Domestics Get Another Shot

For today's domestic dealer, life is a day-by-day, payroll-to-payroll battle, fought one deal at a time. An angry public and demanding auto makers suggest that the likelihood of good times is slim and distant. Many pundits are concluding this down market signals the final transition of dominance from domestic to import cars; of the stupid giving way to the smart, the unlucky to the fortunate. I don't

For today's domestic dealer, life is a day-by-day, payroll-to-payroll battle, fought one deal at a time.

An angry public and demanding auto makers suggest that the likelihood of good times is slim and distant.

Many pundits are concluding this down market signals the final transition of dominance from domestic to import cars; of the stupid giving way to the smart, the unlucky to the fortunate.

I don't think so.

From a dealer perspective, profit and survival have always been about value for the customer, not brand wars. The simple wisdom is that when a customer trusts the car and dealer, that dealer need not resort to desperate measures to make a profit.

Much of this has to do with price-point and cost, but more of it is a matter of reputation and warranty. Overburdened dealerships, regardless of brand, have overpriced product, limited service, stressed staff, and unhappy customers. The brands with the most burdened dealers lose the most market-share. End of story.

Over the years, the Japanese have scratched out a market by efficiently providing what customers wanted. More importantly, they were disciplined about avoiding investment in things that didn't move those customers.

While domestic brands were pitching vacation contests to their volume dealers, their Japanese competitors were offering products with more trouble-free miles to the gallon.

The imports invested early gains in providing reliable transportation at a popular price. They saw it as their responsibility that the customer got what was promised. As a result, import dealers were less pressured to engage in heavy-handed tactics.

The Japanese did not patent this culture. They just embraced customers and dealers in ways that made a difference.

The Japanese did not jam their customers when their best cars still needed repair. They didn't jam their dealers when the margin didn't support profit.

Today, there is an opening for domestic brands to unburden their dealers of costs that are more bunk than benefit for their customers.

Ending processes and programs that don't add customer value creates a competitive advantage by reducing the cost to sell and service cars. There is an opportunity for today's auto makers to get as lean and nimble in their dealer strategies, as in their manufacturing.

Recent history in domestic dealerships has been a study in what happens when it costs more than a dollar to make a dollar. Sales pressure drives desperate sales tactics. It is no mystery why customers respond by fleeing, warning everyone in their path.

Years ago one of the smartest dealers I know put his fast-moving parts into a self-serve cabinet in his shop. Conventional wisdom said the result would be rip offs and unbilled items. What actually occurred were improvements in efficiency, morale and profits.

The technicians, service writers, warranty clerks and parts countermen used the time to work more closely with customers. Dealerships are filled with similar opportunities in every department.

Manufacturers that partner with their dealers for customers' benefits invariably gain sales. Yet most auto makers can't get past a culture built on flogging dealers for product failures while billing them for national marketing efforts.

There is a direct link between lost sales and programs that add to dealers' costs. Bad processes kill dealers more than bad salesmen do.

As victimized brands get squeezed for shelf space, low-cost, customer-loving dealers will become the most competitive weapon. Keen observers of customer preferences will support those nimble dealers.

An ancient proverb says that to defeat your strongest competitors, wish upon them decades of prosperity for surely they will then destroy themselves.

The time is ripe for the domestic brands to seize the market by rededicating themselves to dealers and customers, while their import competitors are on vacation.

Peter Brandow is a veteran dealer in Pennsylvania and New Jersey,

TAGS: Dealers Retail
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