Just in time ordering
There were no used cars available anywhere around the Air Force Base in France where I was in 1958. The one of the two car dealerships in town was Peugeot, the dealership was downtown Chaumont in a building with a showroom large enough to park three cars with no car lot anywhere else. You walked into the sales department looked at books of pictures that displayed available models in different colors. My only choices were white, blue and green. I selected blue; paid in full, the sum of 865 us dollars in francs; and was told that when my car was completed, I would be notified to go to the factory just outside of Paris to pick it up, eliminating delivery charge. Which I did on the way to the Orly Airport to pick up my wife and baby daughter. They had just flown in from New York via Iceland and Amsterdam.
That was my first experience with “just in time” manufacturing sixty-four years ago. I have often wondered why that procedure was not adopted in this country. My only answer was the American need for instant gratification. I’m going to buy a new car and I want to drive away in it now. Guilty! I have done that a few times; drove the old car in, took stuff out of the trunk and put it in the new trunk and drove off. In those days it was with a full tank of gasoline.
What brought this about? I saw an ad on-line depicting acres and acres of last year’s model cars that supposedly would sell at greatly reduced prices. So, who is going to end up losing all that money? Then, I started noticing that a few years ago you would walk through acres full of new cars to select the one that would suit your taste. Now those lots have shrunk in size as has the inventory and so have the dealer’s interest payments.
Is this an indication that car dealerships are tired of paying those “floor planning” interest rates? They could do it as I did in France sixty-four years ago. That is called: just in time, or demand flow or continuous flow. There may be other terms depending on the manufacturer.
Last year around this time we replaced my wife’s eleven years old vehicle, with slightly over one hundred thousand miles, for a new model; like item. The salesman asked if similar is what we wanted then he brought up a car model that we described, we drove it around the block, gave him the old one, filled out paperwork and drove off with the new one without walking around looking at models that did not interest us.
Just in time selling would take re-educating the car-buying public; but the dealerships would benefit by eliminating the amount of space needed; by reducing inventory costs plus the financing costs of that inventory; and you could order your car on a tablet from home. It already works for some home buyers.
Just-in-time works for manufacturers alike. They don’t start building until they have an order. Home builders don’t build spec houses at the same rate they once did. The days of huge profits are almost gone. Then we hear that due to a micro-chip shortage from China needed for the dozens of computers in new automobiles new car production has slowed.
It’s amazing to me. Mechanical and cable connections worked for decades, now you need computers and servos to move seats up and down, front and back and to shift gears plus untold other processes. The cynic in me says that it’s only a ploy to boost the price of automobiles and trucks to the point that only the affluent will be able to purchase new cars in the next five years. It used to be that a three-year financing mortgage was a long time. I looked it up, now you can finance a car for up to ten years. Good luck on your car lasting that long.