Bloomberg has an article quoting a bunch of different senators and their opposition to the closing of Chrysler and GM dealers. While there is justification to this concern, there is also a need to ask why there are so many dealerships.

Let me explain this. Here in Cincinnati it used to be you had certain areas that had dealerships. If you wanted a new car or to get dealership service then you had to venture out to one of these areas. Of course they were never more than thirty minutes away. In the last twenty years that has changed, and now auto dealerships are as common as Wal-Marts.

Why?

Should buying a car really be as convenient as buying a gallon of milk? Of course not. There is only one reason you really need a dealership more often and that is for service. That’s where we really need more intuitive thinking. That’s where the calls for a new business model really should be heard.

Instead of having these huge dealer lots with big show rooms and tons of new cars just sitting there, why not just open up manufacturer service centers, or even contract it out? Service is the most common need for a dealership, and also its the point when proximity is more of a necessity for the consumer.

What the auto makers can do is develop a strict certification program. There are also requirements, like the use of genuine manufacturer parts. Then Jim’s auto shop down the street can spend a little money and time, then become a certified service center. They also can provide warranty and recall work, in which the manufacturer would pay them for the service. The program should be strict, but not a deterrent to enter it.

Think of it as outsourcing on a local level. We aren’t sending jobs overseas, but rather using the big industries to help smaller businesses. The manufacturers would also save from the huge overhead of staffing and housing all these current dealerships/service centers. Given the current environment, I really believe this type of restructuring would be a winning solution for the most people involved.