Alfred Sloan's Memoir VI: Getting Dealers Up to SpeedThe woes of discontinued General Motors dealers have been much in the news lately. It's interesting to go back in time some eight decades to see how Alfred Sloan viewed the issue of developing a strong distribution system based on franchised dealerships. In Chapter 16 of My Years with General Motors, Sloan recalls:
Alhough in the 1920s we had made great advances in getting the facts about General Motors' economic position, we did not then have the facts regarding the economic position of our dealers, and so were handicapped in thinking through dealer problems. When a dealer's profit position was failing, we had no way of knowing whether this was due to a new-car problem, a used-car problem, a service problem, a parts problem, or some other problem. Without such facts is was impossible to put any sound distribution policy into effect.
In the Proving Ground address which I mentioned earlier [delivered to the Automobile Editors of American Newspapers on September 28, 1927 in Milford MI], I made the following observations on this subject:
... I want to outline to you what I believe to be a great weakness in the automotive industry today and what General Motors is trying to do to correct that weakness.This brings us back to ... two words proper accounting. Many of our dealers, and the same thing applies to dealers of other organizations, have good accounting systems. Many of them have indifferent ones and I regret to say that too large a percentage of them have practically no accounting system at all. Many of those who have accounting systems, through lack of their being properly developed, are not able to effectively use them. In other words, they are not so developed that they give the dealer the facts about his business; where the leaks are; what he should do to improve his position. As I said before, uncertainty must be eliminated. Uncertainty and efficiency are as far apart as the North Pole is from the South. If I could wave a magic wand over our dealer organization, with the result that every dealer could have a proper accounting system, could know the facts about his business and could intelligently deal with the many details incident to his business in an intelligent manner as a result thereof, I would be willing to pay for that accomplishment an enormous sum and I would be fully justified in doing so. It would be the best investment General Motors ever made.Accordingly, in 1927 we set up an organization called Motors Accounting Company. We developed a standardized accounting system applicable to all dealers and sent a staff into the field to help install it and to establish an audit system.
I have stated frankly to General Motors dealers, in almost every city in the United States, that I was deeply concerned with the fact that many of them, even those who were carrying on in a reasonably efficient manner, were not making the return on their capital that they should. Right here let me say that so far as General Motors dealers are concerned, from what facts I have I realize there has been much improvement during the past two or three years, but interested as the management of General Motors must be in every step from the raw material to the ultimate consumer, and recognizing that this chain of circumstances is no stronger than its weakest link, I feel a great deal of uncertainty as to the operating position of our dealer organization as a whole. I hope that this feeling of uncertainty is unwarranted. I am sure that with a responsibility so great, all elements of uncertainty must be eliminated and that our dealers should know the facts about their operating position as clearly and as scientifically as I have outlined to you we feel that we know the facts about General Motors' operating position.
[pp.286-287, 1990 edition]