Paul Meisel

Auto Retailers Should Approach the Vendor as a Resource Center

This thought spurred my thinking: The tradition of having 60 or 75 days of inventory for customers to shop from originated in the days when A) most dealers were one store operations B) there were a higher percentage mix of small dealers compared with larger dealers C) there were no good information systems to know where a car that you didn't have, and a customer wanted, might be available.

Given the business changes, with more multi-location and large dealers, good information to allow you to leverage inventory between locations and to some extent with other dealers, wouldn't you expect the business to carry less inventory?

Further, since the OEM's now produce most of their product based on the order bank and schedule their supply base with real orders back to tier 2, if the OEMs could tie into sales at the dealer level in "real time" -- let's say daily six days a week -- some reasonable collaboration could cut the amount of capital tied up in inventory by 50%. For the North American industry that would be something close to $15 billion of capital released. That is about the market cap of Ford, isn't it?

Now how this windfall would be shared is another question.....