Delaying the inevitable?

In the 1970s British Leyland were given the equivalent of several billion pounds in government support in order to keep afloat and keep British workers employed. What happened? The company went under anyway and the cost not just in monetary terms took years to recover from. Was it just delaying the inevitable?

The Germans and the Japanese have been a country mile ahead of the competition in recent years because of several factors; they have built reliable, safe, stylish iconic, modern cars which people want to buy, cars that have status and kudos that are inspirational who could really say that their dream was to own a Maestro!

Let’s face it if we want to save any car company let them be companies that will carry on providing the world with want-to-buy cars. The problems which are occurring now will surely be overcome by companies which are prepared to work more efficiently and provide service that will bring people through the doors. The SMMT insist that the industry just wants access to credit and finance facilities to nurse it back to health that this is a short term problem and indeed there are some small signs of recovery in car sales, but what if these measures do not provide the solution in the long term? Will the British taxpayer want to fund the bailout businesses which are foreign owned like Tata who has recently alleged to have sought government funding for support with its Land Rover and jaguar brands. On the other hand can the government afford to stand by and do nothing when there are potentially 1 million jobs affected?

Whatever the outcome it is predicted that more than 1,000 franchised dealer outlets will close next year leaving maybe as few as 3,000 countrywide in 2009. As we have often pointed out there are way too many replicated dealers in the same proximity chasing a smaller amount of potential customers leaving margins cut to the bone.

Many dealer groups are looking for constant cost cuttings in order to stave off more redundancies and closures but perhaps the realisation is that this is just the way it is meant to be; the best survive, the worst go under and the businesses with great people, efficient processes and the desire to ‘retail’ their way out and not ‘pre-register’ may avoid bankruptcy.

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