Welcome Aboard, Kirk

I am encouraged that domestic auto makers are ready to fight, to acknowledge their faults and to make big conspicuous changes to reverse slipping sales and market share. Detroit's decision makers stand with their backs to the wall ready to cut their own pay, eliminate waste and get down to business. Gone are thick layers of middle management wallowing in the limbo of being too long in the tooth to

I am encouraged that domestic auto makers are ready to fight, to acknowledge their faults and to make big conspicuous changes to reverse slipping sales and market share.

Detroit's decision makers stand with their backs to the wall ready to cut their own pay, eliminate waste and get down to business. Gone are thick layers of middle management wallowing in the limbo of being too long in the tooth to remain entry level, yet too ineffectual for positions of higher importance.

Gone with them are foot soldiers serving at the pleasure of higher ups claiming an entitlement to expensive luxuries that were the life perks of the industry's upper echelons.

For so many years there were enough assets to give stakeholders a decent return while pampering those who steered the ship. Back then, the fight against excess was for another day.

But we are now in tougher times. Many are hemorrhaging cash. It's been reported that 25% of American new car dealers were unprofitable last year. That 25% means it wasn't just the victims of Katrina or some temporary aberration soon to be reversed. That 25% means it can't be hidden in a footnote that Wall Street analysts might look past on this year's industry balance sheet.

I wish I were a fly on the wall when General Motors took Kirk Kerkorian's Jerry York as a corporate board director. I was riveted when Kerkorian was forced to push his Tracinda agenda around Wall Street because York's offer to help GM initially had been politely declined.

I had received a call from a concerned parent asking whether his GM retirement holdings were turning into toilet paper because millions of Tracinda's GM shares were being sold at a loss and values were plummeting.

I advised the caller to hang in there. So you can imagine my relief when Tracinda repurchased most of their shares. I can't say I was surprised when the merits of York's previous offer were rethought afterwards.

We need new blood acting out of enlightened self interest. York is certainly catching attention as having that orientation. We need him to push us to do the things that prove American products are competitive.

I can't wait for his cold logic to be focused on the schism between manufacturing and retailing. We also need him to revitalize the trust relationship between dealers and lenders. We need to normalize the costs of stocking inventory, advertising it and staffing the showroom.

We need a business case for dealers to bet their future on the promise of brighter days ahead.

Our industry is at a turning point. Despite the current round of push-pull inventory schemes cooked up to force excess inventory on fearful dealers, all agree that we must stop mortgaging our collective futures in order for Detroit to get through the day.

Selling customers what they want today and will continue to want for the life of the product is the only sane foundation for a brighter tomorrow.

I don't know Mr. York or Mr. Kerkorian or their personal motives. And if they are short-term thinkers, industry terrorists or dealer haters I may eat my words. But so far, I have seen them put personal skin in the game. These guys seem to be here with a plan to make it work.

So, for my stake I welcome their investment as a new light in Detroit, saying that we can build great, sexy, cars that America wants: powerful cars and fuel efficient cars and lifestyle cars and cars that hold their value. And we can sell them for a profit that makes sense to investors.

As a dealer, I risk everything every time I open my showroom doors. So it's easy to understand my affinity for decision makers who take personal risk.

Let's hope Wall Street through investments appreciates the opportunity to support this kind of entrepreneurial leadership in Detroit. For the first time in a long time, I have faith in whose steering us, and a reason to stay in the game.

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

TAGS: Dealers Retail
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish