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Prior to joining Polk earlier this year, I held numerous positions within Chrysler in the network planning and dealer operations areas. I am now able to apply my skills globally by overseeing Polk's network planning support of all major OEMs. I welcome your comments on any dealer network issues. |
My major take-away from last night's World Congress presentation was the sharp role reversal between guest speakers Yoshimi Inaba, President and COO of Toyota Motor North America, Inc., and Mark Reuss, President of GM North America.
Mr. Inaba spoke first about Toyota's recent successes and challenges. He calmly and confidently highlighted their current and future products, large R & D investment and employee charitable volunteer activities. The audience was left with an impression of a bright future for Toyota in North America.
Mr. Reuss then took the podium and explained the sense of urgency and renewed customer focus at GM. He noted the irony that the same government once concerned about GM controlling too much of the U.S. automotive market, now controls GM. Mr. Reuss covered current and future product and outlined the recovery steps already in place at GM.
It was interesting that GM, who once enjoyed over 50% of the U.S. market, is now behaving like a new entrant OEM by actions such as encouraging engineers to drive parts to stranded customers and having its president interface with the public via Facebook. Through various reasons such as insular management, quality issues and complacent dealers, GM basically handed their market share dominance to the imports over the years.
I was impressed with the passion and commitment of Mr. Reuss, but can't help but wonder if it's too little, too late for GM. They have some great new products and the new, customer focused attitude is refreshing; but will the North American consumer be drawn from their imports back into Chevy, Buick, Cadillac or GMC vehicles going forward? As you ponder that question, consider the fact that of the 16 Polk Automotive Loyalty Awards presented last night, import OEMs captured 13 categories, Ford 2, Chrysler 1 and General Motors 0.
Posted by James Dimond, Vice President of Global Network Planning, Polk (01.13.2010)
There's still a lot of press regarding automotive industry challenges like the recent GM and Chrysler bankruptcies and related dealer closings, but has anyone looked at the domestic OEM’s market share lately? I have and the industry trend is very sobering – GM, Ford and Chrysler combined retail market share has dropped over 10 percentage points during the last five years and is currently hovering around 40%. Yes, almost two out of every three vehicles currently purchased at retail in the U.S. is an import. I know that the definition of an import is fuzzy at best with Hondas built in Ohio and Subarus built in Indiana; but for the purposes of this discussion, let’s consider anything not made and/or distributed by the Detroit Three an import. We’ll also count future Fiats and Alfas as domestics since they will be distributed through Chrysler dealers.
My crystal ball is as cloudy as anyone else's, but I don’t see this sharp downward trend reversing in the near term. With the impending demise of Saturn and Pontiac, the reduction in GM and Chrysler dealerships and the heightened import competition (particularly Hyundai, Kia and VW), Detroit Three share can’t help but continue to slide even further. Add to the mix a newly refocused Toyota and vehicles from China and India on the horizon, and one can only wonder where the domestic share will bottom out.
I can say that from R. L. Polk's automotive forecast, we expect the Detroit Three total market share (including fleet units) to stabilize around 40% over the next five years. Even with Ford's recent uptick in share, I predict the Detroit Three to account for only 25% to 30% of the retail U.S. market within the next five years. What's your forecast, and what, if anything, can the Detroit Three do to become the Big Three again?
Posted by James Dimond, Vice President of Global Network Planning, Polk (10.28.2009)
In my last blog post, I shared two critical dealership survival strategies for today's economic slump: 1. Know your market and 2. Obtain a fair and objective assessment of your dealership facility. Following are two additional steps that all dealers should take in light of the current automotive industry challenges:
Step 3: Maintain a steady and open dialog with your OEM and understand your dealer agreement: In most countries, the only way new vehicles can be sold or have warranty service performed is through a franchised dealer. Accordingly, auto companies are continually seeking to optimize their dealer networks by evaluating and scoring such items as sales performance, customer satisfaction and financial strength. Through open and direct communication with their OEM's field or home office personnel, dealers need to be in tune with their OEM's network strategy and how they fit into it. Just as every college student knows what their GPA is, every dealer needs to know what their performance scores are with their OEM. Any shortfalls need to be addressed with a corrective plan.
While listening to the recent Capitol Hill testimony regarding U.S. dealer terminations, it became painfully clear that many dealers either didn't read or understand their dealer contracts to know what was expected of them. Most don't read it until there's trouble. Dealers need to thoroughly understand every facet of the contract by reviewing it with either their field rep or business attorney.
Step 4: Take care of your current and potential customers: CRM, business development centers and effective lead management are more than just industry buzzwords; they are the most important activities a dealer can and should undertake to ensure survival. Many dealers have told me that following up with existing customers is the major initiative getting them through these tough times.
Customers now expect basic conveniences like service shuttles or free overnight service loaners. Dealers that don't offer these and other customer perks aren't even in the game. Customer handling may get a little lax in a 17 million unit industry, but it's importance cannot be overstated in a 10 million unit industry.
The economy will eventually recover, but the "good old days" and "boom times" for dealers may never return. The future for a dealer includes increased competition from existing dealers and new entrants (e.g., Mahindra, Geely, Cherry, Fiat and the "new" Saturn), continued economic pressures (fluctuating oil prices, credit & real estate) and a more discriminating consumer with lofty expectations. The days of "Mom & Pop" dealerships are long gone, and going forward, the successful dealer must be sophisticated, technologically advanced and competitive in all aspects of the business.
Posted by James Dimond, Vice President of Global Network Planning, Polk (07.29.2009)
Step 3: Maintain a steady and open dialog with your OEM and understand your dealer agreement: In most countries, the only way new vehicles can be sold or have warranty service performed is through a franchised dealer. Accordingly, auto companies are continually seeking to optimize their dealer networks by evaluating and scoring such items as sales performance, customer satisfaction and financial strength. Through open and direct communication with their OEM's field or home office personnel, dealers need to be in tune with their OEM's network strategy and how they fit into it. Just as every college student knows what their GPA is, every dealer needs to know what their performance scores are with their OEM. Any shortfalls need to be addressed with a corrective plan.
While listening to the recent Capitol Hill testimony regarding U.S. dealer terminations, it became painfully clear that many dealers either didn't read or understand their dealer contracts to know what was expected of them. Most don't read it until there's trouble. Dealers need to thoroughly understand every facet of the contract by reviewing it with either their field rep or business attorney.
Step 4: Take care of your current and potential customers: CRM, business development centers and effective lead management are more than just industry buzzwords; they are the most important activities a dealer can and should undertake to ensure survival. Many dealers have told me that following up with existing customers is the major initiative getting them through these tough times.
Customers now expect basic conveniences like service shuttles or free overnight service loaners. Dealers that don't offer these and other customer perks aren't even in the game. Customer handling may get a little lax in a 17 million unit industry, but it's importance cannot be overstated in a 10 million unit industry.
The economy will eventually recover, but the "good old days" and "boom times" for dealers may never return. The future for a dealer includes increased competition from existing dealers and new entrants (e.g., Mahindra, Geely, Cherry, Fiat and the "new" Saturn), continued economic pressures (fluctuating oil prices, credit & real estate) and a more discriminating consumer with lofty expectations. The days of "Mom & Pop" dealerships are long gone, and going forward, the successful dealer must be sophisticated, technologically advanced and competitive in all aspects of the business.
Posted by James Dimond, Vice President of Global Network Planning, Polk (07.29.2009)
It's no secret that with the global recession, tight credit, low consumer confidence and a U.S. new vehicle industry down over 40%, it is a very difficult time to be a car dealer. No one knows how long the recession will last, but in a recent Automotive News editorial titled "Don't expect normalcy anytime soon," Editor-in-Chief Keith Crain warned dealers that "Chaos will be the norm." Automotive consultant Dennis DesRosiers closed his recent Canadian newsletter, Uncharted Waters, with the quote, " there is going to be a whole pile of 'ungood' over the next few years." Although both are right, there are basic survival strategies that can help dealers weather the current automotive industry challenges and prepare to flourish when the economy does improve.
Hopefully by now, surviving dealers have already performed the "basics" such as cutting all unnecessary expenses, right sizing the staff and refocusing the entire operation on customer satisfaction. Here are additional steps dealers must take to get through the industry slump:
Step 1: Know your market: In good or bad times, a successful dealer needs to continually analyze basic market data to determine which vehicles are selling in their area (both new and used), who's selling them and how their dealership stacks up against local competitors. Most publicly-held companies and successful, large dealer groups have this information readily available and fully integrated into their sales and service strategies. This information not only helps dealers balance their new vehicle inventory, but lets them know which are the hot-selling used cars they should buy at auctions. Data-based decisions also allow dealers to more effectively evaluate the success of their marketing campaigns.
Step 2: Obtain a fair and objective assessment of your dealership facility: In today's hyper-competitive market, it is absolutely critical to have a clean, well-maintained dealership. Too often, dealers become complacent about their facility's attractiveness. They need to drive the market in the daytime, nighttime and weekends and critically assess how their facility rates against the competition, including independent used car lots and service facilities. Better yet, the dealer should have someone else do this to remove any subjectivity. After all, how likely is a customer even going to walk into a poor appearing facility, let alone plunk down $30,000 for a new vehicle?
All major OEMs have a facility brand image program, some with incentives for upgrades. If a dealer hasn't taken part in the facility program, they may as well do it now, because the OEM and the consumer will be demanding it in the near future. I know the timing seems bad, but if the facility is deficient, it needs to be corrected now.
In my next blog post, I'll talk about two additional dealership survival strategies.
Posted by James Dimond, Vice President of Global Network Planning, Polk (07.27.2009)
Hopefully by now, surviving dealers have already performed the "basics" such as cutting all unnecessary expenses, right sizing the staff and refocusing the entire operation on customer satisfaction. Here are additional steps dealers must take to get through the industry slump:
Step 1: Know your market: In good or bad times, a successful dealer needs to continually analyze basic market data to determine which vehicles are selling in their area (both new and used), who's selling them and how their dealership stacks up against local competitors. Most publicly-held companies and successful, large dealer groups have this information readily available and fully integrated into their sales and service strategies. This information not only helps dealers balance their new vehicle inventory, but lets them know which are the hot-selling used cars they should buy at auctions. Data-based decisions also allow dealers to more effectively evaluate the success of their marketing campaigns.
Step 2: Obtain a fair and objective assessment of your dealership facility: In today's hyper-competitive market, it is absolutely critical to have a clean, well-maintained dealership. Too often, dealers become complacent about their facility's attractiveness. They need to drive the market in the daytime, nighttime and weekends and critically assess how their facility rates against the competition, including independent used car lots and service facilities. Better yet, the dealer should have someone else do this to remove any subjectivity. After all, how likely is a customer even going to walk into a poor appearing facility, let alone plunk down $30,000 for a new vehicle?
All major OEMs have a facility brand image program, some with incentives for upgrades. If a dealer hasn't taken part in the facility program, they may as well do it now, because the OEM and the consumer will be demanding it in the near future. I know the timing seems bad, but if the facility is deficient, it needs to be corrected now.
In my next blog post, I'll talk about two additional dealership survival strategies.
Posted by James Dimond, Vice President of Global Network Planning, Polk (07.27.2009)
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