Coordinated Bankruptcy for the Auto Industry

The Times offers an interesting editorial proposing that the federal government facilitate the simultaneous bankruptcy of the "Big Three" auto makers, accompanied by extension of sufficient credit to sustain their operations through that process. This beats the current congressional proposal of, "Come to us with a business plan we like and maybe we'll lend you money," as it would allow the auto companies to address problems they cannot discuss as part of such a business plan - for example, how to eliminate failing brands and close hundreds of auto dealerships. If Ford announces, "We're going to close down Mercury," or even more modestly, "We're going to close it down as an independent line, while making select Mercury models available through Lincoln dealerships", they would create immediate consumer concern about Mercury vehicles, and would be immediately sued by Mercury dealers. If they say, "To control expenses, we need to cut the number of dealerships by a third," again they would be facing lawsuits by car dealers afraid of being among that third.

Meanwhile, the fact is that the manner in which cars are sold and distributed in this country is out-of-date, excessively costly, and anything but consumer friendly. At this point if you want to buy an iPod and only an iPod, you can go online to the Apple Store and buy one. But if you want to price shop or compare the iPod to other brands, you can choose from thousands of online and retail vendors who carry multiple brands of MP3 players. While iPhone sales are more constrained, once again you can find stores that offer contracts through multiple services, so you can go in and choose between an iPhone and a variety of service plans, and similar products from other vendors and service providers.

Try that with a car.

What if you're interested in offering a new type of dealership - a concierge type service that caters to professionals at their offices, allows them to arrange to drive a car model of their choice on their schedule, and offers the full range of makes and models they are apt to want to buy? Good luck with that.

What if an auto maker wishes to take the Saturn model to its next logical level, and build a Dell-style website where customers can pick a model - any model they offer - customize it, and have it delivered in days to a dealership with them with no haggling, no surprises, no post-sale pressure for "paint protection" or similar add-ons, no concern about financing (you've already been approved online) or confusing over rates. Get a good price, don't worry that you're paying more than the next guy or being otherwise hoodwinked, and show up at the dealership to inspect your vehicle, go over any special features, and drive away. The manufacturers are already about 90% of the way there with their "design your own vehicle" features on their websites. But do you think there's any chance that the crucial remaining 10% will get past NADA?

Bankruptcy only touches on these issues - facilitating the dropping of brands and closure of dealerships - but it doesn't do anything to overcome anachronistic, protectionist state laws that prevent innovation in vehicle distribution and sales, reduce manufacturer and customer cost, and increase customer convenience. But really, you're unlikely to hear anything about this from the CEO's of the Big Three.

I continue to favor something similar to bankruptcy but legislated by Congress, as opposed to Chapter 11, as being a possible path to reforming the auto industry with a much lower risk of failure. For those who complain, "Foreign auto makers will think it's unfair," I say, "They're not complaining about protectionism in their own nations, and you know what else - they're welcome to join in." If Congress is unwilling to act, cannot act with sufficient speed (as the authors of the editorial surmise), or forces bankruptcy upon the domestic auto industry, I think it's fair to say that it will be the result of a failure of leadership - in Congress, the auto industry, the UAW, and the nation's auto dealers and their "union", NADA (who are strangely omitted from most discussions of the industry's problems).

"No, You Can't Have That Discount"

You've probably seen banner ads for Lamps Plus on major media websites, including newspaper websites, offering $10 off a purchase. Well, I was in the market for a new lamp, and thought I would try them out. They have a really clever database design, "powered by EasyAsk", they have nice, clear images of their merchandise, their prices are comparable to other online vendors, and they do a great job trying to upsell accessories at the end of your purchase.

So what are they doing wrong?

They wouldn't honor their discount.

Now I'll grant, when you click through their ad you get a paragraph-long set of exclusions from the $10 discount offer, but they do nothing to explain to you why a particular lighting fixture doesn't qualify for a discount. You just get an impersonal error message and no discount.

To me, that's worse than not offering a discount in the first place.¹

So what did I do? I searched the same product at Yahoo! shopping, used Google to look up coupon codes for the various merchants listed, and found one that offered a ten percent discount plus free shipping. Lamps Plus ended up saving its $10, and I ended up saving quite a bit more.
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1. It feels like enough of a cheat when you see the "coupon code" box and don't have a code. I like the approach of KidSurplus, where they offer up a coupon code on every page of their site - so you have the easy opportunity to get a discount if you don't have a better code from another source.

How About a $100 "We'll Treat You Like a Human" Fee?

With the rising cost of fuel, the commoditization of ticket prices, and an apparent zeal to gouge every spare cent out of a passenger's pockets, the nation's (probably the world's) airlines have collectively made air travel an unpleasant experience. Frequent flyers may benefit from upgrades to a higher class of seat, assuming they're available, but pretty much everybody else must choose between the often absurd price of a "first class" or "business class" ticket or flying in the cattle car coach. Airlines don't appear inclined to lower fares for their first/business class sections, and to date the airlines offering all first class or all business class seating seem to be faltering and failing. So what's another option?

How about letting any passenger who wants pay a flat $100 (perhaps more for international flights), and treat them as if the clock has been rolled back to when air travel was more pleasant. For that money, give them a day pass to the airline's "club" lounge at the airport, the right to be screened through the expedited "first class" security line, the right to check at least one bag without an extra fee, a seat toward the front of the coach section of the plane, and a somewhat upgraded in-flight meal or snack (if they wish)? This could also be offered to frequent flyers who would otherwise qualify for a free upgrade when there's no room in first/business class, and to other flyers who want to cash in some saved miles for the privilege of being treated decently.

That's Helpful....

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