Is It Shut Up and Sell?

It used to be that you could build a profitable dealership with a sharp mind, an adding machine and some inventory. It used to be that 20 groups, computers, finance and insurance and special finance were extra ways to make money, not survival tools. And there was a time when most any automotive franchise was a good thing. Things have certainly changed. In yesteryear, dealers were rugged individualists.

It used to be that you could build a profitable dealership with a sharp mind, an adding machine and some inventory.

It used to be that 20 groups, computers, finance and insurance and special finance were extra ways to make money, not survival tools.

And there was a time when most any automotive franchise was a good thing.

Things have certainly changed.

In yesteryear, dealers were rugged individualists. They had attitude. They had grit, and were admired for it. Then came the age of consultants, analysts and national ad agencies. Almost overnight, the chant to dealers changed from “go get 'em” to “get in line.”

Today, dealers sell the most regulated products on the face of the earth to customers who usually believe they are being taken advantage of, and for franchise executives who think it's an insult to have to deal with them.

The number of times that I've been advised to dummy down and behave like a good dealer is beyond count. Few manufacturers want to share critical information or want a dealer's opinion.

Dealers risk millions on inventory and real estate for the privilege of selling with some of the thinnest margins in American retail. That has resulted in some of the worst-selling schemes ever devised. We too often are kept in the dark by a system that has institutionalized bewilderment.

Happily, Wall Street is beginning to link the profitability of manufacturers to the financial health of their dealers. Let's hope everyone will realize that dealers cannot become healthy without sophisticated and timely information and a partnership with our manufacturers.

The notion is ludicrous that Toyota and Lexus achieve what they do because their dealers are better. Study what those same dealers do with less impressive brands. It's the ability to support investment that makes a competent dealer great.

Brands that back this notion thrive. How can you tell if a particular franchise does? Ask its dealers how accessible the factory is. Ask dealers how quickly they can get accurate information. These are the linchpins of a solid distribution system.

I welcome Wall Street's dive into what's happening. If they want to know the likelihood of a make's success, they have only to study the interaction between its manufacturing and its dealering. How much critical information is available when necessary to make a decision?

I'm hoping for Wall Street to be the dealer's best ally, to ask tough questions about what happens where the rubber meets the road at dealerships. This will bode well for a record profit in 2006.

Credible manufacturer pricing, such as General Motors' price roll back, are the tip of this iceberg. Another snowshoe will drop when someone calculates what it takes to provide a dealership experience that everyone wants.

I heard from a manufacturer's regional manager who had been laterally demoted for dispensing too much information to a dealer whom he was expected to control rather than educate.

We're not talking national secrets here, just helpful advice any outside consultant could have offered. Sadly, for that regional manager, an educated dealer was not what the manufacturer wants.

To hear him tell it, most manufacturers expect dealers to do what they are told. Questions and opinions are not preferred. The best dealers take big risks on big inventories and place big ads to move the metal. Period.

In defense of retailers, we are straightforward. Our customers have fair notice that we want their money and a completed survey that says that they've enjoyed handing it over. No gloss, no slight of hand. The plain truth.

Our customers, lenders, and manufacturers are less forthright. We are forced to expose everything, right down to the cost of our wares. Our lenders and manufacturers are not and do not.

Manufacturers who provide information may trust that their new vehicles will be prioritized by their dealers. What an interesting turn of events that some of the same bean counters that shut off the light over dealers might now revitalize Detroit by focusing on them.

Peter Brandow is a veteran dealer with stores in Pennsylvania and New Jersey.

TAGS: Dealers Retail
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