GM to Chevy dealers: Sell Volt at MSRP or else...

http://www.dailytech.com/article.aspx?newsid=19346

oops meant Autonation not GM

Welcome to socialism.

I'm not following... How is a company providing standards to the dealerships that it owns and that use its name socialism? Seems to me it's good business sense - protecting their name and reputation with consumers from sleazy dealerships?

LOL, wes, I love you buddy, but what's the point? AutoNation is sleezy like every other car dealership (and conglomerate) and they're telling the GM dealerships they own they can't charge above MSRP or they'll terminate their contract. I find it funny they're really exposing how scammy they are in the article.

If you read into it, why would a conglomerate be telling their own "dealerships" (that they "own") that if they charge over MSRP they'll be "terminated"? How can you "terminate" a company you own and what does that even mean? There's way more to the story

Seems pretty fishy to me that a company would prevent its franchises from making as much money as they can. Why? I would venture to guess some under-the-table influence is at work.

Rob, I don't doubt there's more to the story, or that Autonation is sleazy. I'm just trying to understand where socialism is coming from. I couldn't care less about Autonation, but I do think it will be interesting to see how the whole Volt situation plays out as I think it will have big consequences for GM.

SO wait, a car dealership is sleazy if it rips off a customer but a major auto group is sleazy if they make sure that doesn't happen with any of it's dealerships? Am I reading this right?

Originally Posted by pesos

Rob, I don't doubt there's more to the story, or that Autonation is sleazy. I'm just trying to understand where socialism is coming from. I couldn't care less about Autonation, but I do think it will be interesting to see how the whole Volt situation plays out as I think it will have big consequences for GM.

GM is doing themselves in on so many levels, if the government stopped trying to buy them out and support a dying company they would be doing America a favor. Watch GM's IPO come and go and the company collapse again because they have too many products, too much baggage (regardless of the bankruptcy), and too little innovation. Do you know where they send the bottom of the bottom engineers that graduate from all those engineering schools in the midwest (purdue, etc)? Michigan . Japanase and European automakers have been killing them for the last 10 years and GM has been losing the brands that used to be their corer (Olds, Buick, Pontiac, etc).

The other side of this story that I find ironic, and even more so that they're are obviously trying to get attention for their "forcing their dealerships to sell at MSRP" is that all of these dealership chains (autonation, penske, etc), are huge monopolies and I think when they speak of terminating their contract, they're referring to how each dealership is generally setup with a bogus entity that they don't "own"...

The govt 1) owns GM, 2) has virtually unlimited resources, and 3) is hellbent on alternative energy. Sure, it's speculation, but can you see where I'm making a connection?

Originally Posted by blabel

SO wait, a car dealership is sleazy if it rips off a customer but a major auto group is sleazy if they make sure that doesn't happen with any of it's dealerships? Am I reading this right?

There's way more to the story, the quote in the article is just for attention.

Originally Posted by trace

The govt 1) owns GM, 2) has virtually unlimited resources, and 3) is hellbent on alternative energy. Sure, it's speculation, but can you see where I'm making a connection?

I don't think GM has anything to do with this lol. This btw, has been happening for ages, companies jacking up the retail prices of vehicles that had a lot of hype, highend stuff like the audi R8 suffered from it, and even the mazda miati when it came out, I remember dealerships charging like 2x MSRP for the cars.

Govt Motors has no interest in saturating the market if they can?

Sure, dealer markup is nothing new. But a $20,000 markup on a $40,000 car as that LA dealership said they will be adding is not something you see too often. What if the Apple Store manager in Orlando came out and said they were going to sell their initial supplies of ipads with a 50% markup. What's wrong with that? Demand is high, people would have easily paid it. But I imagine Apple might not have looked on it too kindly?

Maybe it's the other way around - maybe they don't think they're actually going to sell well, so they want to get them off the lot before anyone else. I just can't see any other valid business reasons for a company like Autonation to take a step like this.

Originally Posted by pesos

Sure, dealer markup is nothing new. But a $20,000 markup on a $40,000 car as that LA dealership said they will be adding is not something you see too often. What if the Apple Store manager in Orlando came out and said they were going to sell their initial supplies of ipads with a 50% markup. What's wrong with that? Demand is high, people would have easily paid it. But I imagine Apple might not have looked on it too kindly?

Your apple store argument isn't plausible considering they're all corporately owned. There's a reason manuf's put a MSRP on products, it's to prevent unfair price gouging and create consistency in the market - which is basically what's going on here. Now if multiple dealerships are conspiring to mark up the cars by $20k, that's price fixing, but the government hardly ever does anything about that (hence the reason oil companies have been making so much money lately).

Originally Posted by trace

Maybe it's the other way around - maybe they don't think they're actually going to sell well, so they want to get them off the lot before anyone else. I just can't see any other valid business reasons for a company like Autonation to take a step like this.

No. Here's how new car dealerships work, and the reason they all stay in business. The manuf's give the dealerships really cheap financing, often times the first 90 days they hold a car in inventory, they're not paying any interest on the car, or if they are it's mega cheap. The dealerships are "floorplanned" (basically controlling their inventory), but it's not done on a really forceful measure, it's not like they're going to go tell a Chevy dealership in San Francisco, "Hey you need to be selling the same ratio of Diesel Duallys as this other dealership in nebraska".

How does that explain why they would tell their dealers to forgo additional profits on a popular car?

Originally Posted by trace

How does that explain why they would tell their dealers to forgo additional profits on a popular car?

IT'S OBVIOUSLY FOR ATTENTION. Did you notice the part where this came out when being interviewed by a magazine? What company would go out and blab corporate policies like this for any other reason?

The biggest crime here is that horrible article!! Why would you report on something like that without interviewing Autonation and finding out what their motivation is for keeping the price down and foregoing an extra $20,000 per vehicle. There is definitely more to the story because companies don't pass on an extra $20,000 per vehicle (instead opting to create a secondary market that will happily take that $20,000 per vehicle) out of the goodness of their hearts. I could understand if GM had some sort of agreement that prohibits its dealers from doing this (see Apple example above), but I would expect that to be the same case for all the vehicle models since the reasoning behind it should be consistent.

I'm calling BS. That's PR spin. They're trying to hype it and create interest by implying that the cars are going to be in sssooooooooo much demand.
They have no problem charging a "Geographical Correction" surcharge on the hig end Corvettes sitting at the dealer. An extra $20k because the car is sold in WI?? Why would they not allow that on the Volt? Somthing's off....

You may find this interesting http://www.bloomberg.com/news/2010-0...n-hassett.html