Small-town dealers - of cars, boats, RVs, electronics, or anything - are a dying breed.
We are at an RV show in Florida, looking at "Class B" vans - RVs built on a van chassis, such as a Mercedes Sprinter, Ford Transit, or Ram Promaster (the latter sold in Europe as a Fiat). We are renting one in Spain for a month and want to see what they are like. As we get older, towing a trailer seems more difficult and the savings in storage fees (we can park the van in the driveway) would help defer the additional cost of switching to one.
What was interesting to me was that there were basically four mega-dealers there with dozens of RVs each. No small-time dealers or Mom-and-Pop operations. One salesman, from "Admiral RV" gleefully told me that "Leisure-Days" RV chain would soon go bust, and that his chain would snatch up the remnants of that once dominant dealership.
What happened? Well, the big dealers get discounts - kick-backs - from the manufacturers, for selling a lot of RVs. Car dealers work the same way, which is why you see so many big mega-chains of car dealerships, with dozens of locations and a host of brands. Once you move a lot of product for a manufacturer, you can ask for - perhaps demand - special discounts and rebates, much as Rockefeller asked for "rebates" from the railroads for shipping his oil.
The snowball effect kicks in. Since the big dealers can offer lower prices, they get more business and become more profitable and can expand further. For the small dealer, the reverse-snowball kicks in, and since he has smaller margins, he has to charge more for the same product and resort to screwing his customers to make a buck. This, in turn, pisses off the customer base, and they flock to the mega-dealer for better deals. I learned this firsthand, years ago, when we bought the Nissan Frontier. The local dealer had four in stock, one nearly two years old, unsold! The big dealer in Jacksonville had dozens and called me one day, a year later, with an offer that was too good to refuse.
So the smaller dealer goes bust, and the mega-dealer who is flush with cash, buys him out for pennies on the dollar. Capitalism at work! And at first blush, this seems like a win-win for everyone except Joe Small-town dealer. The customer gets lower prices, the manufacturer moves more product (and has to deal with fewer dealers) and the mega-dealer make more money.
Are there any other downsides? Perhaps. So long as there is competition between competing mega-dealers, prices can stay in check. But if the number of dealers dwindles down to just a few - a duopoly, for example - it becomes a lot easier to fix prices and screw the consumer on a grand scale.
Perhaps this hasn't happened yet and maybe it never will. Maybe it already has. After all, at least with RVs, all you need to do to start an RV company is buy a sheet of fiberglass and a screw-gun. I've seen it firsthand!
On the other hand, it seems that more and more of our economy is being controlled by a few big players. You want to eat? Chances are, you have to shop at one of four or five mega-chains to buy groceries, with Walmart being the 600 lb gorilla in the room. They can set prices - to drive a competitor out of business or to reap windfall profits from consumers.
It just struck me as interesting that, not too long ago, there were no nationwide or regional mega-dealers of anything, and yet today, these are quite common, and it all happened in a short period of time and no one seemed to notice (or at least I didn't!).
