Some interesting blog posts about the auto industry showed up in my Google Reader queue this morning.
First, here is Neil Buchanan over at Dorf on Law, suggesting that auto dealers are one of the bigger problems with the auto industry as a whole:
The problem, from a business standpoint, is that customers are alienated and angry. Buying a car is such a stressful experience that people put it off as long as they can. While GM would like to build a bond with their customers to increase the likelihood of repeat business, car salesmen and their dealerships are in it for the quick kill. It was, in fact, the traditional dealerships that put huge amounts of pressure on GM to euthanize Saturn. If the Big Three automakers really want to get the people behind them, they could do a lot worse than proposing a complete break with the way cars are sold.
Indeed. I have often said that salespeople are less than worthless: they either are an obstacle to the products that informed customers have already decided to buy, or they are ignorant or dishonest dust-throwers in the eyes of car shoppers who foolishly rely on dealers to tell them what they need. I recently purchased a car, but while my experience was mostly painless, it could and should have been much easier. Buchanan is right when he points out that “the ‘no haggle’ dealers are merely toned down versions of the sleazy norm.” I purchased mine from a “no haggle” dealer, but I still had to haggle—although I did it over the phone, explaining to the salesperson that since I live so far from his lot, I would not bother to drive out, and he would have zero chance of making a sale, unless he could give me a final quote in writing, via fax or email, on the day before my appointment. He was amenable, and everything worked out, and I got a good price, but even then, why should I have to go through that kind of experience just to buy something that is basically just a commodity, and practically a necessity for most people, including me?
Meanwhile, Judge Posner writes about the United Auto Workers and slips in this little gem that should warm the hearts of people like me who have a hard time seeing modern labor unions in the noble light they claim for themselves:
The goal of unions is to redistribute wealth from the owners and managers of firms, and from workers willing to work for very low wages, to the unionized workers and the union’s officers. Unions do this by organizing (or threatening) strikes that impose costs on employers. For employers are rationally willing to avoid those costs at a cost (provided it is smaller) of higher wages and benefits and restrictive work rules. Because the added cost to the employer of a unionized work force is a marginal cost (a cost that varies with the output of the firm), unionization results in reduced output by the unionized firm and, in consequence, benefits nonunionized competitors. Unless those competitors are too few or too small to be able to expand output at a cost no higher than the cost to the unionized firms, unionization will gradually drive the unionized firms out of business.
Unions, in other words, are worker cartels.
As my law school professor of both Contracts and Remedies often said, leave it to Judge Posner to give you an excellent and detailed description of how things really work.
So if you are looking for a place to direct your ire about the government bailout of Chrysler and General Motors, but you are tired of blaming the executives, think about dealers and unions. They helped a good piece, too, in making the American auto industry fail.