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The view from Jack Phelan Dodge: Customers looking at big trucks again, not worried about bankruptcy

This TIME.com video visit to Jack Phelan Dodge Suzuki Isuzu in suburban Chicago was my doing, I think. I suggested at a meeting a few weeks back that a car dealer video might be cool, an editor said he'd check into it, and now it has magically appeared on our website. I had this image in my head of videotaping a desperate junior salesman chasing down potential customers on the street, but that probably would have been impossible to arrange on short notice, so instead we've got congenital optimist Phelan talking about how things are going. I wouldn't put too much stock in his economic forecasts (then again, I wouldn't put too much stock in anybody's economic forecasts right now), but two things he said in the video struck me as interesting. (I also really liked the part where a customer says he might want a Ram Hemi pickup "for, like, a Sunday car.")

One was that customers, now that last summer's gas-price freakout has begun fading in their memories, are buying big pickup trucks again. The other was that nobody coming into the showroom seemed at all worried about Chrysler's possible bankruptcy. Now it's possible that many of the masses who stayed away from the showroom were put off by the bankruptcy threat, but as I'm at least a little bit dubious of the market research on this topic that GM keeps flogging, Phelan's comment heightened my dubiosity a touch. As for the truck comeback, that reminded me of something Felix Salmon wrote early last month:

Right now, the Big Three -- Chrysler and GM especially -- will say anything which will get them the money they need to avoid declaring bankruptcy. But their declarations that they've suddenly got religion when it comes to small, fuel-efficient cars ring hollow. What's changed since they last protested that they were incapable of manufacturing such things? Why should we believe that Detroit will ever have any kind of comparitive advantage on that front?

Ironically the Big Three might be better off if they stuck to what they're good at: gas guzzlers. Why is Ford the healthiest of the three? There's one big reason: the F series pickup truck. And the brightest of GM's dim bulbs is Cadillac, a marque which has never been known for its fuel economy.

Detroit knows that it needs to get smaller. If it's going to downsize, it should stick to what it's good at, rather than try to compete with Japanese and European manufacturers on turf it conceded to them decades ago.

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  • 1

    The other was that nobody coming into the showroom seemed at all worried about Chrysler's possible bankruptcy. Now it's possible that many of the masses who stayed away from the showroom were put off by the bankruptcy threat, but as I'm at least a little bit dubious of the market research on this topic that GM keeps flogging, Phelan's comment heightened my dubiosity a touch.
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    I'd talk to a GM dealer before questioning the research, because most of the media coverage about a potential bankruptcy was about General Motors -- and its public perception of which company(ies) might go bankrupt that determine consumer behavior, and with most of the talk being about GM's problems, most of the impact of "bankruptcy" would be on GM.
    _
    As to why you'd be dubious of the GM report itself, I think its MUCH more likely that Phelan's remarks about "nobody coming into the showroom seemed at all worried about Chrysler's possible bankruptcy" is really a result of people who are concerned about a Chrysler bankruptcy avoiding Chrysler dealerships. Its not as if there aren't alternatives to Chrysler for those who are concerned -- in other words, Phelan's sample is a group of self-selected people who weren't worried about Chrysler's potential bankruptcy, and that's about all it means. (I bet that Phelan didn't tell customers that Chrysler might go bankrupt as part of his sales pitch -- and I wonder if not doing so violates some kind of disclosure law?)

  • 2

    Pluk,
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    Speaking from a legal standpoint with my lawyer hat on, there is no duty of candor for a contractual relationship. That is to say, when two parties are entering into an agreement, both parties have to only agree to make the agreement work in good-faith. As long as Chrysler believes (or hopes) that things will turn around and operates in a manner consistent with being and staying in business, each party bears the risk of the other not being able to perform the duties of the contract and subjects themselves to contractual remedies at law in the event of breach.

  • 3

    I can certainly see one dealer's impression being a self-selecting sample. But I'm even more suspicious of GM's dodgy "research." I don't think we know what the truth is here.
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    And I'm surprised at Felix' statement. It's kind of like saying don't change in a world that demands it (and yes, despite an uptick in truck sales, the world is demanding change). That is simply a prescription for extinction.

  • 4

    I think the two biggest hurdles to getting the Big 3 to sustained profitablility are the following:

    1. Getting new product to market in less that 18 months. (Import manufacturers do this better than Detroit does)
    2. Listening to the voice of the customer. What's good for the customer is good for General Motors not the other way 'round. They haven't learned that lesson for almost 40 years.

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