Is Closing Auto Dealerships the Right Decision?
Dennis AuBuchon
May 17, 2009
Recently in the news we heard about decisions to close over 1,900 auto dealerships through GM and Chrysler. The loss of the jobs will hit local communities in several states hard. Many support local activities for which funds will be reduced if not eliminated. While this decision is not final in some cases it raises many questions about how the decision was made. I understand the need for the major car manufacturers mentioned above to restructure their operations. Some dealerships as discussed in the news plan on staying open even if the car manufacturers will not renew their contracts through selling used cars. I think this is a wise decision based on the current economic environment. People are looking to keep their cars or buy used cars vs new ones.
I once heard a statement in a movie which said downsizing is easy making it work is the hard part. I do not know all the details of the current environment for Chrysler and GM but they have received government funds to help them stay afloat. I personally feel that closing dealerships may not be using the money wisely. Granted there are dealerships that may be a drain on the corporate profits and may need to close but many have been in business for generations. Making a decision to close them hurts the entrepreneurial spirit to start and build a business. The thought appears to be that customers will go to another dealership which is remaining open. This may not be the case. Many times customers have developed a relationship and trust those with which they have done business for years and to make a decision assuming customers will go to another dealership may be flawed.
The environment today is one where consumers are questioning with whom they are going to do business. The key is and will be that they will do business with those they trust. Many companies have closed operations and customers must develop a relationship with others providing the same product. Trust is a big issue today with the corporate scandals that have been in the news recently. Assuming customers will be loyal to their brand of product when operations close is not being based on sound principles. While there are those who have developed a trust of specific brands the customer service they receive will be a major factor. Even companies from the same corporation or having contracts with the same corporation do not necessarily work from the same perspective that people have become accustomed to in the past.
Companies who have been given the notice to close operations have built a business and a relationship with their customers. Businesses succeed when they have a good product and a good relationship based on trust. This relationship has developed over years and sometimes generations. The one thing about consumers that the auto manufacturers and other corporations must realize is that consumers make their own decisions when it comes to doing business. These decisions may not always agree with the philosophy of corporations when they decide to downsize and restructure. Granted downsizing can be beneficial to a company but it must be done the right way.
The details of the decisions involved with those being notified that their relationship with the auto manufacturers will cease are not readily available. The impressions given in news reports indicate that dealerships were not consulted or given the opportunity to put their case before the individuals making the decision. Many may have offered ways they could work with them to stay open or offer substantiation why they should they should not have their relationship severed. Some of the decisions may impact local communities already hard hit with closures. These situations should be considered if not already.
When decisions affect the livelihood of individuals, corporations must consider their decisions carefully and with integrity of purpose. We criticize other companies when they make decisions that benefit the corporation without regard to the employees affected but this appears to not exist thus far in news reports. Causing a shift in the customer base from one dealership to another who has built the business with their customers is in my opinion not in the best interest of the customer. Having done business with specific dealerships a relationship was developed over time which involves great customer service. This relationship will need to be developed with new dealerships if customers decide to do business with another which will remain open. This will take time and how the restructure of these car manufacturers and their dealerships will shake out remains to be seen. It is not a given that customers will automatically transfer their business to other dealers with the same product.
The plight of dealerships does not rest entirely on the car manufacturers as we the public have demanded large cars and trucks. When gas prices skyrocketed the demand for these vehicles fell sharply and dealers were left with a product they could not sell or sell in the quantities of the past. While I do not like the idea of giving money to corporations who are failing to make a profit such as the auto manufacturers I do agree that something had to be done.
There are a few remaining points I wish to reinforce and address. The manufacturing of automobiles is an integral part of our economy and their impact affects countless companies who furnish parts to the auto makers. As with any business that downsizes the impact to suppliers of those businesses may not be readily known. Downsizing if it is deemed to be necessary while it is a decision at the corporate level affects the relationships with their suppliers. This needs to be considered before final decisions are made. Businesses that will be impacted by these kinds of decisions should have an opportunity to plead their case. Another factor to consider is how the decision will impact local communities who may already be hard hit with closures and loss of jobs and income to the community. In all this many times the consumer appears to not be considered and how they may react to these closures or downsizing decisions. The consumer will be the ultimate decision maker on whether downsizing decisions will be looked upon favorably.
The key in any successful business is the customer relationship that they develop over time. If there are good products or services but there is poor customer service consumers may switch to competitors if they are available for the same product or service. Making decisions to downsize a company is not an easy one but in many cases it may be necessary especially in today´s economy. While I sympathize with companies who must make these decisions they must be made with integrity and considering the impact not only on the company but the communities and individuals who will be affected with their decisions. Consumers must be considered as to how they will be impacted and the potential for more lost revenue if they do not receive the decision favorably.
There are always going to be competition for the same products or services and you cannot assume how consumers will react to decisions made by corporations. Consumers are the lifeblood of companies and without them they will fail. Keeping customers happy is the key to staying in business. Companies need to make sure that they have a policy that puts customer satisfaction first through great products and great customer service not only before the sale but after. This is how companies retain their customer base and have the opportunity to gain new ones. Customers talk to each other and when they are satisfied with a company they tell their friends. The same is also true if they have a bad experience with a company. The greatest asset a company has is their customer base. Customers who have bad experiences can cause a reduction in the customer base and keep potential customers from trying their products and services. This article has been about the closing of auto dealerships but the principles discussed in this article apply to all companies who want to succeed.
I once heard a statement in a movie which said downsizing is easy making it work is the hard part. I do not know all the details of the current environment for Chrysler and GM but they have received government funds to help them stay afloat. I personally feel that closing dealerships may not be using the money wisely. Granted there are dealerships that may be a drain on the corporate profits and may need to close but many have been in business for generations. Making a decision to close them hurts the entrepreneurial spirit to start and build a business. The thought appears to be that customers will go to another dealership which is remaining open. This may not be the case. Many times customers have developed a relationship and trust those with which they have done business for years and to make a decision assuming customers will go to another dealership may be flawed.
The environment today is one where consumers are questioning with whom they are going to do business. The key is and will be that they will do business with those they trust. Many companies have closed operations and customers must develop a relationship with others providing the same product. Trust is a big issue today with the corporate scandals that have been in the news recently. Assuming customers will be loyal to their brand of product when operations close is not being based on sound principles. While there are those who have developed a trust of specific brands the customer service they receive will be a major factor. Even companies from the same corporation or having contracts with the same corporation do not necessarily work from the same perspective that people have become accustomed to in the past.
Companies who have been given the notice to close operations have built a business and a relationship with their customers. Businesses succeed when they have a good product and a good relationship based on trust. This relationship has developed over years and sometimes generations. The one thing about consumers that the auto manufacturers and other corporations must realize is that consumers make their own decisions when it comes to doing business. These decisions may not always agree with the philosophy of corporations when they decide to downsize and restructure. Granted downsizing can be beneficial to a company but it must be done the right way.
The details of the decisions involved with those being notified that their relationship with the auto manufacturers will cease are not readily available. The impressions given in news reports indicate that dealerships were not consulted or given the opportunity to put their case before the individuals making the decision. Many may have offered ways they could work with them to stay open or offer substantiation why they should they should not have their relationship severed. Some of the decisions may impact local communities already hard hit with closures. These situations should be considered if not already.
When decisions affect the livelihood of individuals, corporations must consider their decisions carefully and with integrity of purpose. We criticize other companies when they make decisions that benefit the corporation without regard to the employees affected but this appears to not exist thus far in news reports. Causing a shift in the customer base from one dealership to another who has built the business with their customers is in my opinion not in the best interest of the customer. Having done business with specific dealerships a relationship was developed over time which involves great customer service. This relationship will need to be developed with new dealerships if customers decide to do business with another which will remain open. This will take time and how the restructure of these car manufacturers and their dealerships will shake out remains to be seen. It is not a given that customers will automatically transfer their business to other dealers with the same product.
The plight of dealerships does not rest entirely on the car manufacturers as we the public have demanded large cars and trucks. When gas prices skyrocketed the demand for these vehicles fell sharply and dealers were left with a product they could not sell or sell in the quantities of the past. While I do not like the idea of giving money to corporations who are failing to make a profit such as the auto manufacturers I do agree that something had to be done.
There are a few remaining points I wish to reinforce and address. The manufacturing of automobiles is an integral part of our economy and their impact affects countless companies who furnish parts to the auto makers. As with any business that downsizes the impact to suppliers of those businesses may not be readily known. Downsizing if it is deemed to be necessary while it is a decision at the corporate level affects the relationships with their suppliers. This needs to be considered before final decisions are made. Businesses that will be impacted by these kinds of decisions should have an opportunity to plead their case. Another factor to consider is how the decision will impact local communities who may already be hard hit with closures and loss of jobs and income to the community. In all this many times the consumer appears to not be considered and how they may react to these closures or downsizing decisions. The consumer will be the ultimate decision maker on whether downsizing decisions will be looked upon favorably.
The key in any successful business is the customer relationship that they develop over time. If there are good products or services but there is poor customer service consumers may switch to competitors if they are available for the same product or service. Making decisions to downsize a company is not an easy one but in many cases it may be necessary especially in today´s economy. While I sympathize with companies who must make these decisions they must be made with integrity and considering the impact not only on the company but the communities and individuals who will be affected with their decisions. Consumers must be considered as to how they will be impacted and the potential for more lost revenue if they do not receive the decision favorably.
There are always going to be competition for the same products or services and you cannot assume how consumers will react to decisions made by corporations. Consumers are the lifeblood of companies and without them they will fail. Keeping customers happy is the key to staying in business. Companies need to make sure that they have a policy that puts customer satisfaction first through great products and great customer service not only before the sale but after. This is how companies retain their customer base and have the opportunity to gain new ones. Customers talk to each other and when they are satisfied with a company they tell their friends. The same is also true if they have a bad experience with a company. The greatest asset a company has is their customer base. Customers who have bad experiences can cause a reduction in the customer base and keep potential customers from trying their products and services. This article has been about the closing of auto dealerships but the principles discussed in this article apply to all companies who want to succeed.
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