Billy,
"if this means lower per unit prices the difference can be more than made up with sales volume." This is true if Chrysler actually picked up sales volume. The problem is that other manufactures out competed Chrysler on price, style, and quality. One of the problems with price, as David points out, is the boat anchor deals that were given to the unions. Chrysler simply couldn't compete simply on price (nor could the other US auto makers) because of the overhead imparted by the union legacy contracts that included health care and pensions. The Japanese system was leaner and meaner. It outcompeted the American manufacturers. Chris _____ From: [email protected] [mailto:[email protected]] On Behalf Of [email protected] Sent: Wednesday, May 20, 2009 10:08 PM To: [email protected] Subject: Re: [RC] More ( non-) Evil Business Chris : Whoa. There are more ways to make a profit besides maximizing prices. After all, Walmart does quite well minimizing prices. Moreover, market share is a sort of holy grail for all successful businesses, and if this means lower per unit prices the difference can be more than made up with sales volume. Billy -------------------------------------------------------------------- In a message dated 5/20/2009 9:01:22 P.M. Pacific Daylight Time, [email protected] writes: Billy, When multiple dealerships compete in close physical proximity competition is enhanced. Purchasers can play one dealership against another driving down the prices. The elegant "invisible hand" of Adam Smith is at work. By closing dealerships Chrysler reduces competition between dealerships and drives up prices. Not good for the consumer, but good for the company. When Studebaker closed, my uncle lost his job in South Bend. He never really recovered because he wasn't able to retrain into an equivalent profession. Guys like my uncle and dealerships in Florida are victims of the free market economy. It is sometimes a brutal system, but it is better than government owned Soviet-style businesses. Chris _____ From: [email protected] [mailto:[email protected]] On Behalf Of [email protected] Sent: Wednesday, May 20, 2009 9:52 PM To: [email protected] Subject: Re: [RC] More ( non-) Evil Business Ernie: If you take the story at face value the dealership was successful; it sold a lot of cars, year after year. Therefore, again assuming basic truthfulness, there is no excess to worry about. All cars shipped to the dealer get sold. It is always profitable for the company. Therefore, shutting it down makes no sense. Billy ----------------------------------------------------------- In a message dated 5/20/2009 8:46:33 P.M. Pacific Daylight Time, [email protected] writes: Hi Billy, On May 20, 2009, at 7:33 PM, [email protected] wrote: WTH ? Are the people at Chrysler out of their minds ? No, they're bankrupt. The problem is that Chrysler has too many dealers to ever maintain decent market prices, and thus they need to consolidate if they're ever going to recover. Economists have known for years that any long-term solution to the American auto industry involved shutting down "excess" dealerships: http://www.autoblog.com/2007/06/18/excess-dealers-costing-big-3-436-per-vehi cle-in-extra-costs/ The dealers (obviously) didn't want to lose their investment, and so kept delaying the day of reckoning. The end result is things like this. :-( Now, the details sound unusually harsh, but then again this is only one side of the story. HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA? This comment in particular about the "free market" is more than a little ironic, since for a long time dealers had local monopolies: http://www.reason.com/news/show/36050.html In a truly free market, most car dealers would long since have been dis-intermediated by Amazon and eBay, or replaced by Best-Buy style megastores. He who lives by arbitrary patronage often dies by arbitrary patronage. -- Ernie P. Billy ------------------------------------------------- In a message dated 5/20/2009 1:58:43 P.M. Pacific Daylight Time, [email protected] writes: http://www.americanthinker.com/blog/2009/05/letter_from_a_dodge_dealer.html Letter from a Dodge dealer letter to the editor My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business. We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month. All depend on our business for part of their livelihood. We are financially strong with great respect in the market place and community. We have strong local presence and stability. I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees. Sunshine Dodge is my life. On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as "new," nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory. Our facility was recently totally renovated at Chrysler's insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank. HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN? THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong. This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster. HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA? I beseech your help, and look forward to your reply. Thank you. Sincerely, George C. Joseph President & Owner Sunshine Dodge-Isuzu - Looks like the real thing to me. http://www.sunshinedodgeisuzu.com/staff.html -Another "evil" businessman gets what he deserves? // Lennart _______________________________________________ Centroids mailing list: [email protected] http://radicalcentrism.com/mailman/listinfo/centroids_radicalcentrism.com Archives at http://radicalcentrism.org/pipermail/centroids_radicalcentrism.com/ _______________________________________________ Centroids mailing list: [email protected] http://radicalcentrism.com/mailman/listinfo/centroids_radicalcentrism.com Archives at http://radicalcentrism.org/pipermail/centroids_radicalcentrism.com/ = _______________________________________________ Centroids mailing list: [email protected] http://radicalcentrism.com/mailman/listinfo/centroids_radicalcentrism.com Archives at http://radicalcentrism.org/pipermail/centroids_radicalcentrism.com/ _______________________________________________ Centroids mailing list: [email protected] http://radicalcentrism.com/mailman/listinfo/centroids_radicalcentrism.com Archives at http://radicalcentrism.org/pipermail/centroids_radicalcentrism.com/
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