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Jared Hamilton
From: Jared Hamilton
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Jared Hamilton

Jared Hamilton Founder - CEO

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4 Reasons to Improve CRM Utilization in 2017

4 Reasons to Improve CRM Utilization in 2017

Yes, dealers are creating a tremendous amount of data. The problem is, most of it is junk. Data is like this 1958 Tops Baseball Card complete set. You have…

Your Car Repair Shop Should Appeal To Parents Whether It is At a Dealership or Privately Owned

Your Car Repair Shop Should Appeal To Parents Whether It is At a Dealership or Privately Owned

Running an auto repair means that you have to take care of all kinds of details including scheduling, discipline, and customer service. Giving a customer t…

6 more reasons why we MUST move Techs to $40 to $50 an hour soon

6 more reasons why we MUST move Techs to $40 to $50 an hour soon

If you have followed my published articles in the past about retaining Techs (based on being a former dealership Fixed Ops Manager and my 17 years of r…

Auto/Mate Names Patrick Reilly as New Head of Marketing

Auto/Mate Names Patrick Reilly as New Head of Marketing

ALBANY, NY, UNITED STATES, December 5, 2016 /EINPresswire.com/ -- Auto/Mate Dealership Systems announced today that Patrick Reilly has joined its team …

Top Blogs November 2016

Top Blogs November 2016

1. Which Language Can Close Leads? By Richard Rikess The words we use and see can do a lot of things, but in …

With so much hupla over potential for a government bailout pundits and politicians are quick to point an ignorant finger at the many wrong reasons that placed us in this mess to begin with. Few if any, are discussing the historic facts at the core of the domestic automakers current crisis.  The industry was set up right, but has been locked in and unable, not just unwilling, to change their now antiquated business model & structure.

The domestic automakers were born in the very early 1900’s, they weren’t started IN the industrial age, the WERE the industrial age.  These companies grew rapidly into becoming the economic engine that fueled America’s great growth.  To serve the population dealerships were needed in every community for sales and service.  This industry revolutionized the economic world as well as the social world.  Cars made travel affordable and efficient, keeping people connected and making the world a smaller place much like social networks of today.


In the 50’s and 60’s the interstate highway system was built out, to the pleasing of the auto industry lobbyists.  With easer means of travel the need for cars increased, but so did competition, which severely eroded dealership margins.

Honda and Toyota didn’t enter the US market until this time, and really didn’t gain significant traction until the 1980’s.  Because their infrastructure was built out decades later and in a completely different economic era, their businesses structures are very different than the domestic’s.  Most notably they have far fewer dealers, especially when looked at the ratio of dealers to car sales.  Also, they are also not weighed down by the UAW, which was formed in 1936 (however smaller unions date back to the late 1800’s.)  Global competition has caught up to the American factory worker and these corporations can no longer afford to pay the benefits afforded through the past century given global competition.

Letting these plants move over seas should be out of the question, despite the potential short-term benefit.  Out-sourcing the domestic’ manufacturing would be a national security disaster.  During the past Word Wars the auto plants we converted to building tanks, planes and other vehicles for the military. Could you imagine if WWIII ever happened and we had to outsource our military vehicles to china?  YEA RIGHT!

There is no doubt the industry has some pains ahead of it as it goes through a much needed correction but there is a silver lining to this gray cloud.  Restructuring (even with a Chapter 11 reorganization of some sort) could provide some HUGE long-term benefits to the US auto industry.  Even though the industry is changing and that is painful, it must look at it as an opportunity. New business models could sprout creating a wide array of benefits for those inside the industry and those that consume our products and services.  There is lots of uncertainty in the market right now.  However, one thing is certain, as long as American ingenuity and entrepreneurship is alive and well the domestic industry will survive and reinvent itself into the world wide powerhouse that it was and deserves to be.
 

Andy Warner
Jared, Thank you for bringing this view to the forefront. As you said early in your post, "Few if any, are discussing what is at the core of the domestic automakers current crisis, an antiquated business model & structure." With that said, I'm curious to hear your suggestions for the auto industry. Individuals inside the industry have drastically different viewpoints than those outside the industry regarding re-structure (and hopefully re-birth). What do you think the auto industry should do to revive itself? Andy
Jared Hamilton
Sorry for the delayed response Andy. I think the issue needs to be attacked on many fronts: 1.Domestic OEMs labor contracts: We cant let them employee and go away completely, it would be a national security disaster. Serious reinvention is needed and one of the main things holding that reinvention back is the UAW. They place so many restrictions on the Big 3 that there is no way they can compete in today's world. The job bank program is a complete joke, as one example. I believe that in our market you get rewarded to perform, not because you are part of a group. I'm not convinced that without bankruptcy (yikes) they can rid themselves of the union death grip. This makes me lean towards some form of prepackaged ch 11 or other special legislation. Naturally the fear is the loss in consumer confidence, which is VERY real and could be a slippery slope for the manufacturers. The govt must back up any restructuring so the consumer confidence can remain intact (or as intact as possible, its already dropped tons) 2. Domestic OEM manufacturing: With the weight of the union gone, the OEM is left to the market to treat and pay their people well to attract the best. I prefer the market as the best equalizer, not the union. Then come up with some creative manufacturing, look at the PC model. Dell doesn't create the chips, intel and a host of others compete. The best chip for the price wins. Intel and their competitors constantly are forced to innovate their product and price to place them inside dell computers. Also note, intel and the others supply chips to not just dell, but also HP, IBM, Apple and others. What if there were just engine providers, and they all competed to get their engines into Ford, GM and Chrysler vehicles. The engines would constantly be pushed to new limits thanks to the constant competition. The OEMs could sell plants and space to new start up companies that would look to compete for the option to put their motor, transmissions and other components into all the OEM cars. They could fill the jobs vacated by the OEMs. 3. Dealerships and distributions: This is scary question i know, but is our distribution model out of date? Isn't it strange that you can go to dell, custom build a computer and Dell receives your money before they have to buy their inventory (HUGE REDUCTIONS IN WORKING CAPITAL) you get exactly what you want, and it is sent to your house. It takes only a few hours to build a car, it is completely RIDICULOUS that we have to order them MONTHS ahead of time from the factory. What if the OEM created build to order cars, customers would have to visit a dealership to test drive and then could order online through the dealer sites. The vehicles (custom mind you) were built, shipped to the store for delivery. Dealers would still be needed for sales, PDI, deliver, service and parts. Not to mention trade ins and to sell used. The need for real estate would drop, as well as the costs for inventory. The OEMs could still franchise the right to sell and service the vehicles, but the costs to run your store could significantly drop. There is no doubt that our industry will have growing pains. Unfortunately that is part of change and innovation. The argument of "We have been one of the strongest industries in the world for 100 years, we just need to get back to what was working before." is a bogus statement. Times have changed, the union has little place these days (just my opinion- I know thats a hot topic) However, we have a HUGE opportunity right now to grab the bull by the horns and dramatically change the game. We could reinvent the industry and take back the position as the strongest industry in the world, and have it based out of the United States. - My 2 cents. (it was fun to respond... i feel another big post coming on.)
Eric Miltsch
Jared - Looks like the union wage item is major stumbling block... http://www.msnbc.msn.com/id/28166218/

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