When Michael Dell made his foray into selling cars through CarsDirect, that was OK with Detroit. All he did was put together a collection of dealers who would discount cars to sell through Dell’s internet company. It worked out well for everyone and the dealers associations have given CarsDirect a number of awards. However, the word is that he is about to step over the line and there are folks in Detroit who do not like it one bit.
Buying from the good ol’ boys in the dealer network was one thing, but actually becoming a dealer – in fact actually owning 124 dealer franchises, selling better than $5 billion worth of cars a year – is way, way, way over the line. Word is that he might be doing just that, however. Dell and some family members are said to be negotiating the purchase of the Asbury Group, one of the biggest dealer companies there is.
Edward Lapham writes for the Automotive News and he is a long time auto industry insider – one of those guys who gets quoted all the time because of his deep knowledge and wisdom concerning the business – especially as the fellas in Detroit practice it. He does not approve of Michael Dell and his new-fangled ideas one bit. Said Lapham:
"Let’s hope that if and when computer mogul Michael Dell buys Asbury Automotive Group he doesn’t treat the dealerships like laboratories for new-age theories about selling cars.
There are those in the retail world who predict the founder of computer giant Dell might want to experiment in areas that have worked in the computer business, such as just-in-time inventory.
That doesn’t pass the smell test."
I can understand why the Detroit insiders are not happy at the prospect of Dell in their supply chain. He has a habit of demanding that suppliers perform. For as long as the auto industry has existed in this country the tails have been wagging the dogs. Dealers – who are the ones who actually buy cars from GM and Ford – have never been viewed as customers. They have been treated as though they should feel honored by the privilege of owning a GM or Ford dealership. In turn, the dealers have done their level best to make us feel as though we should be honored by the privilege of buying from them. I don’t think Michael Dell will share those feelings.
The concept behind CarsDirect was to enhance the car buying process in the eyes and mind of the customer. The same customer focused point of view has driven Dell’s computer business. It seems to me to be a safe bet that Dell will take to the car business this same "smelly", "new age theory" of taking care of his customers and expecting his suppliers to actually deliver value. That, of course, will throw a great big wrench into Ford and GM’s plans. All along, they thought their business plans were up to them and their cronies on Wall Street. Michael Dell controlling a multi-billion dollar chunk of the supply chain means that the customers might actually have a say in things. It is no wonder Detroit is unhappy.
Bob Lutz of GM has a web site in which he solicits suggestions about how GM can improve. Here is a sampling of the input he has received:
"the GM package is made up of dealer sales, dealer service, GM warranty department, and GM customer service. And when the consumer has a problem, all these departments conveniently separate from one another leaving the end user with . . . a full time job trying to get something done"
"Please, please, look at THE DEALERSHIP EXPERIENCE, first, Bob!"
"The best cars in the world will NEVER overcome the mostly clueless dealer network you have out there."
"I can’t tell you how many tales I’ve read recently on my favorite GM car forum of customers who were treated badly by dealerships"
"I won’t reiterate what others have said, but anyone who’s dealt with a GM dealership for sales *OR SERVICE* knows the pain"
"A lot of people is going away not because of the cars, but of the way they’re recepted [recepted? – no points off for grammar, I guess] in the dealers"
"ya gotta do something with the bloated dealer network"
"Don’t force people to buy options they don’t want, or Allow your dealer’s to gouge us if we try to order one instead of buying their "Showroom Model"."
"And we haven’t even gotten to the legendarily awful dealer experience, where despite one’s education, experience, in-depth knowledge of the GM lineup and GM history, one will still be expected to go through the same sleazy sales tactics, haggle through the absurd dealer markups, and generally be made miserable in the process."
… and it goes on and on. Lapham’s editorial says, "Why would you invest heavily in an established business — the sixth largest dealership group in the country — and risk losing everything on unproven schemes that fly in the face of American car-buying habits?" Gee Ed – maybe because the customers are really, thoroughly, completely, totally disgusted at the ‘car buying habits’ your cronies in Detroit have forced on us for decades?
And really, Ed, what exactly does Detroit have to lose at this point by letting Michael Dell treat some of the "dealerships like laboratories for new-age theories about selling cars"? It isn’t like the old school theory is working out all that well for Detroit these days, is it?
Just In Time doesn’t pass the Detroit smell test, huh? I think things have reeked in Detroit for so long that every olfactory nerve in Mr. Lapham’s nose is shot. Michael Dell taking a big stake in the auto supply chain – in the links between the manufacturers and me – is the first really fresh breeze of Spring air that has blown through Detroit in a long time. Let’s just hope there is someone there who can smell it.