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Automobile Industry Distribution Management

It is the suppliers responsibility to mediate competing channels are responding to the market fairly based on their own inherent benefits rather than unnatural benefits such as pricing favoritism among different channel members that give one channel an unnatural advantage. .
             3. Conflict becomes dangerous when it becomes costly for each member involved. Again, resources or money dictate the behavior of a market and dangerous conflict many times is translated as "conflict that ends in litigation." Therefore, channel members have increasingly decided to seek alternatives to litigation such as mediation and arbitration. These forums allow firms to reach conclusions and open the lines of communication in a less costly procedure that can often eliminate the need for litigation. If mediation or arbitration is an option it is one method of escaping dangerous conflict that results in expensive (dangerous) litigation. Litigation is really a lose-lose situation that should be avoided. Other ways to hedge dangerous conflict are to share information and to build rapport among channel members so that they may work toward a more common goal.
             .
             The automobile industry is very mature and has well-established channels of distribution. There are new, used, and rental automobiles at the retail level. Government vehicles are also managed through the channels and add another level of complexity to the market. As described in the text, automobile manufacturers keep factories running and then proliferate these vehicles through the rental channel. The rental channel buys the vehicles at a very low cost and they are able to replace these vehicles every few years. Automobile manufacturers had large shares of these rental companies and this facilitated the process of unloading large amounts of vehicles to the rental companies. In this scenario the manufacturer was a channel member interested in mass producing their vehicles in order to keep production costs low and increasing their margins to the dealers.


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