The Future of Car Dealerships and Car Buyers.
Isaiah 40:28-31 – Hast thou not known? hast thou not heard, that the everlasting God, the LORD, the Creator of the ends of the earth, fainteth not, neither is weary? there is no searching of his understanding. (Read More…)
Early cars were built by hand, one at a time, and were generally sold this way. They were not very reliable, and were mainly considered toys for rich people. If you wanted one, you went to a company — often only a couple guys working out of a little garage — to buy it.
But as cars get better, and more are built, car companies need more than customers who drop by once in a while. Retailers saw a chance to make money, too.
The first automaker believed to have sold through franchised dealers was Winton, who switched from making bicycles to making wooden-framed, single-cylinder automobiles in Cleveland, Ohio, in 1897.
Philippians 4:13 – I can do all things through Christ which strengtheneth me.
The new manufacturing methods increased production. The Curved Dash of the 1901 Oldsmobile is considered to be the first mass-produced automobile, built using an embryonic assembly line. In 1913, Henry Ford began full-scale production with the moving line, which really speeded up the process, allowing him to turn out over one million cars a year during the height of the popularity of his Model T.
Colossians 1:29 – Whereunto I also labour, striving according to his working, which worketh in me mightily.
The first salesperson took the customers order, sent it off to the automaker, and then waited for the car to come in
Now, as hundreds of thousands of cars were rolling off the lot, big automakers were setting up networks of franchised dealers, and shipping directly to them. The cars went to customers, if they would been ordered beforehand, or to dealers inventories, if they were not. This caused problems with many dealers, who did not have cash on hand to pay for them.
In 1919, GM was among the first to start a finance department that covered dealers costs on inventory.
The dealership would pay the interest as the car sat on the lot, then repay the loan when a customer bought it — just like today. This was done almost exclusively to dealers, but as private finance companies opened their doors for consumer auto loans, car companies extended theirs to customers, too. In the early days of cars, dealers did much more than just sell cars.
Colossians 1:11 – Strengthened with all might, according to his glorious power, unto all patience and longsuffering with joyfulness;
Many customers came directly off horses, and it was common for dealers to teach them to drive. Some dealerships sold gas, as stations were few, and most drivers bought from hardware stores or pharmacies. And a few years later, dealers were faced with something they had not seen before: used cars. There was a little learning curve in pricing these to attract buyers, without cutting too deep into the sales of new cars. Canada and the United States are much more rural than they are today, and getting cars into the middle of nowhere was challenging.
Farm stores would sometimes serve as auto agents, selling both cars and carriages
Tractor maker International made a short-lived buggy-style line of cars it sold through its farm dealers, and Velie cars, built by the grandson of John Deere, went to customers through this farm network. Both carmakers and dealers were hard hit by the Great Depression in 1929, with sales of cars plunging, and many smaller auto companies going bankrupt. But dealers were worst off during World War II.
Automakers received government contracts to produce military supplies, but by the time car production ended in 1942, auto dealers had nothing left to sell. Many had stocked up on used cars, but customers could buy just one per year, and only at capped prices set by the federal government. Automakers were still making spare parts to fix them, but because much of the metal and rubber was designated as military supplies, dealers had to ship old parts from customers before they could stock their shelves again.
Deuteronomy 32:36 – For the LORD shall judge his people, and repent himself for his servants, when he seeth that their power is gone, and there is none shut up, or left.
In 1955, a United States government commission was formed to investigate complaints
These complaints were by dealers that car companies were forcing cars onto them and opening up too many franchises in some areas. The chair was Oklahoma Senator Mike Monroney, and it addressed dealer concerns, but it also looked at some of their underhanded tactics, including overcharging, financial kickbacks, and phony trade-in values. In 1958, he wrote the Motor Vehicle Information Disclosure Act, which required each new vehicle to bear the manufacturers sticker showing the suggested price, the value of all of its options, and delivery charges. Now popularly known as a “Monroney sticker,” it is still required on all new cars.
A few years later, a Philadelphia auto dealership created a new option for consumers to lease. In 1962, Chevy dealership Eustace Wolfington developed the program for individuals who wanted to exchange cars more often, but who could not afford it.
Called the “Trade Cycle Technique,”
Wolfington calculated a new cars residual value — what it would be worth two years later — and subtracted it from the purchase price. The customer paid the difference in two years, Wolfington took it back, sold it used, and the customer left with the new one. Other changes have been made to the showroom floor. Longer warranties kept customers coming back to the dealership. New safety requirements brought in seatbelts, crash standards, airbags, and other features.
Luke 21:36 – Watch ye therefore, and pray always, that ye may be accounted worthy to escape all these things that shall come to pass, and to stand before the Son of man.
In 1975, Chrysler introduced the auto industry’s first rebate at the factory
And these days, most people do their research online before heading to the dealer — far removed from one car sold at a time through a factory gate. From picking up the first horseless carriage from your local carriage shop, to purchasing the latest electric vehicle from a online auto dealer, the purchase and sale of cars has changed a lot in the past 130-odd years.
But like with so much history, it is worth knowing where we have been, so that we can better understand where we are going.
It is even more important to take a look at the history of buying cars, to see how things changed for the better, so that we do not regress and miss the progress that’s been made. Today, I am going to briefly review the history of the car industry from the standpoint that truly matters the most: the car-buyer. We are going to take a look at how things started, why some things happened in those decades, and which changes actually benefit — or hurt — car buyers most.
The earliest recorded sale of cars dates to the 1880s
Which is when Carl Benz (yes, that Mercedes-Benz) patented his gas-powered car design. Called a “Motorwagen,” it was among the very first, if not definitively first, vehicles of its type. Throughout the late 1880s and early 1890s, Benz sold around 25 such Motorwagens.
But, despite the slow start, the automobile industry quickly took off. By 1903, about 60,000 cars were being built each year — and these cars had to be sold, some way or another. In the early days, cars were sold straight out of the factories where they were made. Benz was the leading name in Europe, and here in America, the first commercial sales were made by the Duryea Motor Wagon Company in Springfield, Mass. This sales model had clear limitations, though: You had to either live close to the maker in order to purchase one of their cars, or figure out some way of getting them delivered.
That changed in 1898, when Fred Kohler opened Reading Automobile Co. in Reading, selling cars made in Cleveland. Many people think that was the first dedicated automobile dealership in America — although others had come before, they were initially carriage dealers, and then started selling cars. The Reading Automobile Co. started out selling cars, and this sets it apart. The Winton cars, the ones Coleer sold, cost around $1,800 to $4,500 apiece, depending on features and model.
As one would expect, World War II had a pretty big effect on auto sales
Both here in America and around the world. In particular, the rationing and requirements on metals and other materials to use in WWII brought most of the car industry in the United States to a standstill–some manufacturers prospered producing vehicles for the war effort, but consumer sales were minimal, at best. The Great Depression had taken the ability of most individuals to purchase automobiles, and war made them scarce.
Many manufacturers that we have to this day made vehicles for the war effort. The modern Jeep is of course due for World War II, and a great deal of automotive improvements and developments came out of ideas during the war. Car purchases by civilians may have stalled, but the car companies did fine.
John 3:8 – The wind bloweth where it listeth, and thou hearest the sound thereof, but canst not tell whence it cometh, and whither it goeth: so is every one that is born of the Spirit.
There was an enormous boom of prosperity right here in America after WWII
This meant that soldiers returning from the war, and also their families back home, had greater purchasing power than they had ever had before, and generally had a lot more money. This caused an overall boom in manufactured goods — there was an explosion of buying homes, appliances, and, of course, automobiles. The U.S. automobile boom after the war was huge, because manufacturers were able to invest their technologies and materials back into making cars for civilian populations.
During that period, there was virtually no oversight of how cars were priced and sold to people — dealers were basically free to run the business any way they wanted. That was, however, until 1958, when Senator Almer Stillwell Monroney introduced legislation requiring dealers to put stickers on their vehicles clearly listing recommended prices and other specifications. These became known as the Monroney stickers, and were the first example of automotive industry regulations designed specifically to protect and inform customers.
Throughout the 1960s, the car boom continued, with sales being extremely strong
In general, people replaced their cars every two years or so, although it was fairly common for people to continue driving their preferred car much longer. Used car sales also became fairly prevalent around this time, and they are still a flourishing market today. You can find many classic used models from the 50s and 60s, in no small part because the volume they produced and sold in this boom period was so large.