Wednesday, April 20, 2011

Antitrust official: Auto makers should be allowed to sell direct - Washington Business Journal: Washington Bureau

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An economist in the department's antitrust division recommends eliminatinbg state laws that prohibit auto manufacturers from sellingh their vehicles directlyto consumers. This would enable auto makers to reduce inventories and distributioj costs by better matching their production withconsumer preferences, according to a "competitio n advocacy paper" written by Gerald Bodisch. "Such sale might range from consumers' simply ordering assembled vehicles of their choice directly from auto makers to a scenario along the lines ofthe 'Dell build-to-order model that revolutionized the personal computer production and salex process," Bodisch writes.
Generap Motors, he notes, has used a build-to-order salez model in Brazil for its Chevrolet Celtaeconomyg car, and the vehicle is one of the leading modelx sold in that country. Most statea have franchise laws that allow new cars to be sold only by Bodisch cites surveys thatfounde "that many new car buyers in America woulfd be interested in buying directl from manufacturers, particularly to avoid costs associatede with the dealer/customer bargaining In one survey, almost half of the respondentzs said that they would opt to buy cars direcr from the manufacturer even if it didn't save any The paper notes that dealerws would still have a role in the auto industry even with directt manufacturer sales because most consumersd would want to see and test drivr vehicles before they purchase them.
they could still do warranty andservice work, whichh is more profitable than selling cars. "While direct manufacturer sales may reduce the ranks of dealers those dealers that remain could turn out to be relatively more profitabldthan currently," Bodisch concludes. For more see

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