Guys.....am an occasional visitor here....enjoy some of the discussions,
have received some good advice......but not an expert in anything and
too old to get my Depends in a twist.

But for those interested: here's a tale that has some connection with
the topic:


Dealer franchises: guess things must have changed in recent years to
make it possible for car companies to cancel dealers as they have
recently (a "benefit" of bankruptcy?).....wasn't always so. I guess "in
the beginning" most American makers sold to privately-owned regional
Distributors who resold to dealers.......gradually the makers cut-out
the Distributors and delt with dealers directly to remove a layer of
profit. Whatever the set-up, always a balancing act between the maker
not having to invest in the distribution channel, while trying to
maintain control.

Still, a two-edged sword: Franchises typically grant an "exclusive
territory" which was a problem Ford had in the 30s: they knew they
could sell more cars in an area but an existing dealer had the
"exclusive"......answer: start making Mercury and franchise new dealers
for that badge. We hear about the GM-Ford sales war of the early 50s
where unwanted cars were dumped on dealers: if the dealer refused stock
he didn't want, his franchise could be cancelled.
On the other hand, existing dealer franchises were a potential money pit
for failing makers: one thing for the maker to go bankrupt as many did
in the 30s, but by the 50s there were those who wanted to get out of the
car business and into something else......but their franchises required
them to buy-out their dealers if they failed to provide cars to sell,
that is by-back the parts inventory, signs, tools, etc. etc.

No problem when, say, Chrysler wanted to drop DeSoto: just supply the
dealer with Dodges or Chryslers. But Hudson had to team-up with Nash so
dealers would have Ramblers to sell........Kaiser-Frazer morphs into
Willys and eventually dealers who were selling Manhattans were left with
Jeeps to sell, etc. Edsel was part of Mercury-Edsel-Lincoln.

It was a major problem in 1956 when Packard - having committed suicide
by buying money-losing Studebaker in 1954 found themselves broke and no
longer able to keep building Packards. Would the dealers sue them for
failing to provide a suitable luxury car to sell? They briefly
considered badge-engineering some foreign cars, like Facel-Vega, just to
meet their franchise requirements........but the real answer was to
furnish Packard dealers with Mercedes cars (up to that point, Mercedes
were either imported by private buyers or here only by Max Hoffman).
So.....Mercedes-Benz US was formed as a wholly-owned subsidiary of
Studebaker-Packard.

SP struggled on a few more years but by the early 60s the corporation
had diversified into profitable businesses and management wanted to drop
their only loser: the automotive unit......but what to do about those
dealer franchises?

Again.....they looked for a foreign car to sell to satisfy the
agreements. After WWII, Stude (as well as Ford and others) had passed
when the government offered them the chance to be exclusive distributors
- or owners - of VW. But by the 60s, little German cars didn't seem as
silly. Some of you may be old enough to remember when some Stude
dealers started selling DKWs and Gogomobiles.......that's why.

But management also wanted to explore the possibility of some foreign
maker building a car and badging it as a Stude......or even, Stude using
their factories to build such a vehicle here.

Several possible foreign partners were identified. A few thought there
was potential to partner with one of the Japanese car makers who were
looking for entre into North American markets. There were initial talks
with the Toyota folks who were interested......so Stude hires a
prestigious law firm to go to Japan and work out a deal. Apparently,
things were going along well until the law-firm rep decides to hedge the
bet by also visiting Nissan and others. Bad move: that was an insult
in the Japanese business culture.....a loss of face......no company
would continue talks when they learned that Stude was talking to others.
So the deal fell apart. The consultants covered themselves by opining
that Americans wouldn't want to buy a funny little Japanese car......or
so the anecdotes say.

So.......Stude shuts-down their US factories and supplies dealers with
Canadian-built Studes (with GM engines) until sales dry-up and most of
their dealers go away. Some dealers survive by selling a few DKWs
(which morphs into Audi). Daimler-Benz - which had paid SP to be their
US distributor pays Stude NOT to be their distributor and sets-up their
own US arm......and a number of present Mercedes dealers were once
Packard dealers.

Several years ago, a Studenut did a "what if" article on what happened
to Packard shareholders (Packard was once one of the most widely-held
stocks after GM & AT&T): Packard stock became Stude-Packard became
Studebaker became Studebaker-Worthington became Worthington Industries
became part of McGraw-Edison......and whatever it is today, you didn't
lose your shirt. I guess the Studebaker name exists in someone's
corporate structure today and they occasionally sue someone who tries to
use it in the automotive field. By '62 they gave-up the Packard name,
didn't keep the trademarks/copyrights up and a number of outfits have
tried to use it since.

Again, all this is anecdotal but deemed reliable as "oft told tales"
from many sources. One rumor I can't verify: that the law
firm/consultant who botched the Toyota deal and told Stude that the
funny Japanese cars wouldn't sell here invested in Toyota and did well.
He kept his finger in politics and kept running for office until he won
something: Richard M. Nixon.

Thanks for listening!

Interesting except Edsel dealers were free standing franchises, (ala
Saturn,) not part of LM and Studebaker bought Packard, not the other way
around. Manufactures under US franchise can not force vehicles on dealers,
dealer however where, and still are, required to sell a specific number of
vehicles in a calendar year, or they could loose the franchise. In some
cases the number was a low as 12 for major brands. The first Toyotas
DEALERS were given Toyopets on CONSIGNMENT for six month. If the dealer
could not sell them in six months, the Toyota disturber (Toyota actually
sill has some) would take them back.



The Edsel was named for Henry Fords son, not Ed Sullivan the TV guy, as some
seemed to believe at the time.


"Itsfrom Click" <gpctc (AT) webtv (DOT) net> wrote