I have a couple of questions about dealer relationship with the manufacturer themselves.
1. Why do manufacturers have allotments for each dealership? Isn't the goal to sell as many cars as possible? What's the reason for the cap?
2. Is it true manufacturers are forbidden to sell directly to the public governed by federal law bc of concerns for antitrust and etc? I remember reading something about this in business 101 at school.
3. If 2 is true can't the manufacturer set up dealerships themselves through a straw person to reap the benefit of profits?
thanks for answering and enlightening me.
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1. To allow each dealership a share of teh pie. Only so many cars are made, so they give so many of each to each dealer, so they can sell what they can, and trade with other dealers.
2. Not sure.
3. Becuase if 2 is true, then doing so would be circumventing the rules and not legal.
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from a business perspective it doesn't make sense. i would think the ultimate goal is to sell as many product as possible thus giving the company a better image in consumers view. i still don't understand the reason for capping, it's understandable for dealers to trade and switch cars among themselves but if the cap is at 50, dealers can only sell those 50 among themselves. by cutting the pie equally between dealers, it's not going to help profit wise in terms of units sold, since an allotment has been established for all dealerships. unless the reason is production or manufacturing related i don't see the logic in this, in the end consumer will pay a higher price bc supply has been capped.
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It isn't cut equally, it is cut based on volume of sales. Big dealers get more cars than smaller dealers.
If the car company can only make 50 cars, then it doesn't matter if they sell 50 from one dealer, or 1 for each of 50 dealers. But having more dealers means more exposure and reaching a larger market.
Based on no allocations, there would be parts of the US where you could not buy a BMW or have it serviced by a dealer (warranty).
Also things like 325s have such high allocations everyone gets more than they want. However M5s and such, are much lower production level so some form of allocation system is required to allow all dealers a slice of the pie.
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By limiting the number of cars each dealer has to negotiate, you eliminate the opportunity for one dealer to take a Wal-Mart approach by making just a little money on each buyer but having a lot of buyers. When this happens, the value of the product decreases overall and indivdualized customer service also declines.
Please note that this is just a theory on my part and not based on any profound economics or business management theory. This opinion is also guaranteed to be worth exactly what you paid for it. If you are not satisifed with it, I will refund twice as much as you paid for it.
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And how could customer service get any lower than BMW NA and many dealers? 
ALlocations are only when the number of cars are limited. YOu never hear of allocations problems with 325s, 525s, etc. It is only when the car is brand new and has people waiting for one, or a limited production very desirable model.
Even GM has allocations on models, but mainly things like Corvettes.
If it weren't for allocations, a large dealer could order virtually all of a years production of a limited production desireable car. They could afford the floor plan, and then NO ONE ELSE would get any of those cars to sell.
And most limited productionmodels are there to increase floor traffic, people come in to see the new M3/M5/M6 and end up driving home a 325 or 525.
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question about dealership and manufacture in general