Two auto industry experts sparked controversies. For dealers, it was J.D. Power III and his infamous Wall Street Journal column. For automakers, it was auto writer Micheline Maynard and her new book The End of Detroit.
In the end, the two controversies came together to signify little.
J.D. Power III's prediction of automotive retailing's future shows he doesn't understand the industry that made him famous.
In her book, Maynard goes on about successes of the imports and failures of Detroit. Is there anyone in our industry for whom that qualifies as fresh news?
Power's vision of a glorious future is a Wal-Mart-like car store where consumers could shop different brands. He cites the example of the new Virgin megastore in the U. K. If you do the math, the store's sales average 48 units per brand per year at their current pace of 100 cars per month with 25 brands). And if it's 48 per brand per year, assuming each brand has an average of four models, then they're averaging 12 units per model per year. That's right. One car a month!
Consumers would indeed like a Wal-Mart-like car store where they could compare vehicles of different brands, but not if it means a poor selection of colors (and if you only sell one model a month, how many colors are you going to stock?) or a sales associate who's less informed about the product than is the customer.
That already happens too much in our specialized single-brand dealerships of today. Imagine asking a Wal-Mart associate some detailed product questions about one of their toasters. If the answers aren't printed on the box, they'll have a tough time. That's not knocking Wal-Mart. If you have widespread inventory in your store, it's hard to have effective product knowledge. It doesn't matter so much for a toaster. It does for a car.
Power blames state franchise laws for preventing one-stop-shopping — yet the biggest obstacle to one-stop-shopping is the automakers. This is common knowledge in the industry. But Power did not mention it, maybe because automakers are among his biggest customers.
The automakers purchase Power's research, pay royalties to advertise his awards, and hire his firm to conduct CSI improvement initiatives. Then Power measures the resulting improvement and gives the automakers a public stamp of approval. That's one way to satisfy customers.
Some of his firm's study's are baffling. I'm not sure why exhaustive research was required to determine that Porsche and BMW are alluring brands. Anyone with a Motor Trend subscription could tell you that.
Maynard, as publicity from her book began to die down, wrote a New York Times column called “Dissatisfaction with the Guru of Customer Satisfaction.”
She wrote, “You would think that J. David Power had put a match to the American flag, judging from the outrage…. Power warned dealers that they are in danger of becoming dinosaurs.”
She then closed with, “Adding fuel to the fire was Alan Starling, chairman of the National Automobile Dealers Assn., who contended that dealerships add no more than 1.7% to the price of a car. ‘The franchise system is a time-tested model that works, and the car-buying public recognizes it, even if Mr. Power does not,’ Mr. Starling said, adding that customers are perfectly happy with things as they are.” She then added a zinger: “Officials of Montgomery Ward, People Express and Studebaker could not be reached for comment.”
The car business attracts unfair experts and prognosticators. It helps to get an objective third-party take on business. But there's a difference between getting that and self-promoting bull.
Power and Maynard may get us all cranked up. Yet they have little impact on the marketplace.
With nearly every auto maker getting a J.D. Power award, the honor has lost its market effectiveness. I can't recall the last time a customer referred to one.
None of my customers cite Maynard's book as influencing their purchase decision.
If it doesn't matter to them, I'm not going to let it matter to me.
Chris Lemley, a Ford-Lincoln-Mercury-Mazda dealer, is president of Sentry Auto Group in Meford, MA. He's at [email protected]