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Jul 13, 201012:00 AMMad @ Mgmt

with Walter Simson

Weakly Specials

Weakly Specials

Mad @ Mgmt addresses the concerns of middle market companies, including banking, family & succession issues, turnarounds & performance improvement and economic life in general. Walter Simson is founder and Principal of Ventor Consulting a firm dedicated to middle market companies.

I recently argued that auto dealers need to reconfigure their marketing to be delivery points for an active direct marketing and Internet business. Dealers also need to reduce their financial risk profile.

It is not as if the car companies have made it easy for them. As a matter of fact, the car companies are prime contributors to the weak position many dealers find themselves in.

Imagine you are a dealer. Here's a typical week:

Monday. The car company's sales representative tells you he'd like you to take a few more of those ugly cars. You protest that they have all the appeal of an unmade bed, that you took some the last time he came in and that they haven't moved yet. He reminds you that your ability to get a hold of the sleek new model that really does sell is dependent on not pissing him off. You take the ugly cars.

Tuesday. A loan representative of the car company is counting the cars that they have financed and he can't find a few of them. He thinks you might have sent them to Mexico, so he threatens jail time for you and your loved ones. You remind him that the sales department has been pushing a bunch of those ugly cars, and urge him to look in the place where he found them the last time. He does, but says the ugly cars have been financed long enough, and that you should do something before he has to pull $17,000 a piece out of your checking account. He says they don't finance dealers who can't move the merchandise.

Wednesday. The representative of the car company's systems affiliate quotes you $5,000 to get a report on slow-moving, ugly cars. And it will take a week. You protest that Google could give you a vehicle number of every car on the moon for free in point-seven seconds. The representative tells you that he doesn't know who owns the moon's information, but the contract that you signed with them says that they, and not you, own the information on your dealership. You protest that the systems were created in the 1970s and have the power of a forty-watt light bulb. The representative indicates that they probably need the $5,000 for the ugly-car report to pay for a future upgrade.

Thursday. The representative of the sales department tells you they have decided to deliver a few of the nice sleek cars you have been asking for.

Friday. The representative of the holy-crap-it's-the-end-of-the-month department tells you that they have decided to put a deep discount on the nice sleek cars to build traffic. You protest that the sleek cars were doing fine without a discount and what about discounting the ugly cars. The representative says that shows what you know: not even discounting helps ugly car sales. Besides, last evening they hit your checking account for the value of the ugly cars, so why would they go through the effort of discounting them?

You remind the holy-crap-it's-the-end-of-the-month guy that they owe you for the cars they discounted the last time someone at HQ said holy crap. You had to pay the full value of the cars to the representative of the financing company, while the consumer paid you the discounted price. When do you get the money that makes up the difference?

The holy-crap representative says that he's not sure about that but for $5,000 he could probably get someone to run a report.

Saturday. A young promotion representative shows up with a plaque that you won for selling, at deep discount and on Tuesdays during Lent, more sleek cars than anyone else in your region. She needs $5,000 for the plaque's shipping and handling. You suggest she get the check from the dealership's accountant. You tell her that he's outside, staring at the back fence and, you think, planning a breakout.

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