The Backlash is Coming

Proverbs 22: 28 Do not move an ancient boundary stone set up by your forefathers

Proverbs 23: 10 Do not move an ancient boundary stone set up by your forefathers …… for their defender is strong, he will take up their case against you.

We live in the greatest country on the earth. Our strength is in the free market system that has fed us, clothed us, defended us and allowed us to be the most generous nation ever established. We have taught the world the strength and value of the free market system they are all catching on very quickly.

We are now governed by a group of people who believe they are above the free market system. They believe they have the power and resources to control the free market system. They can not control it but they certainly have the power to pollute it. They are failing to recognize a fundamental reality of which we are as Americans and how a free market economy operates. We vote at the polls with our ballots once every two years. We vote with our pocketbooks every day, every minute of every day.

Closing 25% of the Chrysler and General Motors Dealers will seal the fate of those two great companies. They will cease to exist within 5 years. Those car dealers are the distribution system that allows the workers in those companies to remain employed. When you dismantle the distribution system of any product in a free market system, three things happen.

First, you will sell fewer products. Second, the competition now has an opportunity to expand their market share. Hyundai, Honda, Toyota and Ford are licking their chops.

Finally, the American consumer recognizes that with this decision the long-term viability of these two companies is in question. They have many possible choices about where to buy their next automobile. Those local Chrysler and GM Dealers have loyal customer followings. They have been selling cars in their communities for the decades. In some cases those dealerships are in the hands of 3^rd and 4^th generation owners. These dealers have established customer bases, their friends and neighbors. They support local charities, baseball, soccer and lacrosse teams. In short they are the local customer relationship arm of those car companies. Car owners buy from dealers who support the local community. A very important part of that decision includes where will they get the service on their vehicle, which will provide the parts, will there be anyone to honor the warranty. All those things occur through the local dealer.

Possibly the most overlooked and underestimated dimension of this issue is that cars dealers are survivors by nature. They are ambitious, creative, persistent, smart business people. Dealerships that have survived for 50+ years have not done so by accident. Once the emotion of losing their franchise with Chrysler and GM subsides they will retrench, take on a new brand and start moving their friends and local relationships into a new product.

The backlash from this decision will come when the local consumer needs their next vehicle and they go to their friend, the local “former” Chrysler dealer who is now selling Toyotas or Hondas or Fords or even quality used cars. We vote every day with our pocketbooks. When this happens put a fork in Chrysler and GM, they are done!

In case you think there is no precedent for this, I have served as an executive in the insurance industry for more than 35 years. Insurance companies who were disloyal to their distribution systems ceased to exist, usually in 5 years or less. I witnessed this reality more than a few times.

The free market system is like the ocean, it moves where it wants when it wants and how it wants. It can be a very hostile environment, if you fight it or try to contain it can cost you your life. It can also be a very life giving environment. If you respect it, live with it, on it and through it, it will sustain you. There will be a backlash to these decisions. This backlash will come through the free market, not the media, not the court of public opinion, the polls or the voting booth. This backlash will come through the buying decisions of the American public over the next five years.

If this decision stands both Chrysler and General Motors as we know them today will cease to exist within 5 years.

Dan Meylan is the founder and President of Weavers a membership organization that teaches and consults with business owners on the biblical principles of operating a business. Dan has 35 years of insurance and banking experience and launched 13 new ventures through scratch start ups or acquisitions and mergers. For more information see www.weaversonline.org or email Dan at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Comments

Name *
Email (For verification & Replies)
URL
Code   

Submit Comment