Propping up the banks, insurers and financial service industries that employ far less people, and produce nothing of real value at a cost of several times what the Auto Makers were hoping for makes little sense on the surface either. Unless you are inclined to suspect it’s the organized theft of the treasury as I do by the powers that be.
Though it makes bad economic sense, surveys conclude most Americans would choose going to the dentist for a root canal than a car dealership to buy a new car. The average citizen would hardly bemoan the government’s refusal on that basis alone.
Unlike Bankers car dealers really spread their wealth around. It’s a self serving thought and action of course, the expectation is if your son’s little league team had their jerseys paid for by the local car dealer you will at least browse their inventory before perhaps making a choice to purchase elsewhere.
Car Dealers and Realtors happen to be independent News Papers bread and butter. These two industries typically make upwards to 80% of most of the advertising local news papers take in. Circulation and sales of news papers does not make them profitable. Advertising makes them profitable. Car Dealers and Realtors make them profitable.
Could it be that the or one of the main reasons for allowing the impending bankruptcy of the Auto Makers is to force the sale or closure of the nation’s last few remaining respected and independent sources of news? I wonder, what are your thoughts on this?
Looks like a good insight but OTOH, newspapers first felt the downturn in sales when tv arrived. Then cable tv made the decline faster. Then fax machines were all the rage. Finally, the internet dealt the death knell. It may be that dinosaurs just die off without a meteorite smashing the planet?
I must agree with 99.44% of what you say, Mr P/T. Problem is you are attributing TOO much smarts to the Gang of Four that ruled W-DC the last 8 years. Bush43, Cheney, Rumsfeld and Rice. Yes, I know, Rummie is out of a job. But it will take Bob Gates another 2-3 years to UNDO the harm Rummie did to the Pentagon and the US Military Establishment. I’m not sure Gates wants to stay on that long. All the 3 star and 4 star promotions made in the last 8 years are suspect. Rummie trucked no dissenters.
Aside: Now I forgot what Gates has said about Vietnam. I am of the highest HOPE Gates will keep Barack from sliding down that slippery slope Johnson, McNamara and Westmoreland went down. That KILLED Johnson’s plans for America although many GOP types just loved it! Afghanistan definitely has the potential to be Joel Chandler Harris’ TAR BABY to Barack. www.en.utexas.edu... END
On Cars. A long time ago - 1960s I think - the Auto Makers came to the rescue of dealers. It seems someone had got into the pricing of cars and posted in magazines the dealer cost of everything. Now dealers often took the position they would sell a car for $100 over on the grounds they could get its replacement tomorrow. and a “C” note is OK for not much work. Plus, you can turn a buck on the trade in and also, it may help to keep your service department busy.
The Big Boys knew you can’t run a business that way. So they cut the dealer’s markup over cost in HALF. Car magazines now had to post the new dealer cost figures. But in the fine print, was the DEALER HOLD BACK or DEALER INCENTIVES as it was variously called. The deal was, on selling a car, the dealer notifies the maker and the maker pays the dealer the HOLD BACK or incentive, which meant the dealer actually made about 50% of the posted MSRP price profit. Dealers can survive on that. The practice is continued to this day. The two price scheme protects dealers form themselves. But it is a deceptive business practice for the dealer to say he pays the price he shows you. He does not.
But you can figure it out for yourself. Look around you at the inventory and the physical plant. Dealers must pay “a cent and a half” per month for the floor plan - banks buy the cars from the makers as all car deliveries on cash on the barrel head! That’s 18% per year. Advertising is usually budgeted at 5% of gross.
If the dealer sells 100 new cars a month - well, I figure a dealer must gross $3,000 per transaction. That means if you trade in a car, he must make $6,000 on the two car deal or he will go out of business.
A $20,000 car costs the dealer about $18,000. He can show you the invoice if you don’t believe him. But what he does not tell you is the factory will pay him $2,000 when the car is sold. REAL cost to the dealer? $16,000.
[edit on 2/8/2009 by donwhite]
