Tuesday, January 19, 2016

January 2016 SDADA Column

I am listening to an Federal Trade Commission "Auto Regulation Workshop" as I write this column. This is a rather optimistic title for this "witch hunt".

The FTC has, in the past, shown they supported manufacturer direct selling. Of course this was only the personal opinion of staff - not an official position. 

So the FTC now conducts a "kangaroo court" with panels stacked against the dealers advocating for a demolition of the franchise system (and State Franchise Laws) and endorsing direct selling by manufacturers. 

They are featuring a parade of panelists that are testifying about how the dealers are getting rich ( "average dealership profits of over $1 million/year"), running monopolies within their local markets, adding cost as a middleman and generally doing all of this at the expense of both the manufacturer and the consumer.

The ultimate irony is that the general theme of the panelists is regulation (in the form of State Franchise Laws) is inefficient and adds cost to the distribution system. There has never been an administration that has introduced more regulations (at great cost to our nation's businesses) in the history of our country. But it is only these State Franchise Laws that add costs - none of the federal regulations are guilty of such a travesty!

We can expect the "findings" of this sham to be marched out as evidence that the franchise system is broken and that State Franchise Laws should be sacked. Elon Musk is smiling all the way to the bank.

This is just another attack by the current administration and its legion of regulators who are bitter about the automobile dealers' success in earning a carve out of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010. The attacks by the Consumer Finance Protection Bureau over the past five years are similarly motivated.

I think it is appropriate to end this discussion with a reminder of the Tenth Amendment to the United States Constitution which states that the federal government possesses only those powers delegated to it by the United States Constitution. All remaining powers are reserved for the states or the people. 

That is the Federal Trade Commission you hear in that background muttering "Whatever!". 

Multi-Tier Pricing Strikes Again

You've probably seen the story about Napleton Automotive Group alleging FCA US offered dealers large sums of money to report unsold vehicles as sold. While there are many moving parts to this story and I don't care to opine on this until all the facts are out, it is illustrative of the fact that multi-tier incentives or bribing with "marketing incentives" causes problems for all involved.

It undermines the value of each brand, confuses consumers and now we see it leads to potentially scandalous and misleading reports hitting stock values. It is virtually impossible for dealers to offer transparency in their pricing to consumer if manufacturers will not do the same to their dealers. 

NADA Convention Registration Open 

Online registration for the 2016 NADA Convention & Expo in Las Vegas is open. As one of the most popular destinations in the country for meetings and conventions, several hotels in NADA’s convention block have already sold out. 

Hotel rooms are still available in NADA’s block but they are going fast. The  convention—which runs from Thursday, March 31, through Sunday, April 3, 2016—will be held at the Las Vegas Convention Center. For more information or to register, visit www.nadaconvention.org.

Wednesday, January 6, 2016

Hang Together? Or Separately?

"We must, indeed, all hang together or, most assuredly, we shall all hang separately."  
-Benjamin Franklin

If you're a student of the American Revolution, you will recognize the quote above. Franklin's message was that the signers of the Declaration (as well as colonists in general) had to help and support each other or they were doomed.

I believe that is much like a local community. If those of us in a community do not support our local businesses, we won't hang separately or be executed, but we are doomed.

If you live in a small town, you surely have been encouraged to “buy local.” But what, exactly, does "buy local" really mean? Certainly you are being encouraged buy groceries, hardware and clothing locally. But the higher the price of the items you buy locally, the greater the impact your purchase has on the local economy.

According to the website local-first.org, $73 of every $100 you spend returns to the community through avenues such as taxes (which support the local schools and teachers), payroll (which employees may again spend locally), and other expenditures (like support of local events, activities and organizations).

When you buy locally, businesses have the opportunity to create more jobs locally. Simple economics dictates that more local jobs means a greater demand for workers and thus higher wages and/or better benefits for everyone in the marketplace.

When you buy in Mitchell, Rapid City or Sioux Falls or online, none of the money spent stays in in our local community to pay taxes, payroll or any other expenditures. In other words, you are not supporting the local schools and teachers, local events, activities or organizations. 

"But I Can Save Money"

Can you save money? Are the goods or services you are buying really less expensive? Are they of the same quality? Did you consider the value of your time (driving or riding to another community)? Did you factor in the cost of your transportation (fuel, maintenance, depreciation of your vehicle, etc.)? Did you factor in the cost of shipping and handling (of an online order)?

My experience is that, if given the opportunity, local business owners do or would be willing to match the true cost of goods. To be fair, this should include some of the costs mentioned above. The question is, are you willing to give them that opportunity. Do you care enough about the future of our community to look at a transaction fairly and give the local vendor that opportunity?

I am not advocating feel-good, it's-worth-paying-more-for-local concept. I believe that if you do give the local businesses the opportunity to earn your business, you will be rewarded with better prices, better service and a better community. 

Proud to be Your Local Automobile Dealer

As an automobile dealer with stores in Chamberlain and Winner, I ask you to consider applying the logic above when you purchase your next vehicle. I would enthusiastically welcome the opportunity to help you find your next vehicle, get the financing package that fits your needs and provide service for your vehicle going forward. I believe we can bring value and enjoyment to your ownership experience.

Find the Right Vehicle...

The automobile world has changed drastically over the past 15-20 years. It used to be that you would have to go to the dealership to see a vehicle. The internet allows you to shop online for the right vehicle. Smart phones and tablets let you do that from virtually anywhere. 

It does not make sense for a small town dealership to stock hundreds of vehicles and pay the interest associated with stocking so many vehicles when we can have access to many more vehicles without the expenses. We have a network of dealer-partners across the Midwest with which we trade and buy cars, trucks and SUVs. This expands our "true" inventory exponentially. 

Our professional staff will find the new or used vehicle you are looking for. You won't have to drive all over looking for that "just right" automobile. You tell us what to find, and WE WILL FIND IT!!

...At the Right Price...

When you buy local at Harry K's, you will save money! Our prices will reflect lower costs and will
save you money when compared big city stores. Our overhead expenses (interest, taxes, facility, utilities, salaries, etc.) are much lower and we pass that savings on to our customers!

...And Payment...

At Harry K's, we have access to more than a dozen different financial institutions that specialize in automobile financing. We will shop these banks and pit them against each other to get you the best interest rate possible. 

We will use our buying power to help you get financed even if you have had some bad luck in your financial past. We will work hard to serve your financing needs because you're not just another customer, you're our friends and/or neighbor as well!

...And We'll Take Care of You Down the Road...

Our service professionals are training weekly so that they provide the best service for your vehicle. The value to you is that you can be assured that your vehicle will continue to perform at the highest level and when you come back to trade your vehicle, it retains the greatest value possible because we have a service record.

Growing Together

We believe that when businesses in the community thrive, the community thrives. Unlike big city businesses or dealerships, we are proud to give back to our community. We know the summer rec and swim team schedules because our sons and daughters play and swim on the teams. We are not just your local dealer, we are stakeholders in your community. Supporting your local dealer means supporting the small-town community.

You are more to us than a paycheck or a profit. You are our friends and neighbors. Give us a chance to earn your business. I believe you benefit and our community will benefit!