Oregon Auto Dealers Pitch Risky Strategy

In the midst of the worst sales decline in memory, the Oregon Auto Dealers Association is asking the legislature to make it harder for customers to shop with them.

That was, at least, my initial reaction to the news that the Association wants lawmakers to make it illegal for them to do business on Sunday. Why would an industry desperate for customers tell them that if they want a car on Sunday, they’ll just have to go do business with a dealer across the river in Vancouver, Washington?

There are two significant reasons, it turns out:

1. Closing for a day will cut costs.

2. The guaranteed day off will allow them to attract, and keep, a higher level of employee. As Portland dealer Ron Tonkin put it, “You’d be able to get people who really won’t consider an industry like ours because they don’t like the hours.”

Those are the benefits. The risks are angering potential customers, and losing business to the Washington dealers — they’re just a short drive away, and will be happy to accept the additional Sunday traffic.

These are interesting times — times in which some of the most fiercely independent businessmen in the state feel compelled to ask the government to limit their freedom to compete. Do the benefits of this strategy outweigh the risks?

Please leave answers, opinions, and perspective in the comments below.


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7 thoughts on “Oregon Auto Dealers Pitch Risky Strategy

  1. Cutting of one’s nose to spite one’s face? It feels like trying to artificially create demand on the other six days, but the demand isn’t there right now, anyway. I don’t think you should ever make it more difficult for your customers to buy your product. But I’m just a small seller of small things, so what do I know? 😉

  2. They want a law to make everyone else be fair but as you point out Phil Vancopuver dealers would still be open.

    Obviously the idea sounds absurd but who else takes Sunday’s off and has great success? Les Schwab. With plenty of competition they do fine which I would never had guessed but maybe it is due to good service which has been missing since the car business started.

  3. I think it’s the location of Portland that makes this one tricky.

    I’m not too familiar with Oregon, but I’m thinking this wouldn’t be as big an issue for a dealership in, say, Eugene, simply because they aren’t as close to the boarder.

    The motivation to hire better people is commendable, but just heading across the bridge to Vancouver is way too tempting for a would-be buyer.

  4. Brett,

    You make a good point — it’s the Portland people who will go across the border. Elsewhere it’s not so feasible. I live in Portland, and was viewing this through that particular lens.

    On the other hand, Dave Smith Motors of Kellogg, Idaho has been advertising for a while in Portland. Evidently some people will go a long way if they think it’s worth the trip…

  5. When I lived in Missouri, I was always under the impression that car lots were closed on sundays to prevent comparison shopping. Most people who buy a car work during the week and only have the time to test drive on the weekends. Being able to go to lots on both saturday and sunday would increase the number of test drives, quotes, etc that one could receive.

    By only having one day a week to shop for cars, you can’t compare as many dealers in the same amount of time. Anyone who has shopped for cars knows it is a taxing event. I imagine some “car buying” fatigue sets in if you want to continue looking at cars Saturday after Saturday.

    I also don’t buy the “higher level” of employee argument. What is exactly the difference between working on Saturday vs. Sunday? Either way your weekend is screwed up and (call me cynical) deeply religious individuals who would not work on Sundays tend to not be cars salesmen.

    As for the costs argument: why not close during the week? Aside from employees, what cost savings will they receive? Most of the fixed costs would appear to be the same regardless of the day of the week.

    My guess is that by making harder to buy a car on the weekends, the intend to increase their margin/unit. In this economic environment, I would guess that most people who are shopping for a car are doing so because they need it. That is, it is not a discretionary purchase. If you need a new car, you may only have a weekend to buy it. Limiting the number of lots you can go to in that weekend (by eliminating sunday shoppers) would decrease competition between dealerships and increase unit cost.

  6. Interesting thought.

    I’d imagine there’d be winners and losers in that scenario — a dealership would win if it’s the final store in the shorter sequence. It would lose if the customer buys from someone else because he or she ran out of time on Saturday.

  7. I would suspect that on the whole, sales prices would increase because of the lower level of competition. There appears to have been some demand destruction over the last several months and are not able to sell as many cars. To make up for the lost revenue, they need to find a way to make cars more expensive on the whole. Whether or not you are the last dealership on the sequence is irrelevant if the industry can collude to raise the sales price on all cars.

    It is odd that the car dealerships are lobbying the state to pass anti-competitive legislation that, as far as I can tell, is only bad for the consumer.