Wednesday, February 4, 2009

How to fix the automotive industry

The automotive industry is characterized by two primary problems:

1 - Waste. Every year, too many cars are churned out of factories and they languish on car lots worldwide, waiting for a buyer. Quite often, the only way they get sold is when the price drops below cost so that dealers can clear space for new inventory.

2 - It's run by old men who don't see any problem with waste and don't see why they should change the way things have always been, despite the fact that they need taxpayer money to keep them in business.

Number two is the easiest thing to fix. Out with the old blood, in with the new.

Number one is a little harder, and will involve massive change, but in the end it would result in a profitable business model and happier customers. The boiled down concept is simple: Make cars to order.

Instead of having factories churn out thousands upon thousands of cars at a time, they would produce enough demo models for each car lot to have one. Customers would come in, pick the base model they like, and test drive it. If they like that model, they go inside with the salesperson who walks them through all of the custom options available. The customer chooses the color, options, and accessories, pays for the car, and the salesman submits the order. The factory receives the order and makes the car that the customer desired. Then it gets delivered. At the end of the year, the demo car gets sold (or donated to a charity).

That's it. No unsold cars floating around. No going to a car lot looking for an orange car and having to settle for a color you didn't want because it's what they had and they made you a deal you couldn't turn down.

I'm sure it's not a perfect solution. People could lose jobs, car prices could go up. But, it's a realistic solution. Sucking up taxpayer dollars because you have an unprofitable business model is not a realistic solution, it's a sick fantasy of old men.

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