Gm
The heart of the franchise system is the selling agreement
From the 1920's through the 1094's GM was the catalyst for change in dealer relations
Alfred Sloan recognized the importance of his company's dealer organization and was determined to nurture it.
o Visited dealerships to get a personal view of the sales climate
The Great WARS
Built Aircraft engines during WWI
Regarded as a side line
WWI 35 million
WWII 12 billion
Helped because thousands of dealerships didn't survive the war
o 20.6% decline
Franchise System
o The industry adopted the franchise system in the 1920s
Sloan explained "automakers could not, without great difficulty, have undertaken to merchandise their own product."
Unlike ford it was against the policy of GM to require dealers to take cars in excess of what they properly should take
o Ford's crossroads policy
Crammed cars down dealers throats
Ford had a bad reputation in its relations with its dealer, for it had always ridden them hard.
GM very liberal attitude toward and put less press on dealers
o Sloan "a necessary condition for the progress and stability of an enterprise in this industry"
Wanted to foster prosperous dealers as business associates to distribute their product
Standard Accounting System
o GM set up Motors Accounting Co. in 1927. Creating a standardized accounting system for all of its dealers
o Selling cars on credit became a major way for factories to help dealers
Established General Motors Acceptance Corp in 1919
o GM set up Motors Holding Corp In 1929 to finance the purchase of dealerships by entrepreneurs who lacked the necessary funds
Became a division in 1936/has advanced more than $1 billion to help about 4,000 GM dealers acquire stores
o...
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