Many dealers are excited about 2004 because of a rebounding economy and hot new vehicles to sell. But there are concerns. Dealers worries include lagging job markets, potential terrorism and legal exposure.
For our annual “Dealer Speak” feature, here's what they say:
“So much of our success is based on the product”
Pompano Beach, FL
“It was a tough year in 2003. The economy changed and we had products that had been around for a while. So the continued recovery of the market is a concern for us. We're a high line dealership that sells Porsche and Audi. Our customers do watch the market closely.
Once the market comes back, we'll see consumer confidence increase. But it is harder to predict how things will go in this world where exchange rates are constantly changing and where we have the threat of terrorism.
I believe the market here will be product-driven this year. For us, 2004 will be a challenge — we have new products coming but they won't be here until the second-half of the year. In this area, our customers like change — they have to have the latest and greatest vehicle. And whoever has those products should have a strong year.
Audi has some tremendous product coming in 2005. I had a chance to see the new product, and it's strong.
Porsche has done well. I don't mind the incentives on the new Carrera, which has been selling well. When times are good you can't do anything wrong. But, when things get tough, everyone gets critical. I take that with a grain of salt. So much of our success is based on the product.
“I think we're going to be up 25%-30% this year”
“We don't have any real concerns. With all of the new product coming from Chevrolet, I think we're going to be up around 25%-35% this year.
The only reason I'm hedging on the numbers is because I don't know the actual timing of when the pipeline will start filling and just how aggressive General Motors Corp. will be with them. The product line is phenomenal. I think GM is building the best vehicles right now.
The recent J.D. Power and Associates Loyalty report had Chevrolet faring very well. Our relationship with the OEM is the best it's been in two decades.
I am very optimistic with the economy rebounding. But, the Michigan economy is lagging behind the rest of the country so we're watching that.
Hopefully the interest levels won't move much. Right now dealers are getting cheap money allowing us to warehouse more vehicles.
The only thing that is bad right now is the used-car market. I can't seem to get a handle on it. Everyone is saying that it's tougher — especially the last 8 or 9 months.
“I would have to consider 2003 as disastrous”
Forest Lake Ford
Forest Lake, MN
“I would have to consider 2003 as a disastrous year. No one seems to be talking about the loss of profitability this year. I know there are huge numbers of dealers, especially here in Minnesota, who have lost money. Just from talking to dealers here in the Twin Cities area, I'm hearing more than 50% of them have lost profitability.
We're going to have to address that issue. And you know, dealers are the worst people when it comes to admitting things aren't great. Maybe it's up to the individual managing his business more intelligently.
We still have that Blue Oval money coming — I wonder where our profitability was before we had Blue Oval. I think there is cause for concern when that money dries up next year.
As a result, we're starting to focus on used cars. We've trimmed our staff somewhat and have made some changes in the way we work with the customer to help maximize our potential sales.
I've made it very clear that management types need not apply here. Our managers can sell cars — we've promoted our best sales people to management. I'm even out there working the floor closing deals.
We've had the best December we've ever had. We're focusing on selling cars to everybody. We just have to manage that traffic better.
We're spending money on training and consultants. We're seeing some good changes because of it.
Our product looks great right now. The new F-Series pick up truck is a great vehicle.
For us to survive as dealers, we need more of that great product.
“If you get into this business, get a law degree”
Vacaville Pontiac Buick GMC
“We had a very, very good year in 2003. Approaching this business positively is the only way I can.
We built a new facility at a brand new location, so there is excitement. We also changed the name of the dealership from Fairfield Pontiac. It's a great time to be General Motors Corp. dealer right now.
But we do have some concerns. I don't think the legal pressure we've had the last couple of years will ever ease off. Not only do we have to focus on new cars, but we have to pay more attention to compliance issues, overtime, workers' compensation and health insurance issues.
We'll see how the new governor helps all of us. His election certainly has given us new hope.
We do have to be more alert these days. Fortunately, the California Motors Car Assn. puts on several training seminars. And the dealers have organized to help fight some of these lawsuits going on.
I told my 10-year-old daughter the other day that if she wants to get into this business, she'd better get a law degree first.
“Continue focusing on improving vehicle quality”
Bob McCormick Ford, Hughesville, PA
Ford Select Dealer Council
“The past couple of years, there's been a marked change on the part of management in their willingness to listen to dealers. There has been a lot of dialogue back and forth.
The Select Ford dealers (retailers in smaller markets) are a tougher lot to keep happy, because of the time spent on the floor by the dealer principal. We tend to experience the problems a little more because we're more hands-on in the store than some of the larger dealers.
When we have issues, they may not get resolved 100% the way the dealer wants.
But there is less blatant dissatisfaction today with the OEM. Dealer satisfaction scores are moving up and that's because of the management team in place today.
Dealer allocation has been a big concern for us. It certainly can have a much bigger impact in the smaller stores.
I was concerned with product availability and the new product in the pipeline, but I'm feeling very comfortable right now. We have everything we've been asking for in the way of vehicles.
Also the vehicles are getting better and quality is up. But I would recommend to management to continue focusing on improving the vehicle quality.
“Exceeding expectations, but it's very challenging”
Sierra Vista, AZ
“I'm pretty optimistic about this year. We're in a community that is growing and we're seeing more activity. In mid-December, we closed on some property adjacent to the dealership. We'll be expanding our store this year.
Last year was our first full year in ownership and it was great. I'm not disappointed about anything. We exceeded all of Toyota's expectation.
But, still it's very challenging.
We're in a wonderful community and the support has been great from other business.
We have new homes going up with new people coming in all of the time. The town has a lot of retirees. The longer the stock market does well, the more confident they become.
Another factor for us is that we can be competitive price-wise, meaning we can do the same type of deals that the larger dealers in Tucson can do. In fact, we're starting to see some business coming down from there.
I have no real concerns about this year — I just want to stay positive. Long term, we do have a military base nearby, and the government will be announcing some closings in a couple of years. But it is an intelligence training facility that goes across all of the branches, so I would be surprised if that one closed down.
“Keeping a foot on the gas pedal”
Kelly Car and Truck Center
“Just to give you a snapshot here in Allentown, the temperature is 13 degrees but every location is busy and is selling vehicles.
That is not the norm for us this time of year. You would have thought people would be staying home, but there has been some good activity.
We finished the year strong, so my outlook for 2004 is very positive. I'm impressed with the way General Motors and DaimlerChrysler have kept a foot on the gas pedal. Buick and GMC both have good pricing, as does Jeep.
It's unlike last year, when GM finished strong in 2002 then patted themselves on the back for the first quarter of 2003 about how great they had done. All the while, taking their foot off the gas with no real plan in the first quarter.
I'm particularly impressed with GM's ‘Hot Button’ program. In what is a challenging time of year, GM has developed a plan that will cut through the clutter and it has two big benefits. One, it gives people a reason to come into the showroom. Two, it's an activity-creation method for salespeople who need something to do this time of year. There's a lot of good buzz about it.
And I'm excited that Finbarr O'Neill has move to Mitsubishi as the CEO. All that I've heard is how lucky we are to have him.
Dealers who know him say that, unlike most OEM managers who think it's the look of the facility that drives sales, he understands that it's the people inside who are important.
“I've had a fortunate aligning of the stars”
Glassman Automotive Group
“I have one minor concern. That would be if there were a spike in the interest rates.
The ‘state of the economy’ is a broad term. But obviously, continuation of economic growth is important. The key is to ensure that unemployment starts to decrease.
I guess I still have some concern about the war and job growth. We're fortunate the war hasn't been worse.
My Saab franchise is a bright spot. The 9-2 is a vehicle that will be a homerun. It's the first all-wheel-drive vehicle for Saab. It is based on Subaru's WRX platform, but it's been so well received, I have every confidence that it will enable Saab to appeal to a younger buyer.
Saab today is a different creature than what it was in 1991. It got out from being a niche vehicle driven by college professors.
It's still not a mainstream vehicle, but people who would have never considered buying a Saab are coming into the showroom today.
I'm just as optimistic about the Hyundai and Kia franchises. There is not a better flat-out value today. The challenge for all of us is that there is an incredible number of choices for the consumer today.
But value never goes out of style. And those brands are building quality vehicles
Subaru, meanwhile, continues to be a niche brand. But I do think it will grow out of its niche. It will probably get a halo effect from their partnership with General Motors.
I've had a fortunate aligning of the stars. We've managed to get it just right for us. In each segment we're in, we've got brands that are growing in popularity.