Pub. 2 2020-2021 Issue 3

24 Early Auto Retailing in Los Angeles, Part Two Darryl Holter CNCDA Board Member Providing Service and Repairs Neither the early automakers nor the dealers were espe- cially concerned with service and repairs. Dealers focused on selling cars, not repairing them. They kept a few tools in the back of their showrooms but were not equipped to handle even relatively minor repairs. Instead, they referred their customers to local mechanics. The earliest cars were hand-built and assembled from parts purchased from sup- pliers that were rarely standardized or interchangeable. The factories did not provide manuals for guidance, and repairs were often a matter of guesswork. When dealers referred customers to nearby mechan- ics, disagreements between mechanics and customers over the cost or the time required to make repairs often left the problem at the dealer’s doorstep. Dealers often attempted to fill the service gap by providing repairs for no charge within 10 or 30 days, but this often led to dis- agreements. In 1916 the National Automobile Chamber of Commerce encouraged carmakers to cover the replace- ment of defective parts for 90 days. Most automakers supported this proposal, but the labor cost for replacing the faulty part and the shipping costs fell to the dealers. The “Second-Hand Car” Problem The first buyers were affluent people willing to take a risk on a vehicle with no guarantee that it would perform properly. Early dealers catered to this upscale audience and had no interest in dabbling in “second-hand” vehicles. In 1905, at the second meeting of the Motor Car Dealers of Los Angeles, the members voted “not to trade in any second-hand cars, as part payment on any new machines.” 1 However, as the number of new car sales continued to grow, dealers faced previous customers who needed to sell their used car before purchasing a new one. This situa- tion came to be known as “the second-hand car problem.” Carmakers set prices for new cars and, concerned about the brand’s image, did not allow dealers to discount. Customers saw the value of their car in retail terms, but dealers, anticipating the need to install new tires, paint, and various repairs, estimated the used car’s value in wholesale terms. This introduced an inherent element of distrust that worked against customer retention. Since dealers needed to sell new cars, they soon disregarded their trade associa- tion’s policy and began taking used cars in trade for new car purchases. Each time a used car was taken in on a trade, the dealers had to decide whether to invest in recon- ditioning or wholesale it to one of the used car operators located on the edges of Auto Row. Calculating the value of a used car was often guesswork. Not only was each used car different from all others, but with more than a hundred brands on the market, dealers knew little about the brands they did not represent. Dealers too often offered discounts that were far greater than what they could sell the car for. 2 The manufacturers focused on new car sales, considered the second-hand car problem one for the dealers to handle. In 1914 a 17-year-old boy drove from Arkansas to Los Angeles to find work and enter the University of Southern