Can Detroit Make Cars Customers Want?

AutoNation

1. Why is AutoNation having a problem with its inventory?

US Auto makers manufacture what their plants could produce and use incentives and rebates to lure buyers. Customers do not get what they want on the spot again orders usually adds six to eight weeks of the transaction. The customer who wants to buy on the spot must choose from cars on the lot that the manufacturer has already configured, priced, and shipped. Dealers often have a glut of new cars sitting in their lots for months at a time that no one wants to buy it. The swollen inventory and slow turnaround hurt dealers because they must borrow money to pay for the cars the manufacturers ship.

Dealers often have surplus of new cars in their showrooms for months which nobody want to buy.

Why is this also a problem for auto manufacturers such as GM, Ford, and Chrysler?

Their manufacturing processes are not set up to quickly change production models and have been geared toward optimizing the efficiency of the production plant. Consumer preference change every now and then, prices of other complements of a car also rising and falling thus the above problem affecting GM, Ford and Chrysler.

How is this problem impacting the business performance of AutoNation and of the auto manufacturers?

1. It has become imperative for the manufacturers to keep their plants running regardless of demand to pay for the rising costs of employee healthcare and pensions. What’s more, auto workers must be paid most of their salaries regardless of whether they are working.

2. Losing market share to the Japanese and Koreans

3. Auto manufacturers are scrambling to revamp their product line up

4. The enlarged inventory and slow turnaround hurt dealers because they must borro money to pay for the cars the manufacturers ship.

2) What pieces of data do AutoNation need to determine what cars to stock in each of its dealerships?

• Preferences of car buyers(fuel efficient, small...