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Lemon Vehicles - The Answer Is In The $beans$
By Donald Ladew
It is not difficult to extrapolate a similar set of circumstances in today’s corporate culture where we have level after level of arrogant, vain, amoral graduates of Wharton and Harvard who’s only moral imperative is promotion. Quality customer care, any sense of what the purchasers of their products experience day to day is as remote as a star in another galaxy. We can imagine it going something like this. The word filters down from the top, from the CEOs of Ford, GMC, Mercedes and most of the other manufacturers; “Who will rid me of these meddlesome owners and their constant complaining about defective automobiles. Who will fix my damn balance sheet?” Down through the levels of ambition, avarice and arrogance, the character of the leader is transmuted and translated until it reaches the bean counters, the accountants. There the justifications of corporate cruelty and avarice are made real. Two choices are placed on the scales of corporate profit and loss. Here are the numbers used to justify an execution of corporate torture you and I wouldn’t wish on our worst enemy. Note: Various studies have found that the percentage of lemons manufactured is between 1% and 10%. In California alone, approximately 1,500,000 vehicles are sold every year.
These numbers are fairly conservative. If the manufacturer handled all of it’s defective vehicles fairly - such as buying back or providing the customer with a new vehicle - this would be 37,500 lemon vehicles X $50,000 (approximate total cost of vehicle). This would cost the manufacturer $1,875,000,000. In case this is too many zeros to comprehend, this is almost two billion dollars. As Senator Everett Dirksen said, “A million here, a million there, pretty soon you’re talking real money.” Average total cost to the manufacturer to buy back a vehicle: · $50,000 Manufacturer buyback cost · $25,000 Loss of value to manufacturer due to defects and lemon labeling · $5000 Cost to manufacturer of warranty repairs before lemon disposition · $2,500 Legal costs to manufacturer aside from attorney fees to settle case · Approxiamte Total costs: $82,500 If we assume that 2.5% (it could be higher but doubtful that it is lower) of all vehicles sold in California are lemons; this is 37,500 vehicles. Currently approximately 2,500 lemon law cases are undertaken every year in California. As the bean counters might say, “Let’s do the numbers.” Here are the numbers for the manufacturer to settle 2,500 lemon law
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