radio advertising, and employing dozens of employees on $220 per car.
When times were good, Ford bought Volvo, GM bought Saab, and the quality of both of those cars went down. How much money did they waste in those pointless takeovers?
It's difficult to be sympathetic to companies like GM who through history have done things like buy up and destroy trolley systems to create more of a demand for cars in cities. and more recently creating and destroying their own electric car [the EV-1 of the movie "who killed the electric car"]
perhaps cars are on their way out? perhaps it's time file bankruptcy and [re]develop new technology.
if the government gives aid it should be to protect workers, and it should be tied to development of new technology that's more appropriate for the times.
A bailout does not address the problem, which is that NO ONE wants to purchase American cars. If we give them 25 billion dollars, will that get people to buy their product?
Why should the bail out only apply to Wall Street, the Banks and AIG? Paulsen bailed out his friends, now we need to look at the damaged that his friends did to every industry in this country. The auto industry, as inefficient as it is, has become the financial boogie man! We need to look beyond the rhetoric!
It must be noted that car makers don't build large, low mpg vehicles because they are simply responding to a demand for such vehicles from consumers. The auto industry, through their millions of dollars spent on marketing and advertisements, helps to create a desire for such large cars. Humans don't intrinsically want hummers. Through bigger is better style advertising, the auto industry helped to create a consumer inclination to a style of automobile (SUV, etc.) that is unsustainable both environmentally and economically. At a time when Al Gore was sharing with the world his inconvenient truth, the American car makers were pushing Hummers. For this they should receive scorn, not sympathy. If a bailout is required in Detroit, in order to prevent a depression, it should not go to the 'Big Three' but to encouraging a more progressive, forward thinking industry or program. People speak of the auto industry as being quintessentially American, but a country of progress and innovation is the America I'd like to live in.
Screw the Big 3. If they had been responsible and innovative maufacturers (and had knocked it off with the gas guzzlers!) they would not be in the predicament they are in now. Maybe they's be feeling the recession, but not begging for a bailout that they don't deserve.
Not a dime for these bozos. I had a minor role in the on the AMC and Chrysler workouts of the 70's and '80's and these arrogantly myopic guys haven't learned a thing in 30 years when the foreign manufacturers had the answers right there in front of them. Moreover, they chased profits for Hummers and SUV in opposition to the public interest in clean air. Damn them all.
In '79 Coleman Young pointed out to Jimmy Carter that all Chysler plants were in black neighborhoods and that a significant percentage of black employment was employed by Chrysler. Then there was an overreaching public interest. That no longer exists.
Bailing them out only delays the inevitable. Let the employees seek their fate sooner rather than later. And who was so concerned about the jobs of all the bankers who've been run out of their careers: bankers who had the skill sets to keep us out of this ccredit morass.
In dealing with problem loans, the old adage is that your first loss is your least loss. We're way beyond that now. And the only thing that is certain is that if you bail them out now, you'll only have to bail them out again with more money later. Enough already.
Mr Schienberg said "... dealers are victims too..."
I'm in finance, on the buy side -- where brokerages orders originate, and this year I won't be getting a bonus because there are no profits.
My heart bleeds red-white-and-blue for Mr Schienberg's organization's members, but if I'm taking a hit, everybody else needs to take a hit too.
N.B.: I did not profit nor was I involved in any way with CDS or mortgages or any of all the shady deals that brought us to our knees, and I'm still against any bailouts.
"G.M. currently employs about 8,000 people who actually don’t come to work. Those who do go to work are paid about $10 to $20 an hour more than people who do the same job building cars in the United States for foreign makers like Toyota. At G.M., as of 2007, the average worker was paid about $70 an hour, including health care and pension costs."
-Todays Times
Send them to Chapter 11. They will burn through 10 billion by March.
OR the big 3 becomes the one: AMERICAN MOTORS CORP, taxpayer owned, run out of washington, price set at $1000 each
37 see 19 last sentence
I can't believe this. Now everybody is a (reverse) socialist!
where was all this "we're all in it together" when I got diagnosed with cancer?
What hypocrisy!
Ask your guest how many times he's advocated for national healthcare? Or environmentally friendly cars?
Now he comes hat in hand crying because he might not be super-rich in a year or too. Please!
If the government required banks to use a portion of the bailout money to help their employees and customers buy a new car, that would help both industries.
Aside from the war industry, the car industry has been responsible for the most environmental destruction in human history. Credit this industry with sprawl, which has destroyed uncounted millions of square miles of natural habitat (and all the impacts on species, natural flood control, breeding grounds, etc that this has entailed), and air pollution / global warming, and all the deaths and public health impacts that this has caused (and will cause in lost island nations, swamped millions of square miles, shifting of bread baskets, future migrations and wars over scarce water...) need I go on?
That the taxpayer should be bailing out this industry which has made all the wrong decisions and impacted the environment as badly as it possibly could at every turn with no strings is in keeping with the blank check that Congress gave the 700 billion to Paulson. It's STUPID. But somehow, I'm not surprised. The answer? Heavy duty strings, enforceable strings. Force them to make the best decisions for the environment OR ELSE.
It is frightening to no end to hear the President of a dealership organization, and the head of a Union local not seem to have any idea about the problems with the auto industry and how to solve them. Credit is NOT the problem. When you have a country of consumers, who have just lost 20-30% of the equity in their homes, almost half the value of their 401k accounts, and are watching as people around them are losing their jobs and wondering if they are next, the last thing they are going to do is go out and buy a new car.
It's not about credit, it's about consumers finally realizing theyve gotten in over their heads, and scaling back their spending.
As a left-leaning democrat it pains me to say that the unions have definitely played a part in the current trouble Detroit is seeing. Much like what happened in the airline industry, legacy contracts made it impossible to compete...unions were great back when workplaces were unsafe and predatory, but they have not kept up with the global economy.
And don't get me started on why Detroit ignored fuel efficiency innovation, starting back in the 70's...it's absurd that we are in this position 30 years later.
We are proud owners of a Honda Civic and Toyota Camry hybrid, which on our summer vacation, was getting 42 mpg....
So the auto industry is on the brink of collapse, and still I've not heard any party admit their own fault in its demise. It's just a neverending cycle of blame shifting. Maybe the inevitable just came sooner rather than later.
I am appalled at the level of pedantic discourse I'm hearing from the auto people--union president, dealership owner, etc. Worse, I'm disappointed by Brian's soft questioning. American carmakers in general, and the guests today, refuse again and again to address serious issues of global warming, efficiency, and safety (huge SUV's vs. more compact cars). Even in the face of this bailout--a bailout 'average' Americans will no doubt FEEL in their own pockets--the folks on the show did not sufficiently answer difficult questions. At least, the few that were asked!
By the way, the union guy kept referring to the great American tradition of carmaking. Huh? I don't think there's anything patriotic about producing gas-guzzling, carbon-spewing vehicles and passing on the high cost of union salary demands to the consumer.
You guys should contact Ron Ananian from RA Automotive in
Warwick Nj. He is a talk radio host and an independant shop owner who can give the perspective of the repair shop owners view of the auto industry troubles.
I saw that #48, and a 30 second web search shows profit margins on vehicles, less profit from financing, is roughly 4% on the low end and as much as 13% on luxury vehicles. The average, one site claimed, was 7-8%. That would be $1400 @ 7% on a $20,000 vehicle. That’s nearly six times what the guest claimed. Why should anyone care if someone like this is jobless by year’s end much less believe what any BL guest says in the future unless there is balance or challenges from the host?
The country has a transportation manufacturing crisis for sure, but it is the "sustainable mobility industry" is what needs to be supported. This means public transport, bicycles, biofuel from waste. The private car is a dinosaur. Let it die.
We have to let go of the cliche or rhetoric that 'what is good for General Motors is good for America'. The majority of us have been downsized at some point of our working life, so the issue is not one of a lack of empathy for workers. If the issue was truly about jobs, why have they been outsourcing for years, undermining organized labor and supporting manufacturing in the developing world? There is too much duplicity and hypocrisy for the idea of corporate welfare for the auto industry. The very same champions of minimal government, deregulation & market ideology line up for government handouts only when it is in their self interest. The US auto industry is tanking because they have not been competitive for decades -- the free market spoke long ago about their inferior & uncompetitive products. Their labor practices, environmental disregard and inefficient products are symbolic of a solid contempt or indifference for U.S. consumers and workers, and now they want our empathy. To hide behind the rhetoric that it is about jobs is just laughable. We might as well prop up the V.H.S. industry or pour billions into manufacturing coal driven steam engines again. Where is their vision for sustainable practices that would make them competitive again? What is good for the environment, is good for America.
58: You cannot use a bicycle to get anywhere outside the big cities because the distances are too big. Mass transit with fixed routes would not be cost effective, and everybody can't or doesn't want to live in large urban center.
Big cities are not such overwhelmingly wonderful places that I would want to pave paradise in favor or more urbanization to duplicate Greater NYC or Greater LA.
Maybe what we all need is arcologies.
All this bailout talk has me all riled. My idea would be to switch to an infrastructure that makes automobiles and additional products and services. On the manufacturing front the machinery can be used to create products for the military and consumer goods industry. Dealerships can be used to warehouse these additional products. Maybe the accessories needed to employ residential solar technology and wind power turbines just to name a few of the possibilities. Sure we can buy the solar panels from Asia but all the other stuff needed to deploy the technology could be done domestically.
I wrote more about this idea at plotline.wordpress.com
Aside from the war industry, the auto industry has been in great measure responsible for sprawl (and all the air pollution, habitat destruction, floodplain alteration and the flooding that produces, species impacts, etc) and direct air pollution and global warming, and all the health impacts and deaths that this has and will cause, as well as island nation eradication, extreme weather (hurricanes, floods. droughts, fires, etc), the future migrations and human hunger caused by these,... need I go on?
The idea of letting the automakers keep doing this blows my mind! Doesn't anybody out there realize how much damage the car has done, and a lot of this could have been avoided and can still be avoided with design for environment - technology that exists now and that can be developed to miniaturize cars (like Europe) and make bikes and scooters more acceptable forms of transit? I hope you will shed light on this in your shows, Brian.
For better or for worse, the auto industry is hugely important to our national economy and something must be done to avoid a painful economic thump. To find the right course of action we must acknowledge that this problem did not pop up over night. America has married its economy to a consumer product that is loosing on two fronts: simple over saturation of the market and an increasingly tarnished reputation relating to pollution, road rage, suburban sprawl et al.
As a country, we should bravely face this crisis as an opportunity to re-evaluate how the economy can best serve our needs as a society, not vice-versa. Do we continue to rely on the uncertainty of consumption? Accounting for the end-of-oil, climate change and the rise of new urbanism, can we really expect Americans to buy more cars each year than they did the year previous? I believe that time has passed and to protect ourselves, we need to invent new inroads to economic security. America is a big country and we will always need to get around; government intervention might be best used as a mandate for the Big 3 to reimagine their service (transportation not cars) in a modern, post-product way.
Sorry for the duplicate (almost) post - when I refreshed I didn't see it.
As a country, we should bravely face this crisis as an opportunity to re-evaluate how the economy can best serve our needs as a society, not vice versa. Accounting for the end-of-oil, climate change and the rise of new urbanism, can we really expect Americans to buy more cars each year than they did the year previous? I believe that time has passed and to protect ourselves, we need to invent new inroads to economic security. America is a big country and we will always need to get around; government intervention might be best used as a mandate for the Big 3 to reimagine their service (transportation not cars) in a modern, post-product way.
What would happen if the military/industrial complex was no longer needed? There would be a huge loss of jobs. What would happen if diabetes was cured? There would be a huge loss of jobs. What would happen if tobacco was made illegal? There would be a huge loss of jobs. You get the idea.
By the way, not only don't I have a car but I don't even know how to drive. What... am I some kind of terrorist?
I can't believe how these big business guys feel so entitled to believe the government should throw money at them in order to keep them afloat. Because the economy soured, banks and wall street have their hands out. US auto firms make cars that nobody wants anymore, partly because Americans tired of being pawns to the oil industry. Now Detroit wants the government to keep funding their fantasy. Will the oil companies come begging too when we stop wanting their oil?
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