Tuesday, May 26, 2009

Orphan Owners are going to kill GM and Chrysler

Has anyone really thought about the defection that is occurring here in the automotive dealership world? Our customers are defecting in MASS to the independent shops already. Did the manufacturers really think that customers are going to stay loyal to a brand when they cannot even get service for the cars?

My local dealership has gone away. Now what do I do?

Do the experts at GM and Chrysler think that they make such a great car that the competition is not going to swoop in and suck up the customers. The new Dodge Challenger is a hit! I would even like to purchase one for myself. However, if I have to drive for miles to my nearest dealership for routine maintenance, I am certainly not excited about that situation. This just gives the customer more defection points! Now an oil change is more of a point of defection because the dealership is just too far away.

Remember defection points. Ford Motor Company has been preaching about “Brakes, Batteries and Tires” for years now. Keep the customer loyal to the dealership. Do not let them leave.

Defection Point – Any point in the life cycle that the customer can defect from a dealership and go to an independent shop. This primarily occurs when a customer needs, brakes, batteries or tires. As the independent shop is PERCIEVED to have a better value for the items and services.

I really do not understand how Chrysler is going to survive as the “New and Downsized Dealer body Chrysler”. How is GM going to service with a shrunken dealer network?

Ponder this: If every Chevrolet owner showed up at the dealership today for service that was going to the independents, the Chevy dealership could not handle the influx of business. Cars would be lined up down the street. GM parts depots would be overrun with orders. Parts suppliers would be building spare parts and the chain goes on and on. However, the independent suppliers are not complaining. The aftermarket brake guys are expanding, building parts, fixing cars. What happened in our thinking to believe that closing stores is the right move to save the manufactures?

I heard the advertisement again this morning about a certain oil change shop. It stated that the customer tried calling the dealership for service and they were given an appointment for next week. If you believe the rhetoric from the commercial, what is going to happen when there are 2000 less dealerships in the United States? How long is it going to take to schedule an appointment?

However, dealerships are living the exact opposite. Dealerships are taking customers in NOW. Not tomorrow and certainly not next week. Our business is declining and we want work today. But where is the manufacturers’ effort to save the dealership? The Chrysler and GM effort is to save itself. Open your eyes and ears corporate guys. We dealers sell the products. We service the product. Without us there is no GM and Chrysler.

Where is the outcry from the automobile manufacturer? These are your customers. Do we just sit idly by and wait for someone to steal our customers. Do we just wait as our industry gets turned on its head? What are we all waiting for, let’s get together and make something happen. In fact we should demand that the automakers participate if not lead this effort.

Demand for Service Marketing

I am calling on the manufacturers to create a full scale marketing plan with multi level and multimedia to draw the attention to the customer about the NEW CAR DEALERSHIP SERVICE DEPARTMENT.


Imagine if the manufactures such as Chrysler and GM told their customers how great the dealership service department is performing. Imagine if FaceBook, MySpace, Twitter, pictures on Flickr and all of the known and not so well known social networks were full of fan pages of the new car dealership. Imagine the viral networks filled with testimonials of how wonderful the customer was treated at the new car dealership service department. Imagine if you turned on your television or radio and heard the General Motors talking about Mr. Goodwrench again. Imagine the warm and fuzzy feelings we could all have knowing our most precious investment was being serviced by the most highly trained technician in the world. Imagine how our customers would feel making the trek anywhere we asked them to trek. Finally, imagine how full the shops would be with real repair and maintenance work. Imagine how many customers would be converted into sales customers. That’s what dealerships do. I shudder to think how busy we dealership could be today.

If you follow my logic, then realize that the manufacturer would be supplying parts to the dealership. That would help keep the lights on at GM. Obviously parts suppliers would be busy making parts. GM then could focus on building cars. In the dealership world we have something called “absorption” or “fixed coverage”. This is the amount of the expenses that the fixed operation covers. A successful dealership is 85% fixed coverage. Imagine when the fixed ops pays all the bills. This means every car sales is a profit. A profit! Imagine profits from dealerships. What a concept.

Consider Service Satellites

Let us turn underperforming sales departments into service satellites. Imagine a dealer network where customers were not forced to choose between the competitive dealership service departments. Dealership s could focus on the true competition, the Aftermarkets. I suggest that underperforming dealership sales departments could revamp and focus on service. What are we going to do with all those empty service bays? It breaks my heart and my head to drive along Main Street and see a once thriving car dealership sitting empty.

A scenario could be having one or two dealership sales facilities across a community with service satellites populating the outer areas. This only makes sense. Dealership sales departments could become profitable. What a radical idea. Customers could be serviced by entrepreneurial dealership service departments. Car dealers are smart entrepreneurial folks. They certainly know how to move the metal. They also know how to turn a service customer into a sales customer. I suggest that we let the dealerships find there balance. Put a dealer in charge of the market area and let him run his business.

My suggestion is allow the dealer to do his job and sell and service cars. Without us, death to the brand is just around the corner.


Steven Shaw
cell 310-597-7726

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