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The irony in all this is that G.M. and Ford adopted the dealer system because they thought it would make their lives easier.
About 600 of the 20,770 franchised new-car dealers in the country have closed this year, the largest shakeout in the dealer system since the early 1990s.
After becoming Chrysler's president in 1961, Mr. Townsend was credited with strengthening the ailing company by decreasing its overhead expenses, improving its cars and revamping its dealer system.
A dealer system is better for intermediaries, who can maximise spreads, than for investors, who in an order-driven system have the chance of cutting out the spread altogether.
Worse, in a dealer system there is a risk of collusion among market-makers to keep spreads wide.The SEC has successfully pursued cases against Nasdaq dealers for collusion, partly on the basis of questionable academic evidence that purported to show that prices moved suspiciously more often in eighths than sixteenths.
Update the Federal Reserve's primary dealer system.
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Most auto companies use one global integrated platform, which handles content management for web sites, integration with dealer systems, lease and finance calculators, and the all-important configurator that lets customers choose vehicle options online and see how it looks and what it costs.
Loyalists to auction markets such as the New York Stock Exchange claim investors there get a better shake because the share price can improve in auction trading, but not in dealer systems such as Nasdaq.
3. Valentine F. Ridgway, "Administration of Manufacturer-Dealer Systems," Administrative Science Quarterly, March 1957, p. 464; Joseph C. Palamountain.
As the most mature of the pending lawsuits, the NMAC case remains the bellwether in the battle over the dealer markup system.
"It's an unprecedented attack on the dealer franchise system," Mr. Willingham said in a speech at an Automotive Press Association luncheon here today.
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