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Lemon Law Book » Chapter 6: Page 1
Chapter 6: Manufacturer-Dealership Relationship
"Third prize is you’re fired." -David Mamet, Glengarry GlenRoss
It’s a Business Relationship
The Manufacturer-Dealership relationship is a business relationship. Automobile dealerships are big businesses, and becoming more so as economic pressures force more and more dealers to consolidate. This is the age of the megadealership.
The manufacturer has a contract with the dealership. The dealership gets a license from the manufacturer to sell its vehicles and repair them under warranty. This contract sets out the rules of the relationship.
Risk and Reward: The Games Manufacturers Play
In American business, the bottom line is profit. Both manufacturers and dealerships must make money. Many things can interfere with this goal. Consider the following situations, which create overwhelming pressure on the dealership:
- The manufacturer is producing large numbers of defective products. The dealer can’t change this.
- The manufacturer sets a warranty repair budget for the dealership. When the budget is depleted, the dealership is penalized. For example, the dealership may have to eat repair costs.