WHILE COVERING THE NORTH AMERICAN INTER-national Auto Show ) in Detroit, I couldn't help but think that the money spent there could be more effectively used elsewhere - like deducted from the sticker.
But I was wrong. It wasn't the first time I've been wrong, nor will it be the last, unfortunately.
I admit I was overwhelmed by each manufacturer's attempt to outdo the other as well as their own efforts the previous year. All of this takes cash. Cash for elaborate, multi-level, interactive displays and celebrity presenters.
Automakers from all over the world send their top executives to the Detroit show. They sponsor the attendance of several journalists. They throw lavish parties for their guests.
There was a report that, all together, the manufacturers spent in the neighborhood of $250 million on their displays. That figure probably was conservative. It didn't even include concept cars, parties, airfares and accommodations.
Let's say, for the sake of argument, that the total Detroit Auto Show cost for manufacturers was $300 million.
Certainly that money could be divided across the nearly 17 million cars and trucks sold in the U.S. last year to significantly lower the price of all vehicles.
Well, I did the math and the savings would be...$17 per car. That's hardly any saving. Consumers spend more on stuff to hang from their rear-view mirrors.
Why does the industry put on these shows? That answer is simple - to sell vehicles. Auto shows are designed to interest consumers in buying or leasing a new car or truck. And it works. Detroit area dealers generally report an increase in floor traffic after the auto show.
Manufacturers hope the media will report favorably - to consumers - on the newest products. Auto show press conferences are made-for-TV-news-clip events that are often more entertaining than informative. And those clips are more valuable than commercial time to everyone in the retail world.
There's no other way - for a mere $17 per vehicle - that the industry can get as much TV news coverage or print news coverage.
I remember a story once told to me by David C. Smith, our legendary editor-at-large. He once figured that a certain lavish press trip he was on cost the hosts some $500,000.
He asked how the company could rationalize spending that much money on a bunch of journalists over whose message they ultimately had no control. The PR guy said: "It's no big deal, really. $500,000 is the cost of one network TV commercial."
Ford, GM Make Nice at NADA If there was a theme running through the NADA Convention in Orlando it was reconciliation.
Ford Motor Co. executives seemed to be bending over backwards to make sure their dealers understood that all of their Internet initiatives were being designed with dealers in mind.
And General Motors Corp. executives - while not necessarily admitting that their plan to own 700-800 dealerships was a bad idea - scuttled the General Motors Retail Holdings scheme.
These actions may have been lip service, as some skeptical dealers suggest, but at least it reflects concerns of dealers.
It shows that the executives at these companies - which have had dealer relations problems - actually realize the value of their dealer networks.
They realize that the Internet has unbelievable potential to reach consumers, but that the dealership is where the most-important customer interface takes place.
Which brings me to something else I noticed about the NADA. As usual, there were a large number of "dot-com" companies exhibiting. But the emphasis has moved from sales of vehicles to consumer relationship management programs.
Many of the more-interesting exhibitors were pushing programs that allow dealers to set up web pages for customers' vehicles. From there, owners can set up service appointments, print service-related coupons and find out about manufacturer recall and other vehicle-related information.
There's liable to be a small segment of consumers who want to use the Internet to actually purchase vehicles, but for the most part people want the dealership experience. And by managing the relationship on-line, perhaps the dealership experience can be improved.
Tim Keenan is senior editor of Ward's Dealer Business. He can be reached at [email protected]
