Special Coverage

NADA Convention & Exposition

Commentary

LAS VEGAS – Uncertainty. That word best describes what some automotive dealers are feeling as they come to Las Vegas this weekend for the National Automobile Dealers Assn. convention.

Mercury dealers certainly must be the most concerned. The question of whether the Ford Motor franchise can survive the next couple of years is a legitimate one.

In 2006, the approximately 1,900 Mercury franchisees averaged only about eight new-vehicle sales per month. And judging from the recent Detroit auto show, there is no substantially new product on the horizon.

Dealers probably won’t find the answers they want during Sunday’s make meeting – and that might result in a frustrating weekend for both dealers and management.

Ford is another brand for which managers may face tough questions from dealers this weekend. Ford is moving to reduce its dealership count but has far to go. Its balancing act is a tough one as Ford looks to keep the right dealers in the fold while taking its franchise count down a notch.

The truth is, Ford may not be moving fast enough for some dealers, who possibly may run out of time and be forced to opt for a minimum buyout.

Another intriguing brand is Hyundai. It notched its highest-ever market share in 2006, but its dealers aren’t making a lot of money. According to J.D. Power and Associates, Hyundai’s gross profit per sale is one of the worst in the industry.

Fortunately for its retailers, Hyundai Motor America Chief Operating Officer Steve Wilhite unquestionably is a dealer advocate and understands a profitable dealer body makes for a stronger OEM. But some dealers tell Ward’s they are skeptical of just how much leeway the Koreans will give Wilhite.

And what about Chrysler? The sad, sad inventory snafus of last year are over according to Chrysler boss Tom LaSorda. Well, maybe for the OEM. Dealers will be struggling with the aftereffects of being slammed with unwanted inventory for most of 2007.

Many dealers, some of them prominent, privately admit they are looking to unload their Alpha (Chrysler Dodge Jeep) stores, primarily because of the lingering effects of former sales boss Joe Eberhardt’s policies.

Dealers trust LaSorda, though, and like what he has to say. The new restructuring plan to be unveiled in two weeks may answer many of the dealers’ questions.

But LaSorda has to act quickly to find a replacement for Eberhardt, who was forced out because of his “poor bedside manners” with dealers, as AutoNation CEO Mike Jackson so diplomatically puts it.

Some of Chrysler’s largest dealers say LaSorda is asking them for ideas. Here’s one. Give Finbarr O’Neill a call. It’s likely his time at Reynolds and Reynolds is nearing an end now that he has helped engineer the company’s sale to competitor Universal Computer Systems.

O’Neill has a strong OEM background with many industry insiders crediting him with Hyundai’s spectacular turnaround a few years ago. True, the story at Mitsubishi, which he subsequently headed up, was different. But nobody could have salvaged that one.

O’Neill’s strongest quality is his relationship with dealers. He’s well liked and trusted. Bringing him on board would take away some of the uncertainty Chrysler dealers are feeling.

cbanks@wardsauto.com