Special Coverage

NADA Convention & Exposition

SAN FRANCISCO – Auto makers should rely on their dealers not only to sell and service cars, but for advice during various stages of new-vehicles development.

So say dealers in a conference segment entitled “From Surviving to Thriving: What It Takes to Win (Big) at Retail” at the J.D. Power and Associates International Automotive Roundtable tied to the National Automobile Dealers Assn. convention here.

“Manufacturers should listen to dealers about what products people want, because we’re on the front line selling cars,” says Ed Tonkin, a Portland, OR, dealer and outgoing NADA chairman.

Auto makers should depend more on feedback from dealers and less on focus groups for the creation of new models, he says, noting the Pontiac Aztek – a cross/utility vehicle widely panned for its unattractive styling – “came out of a focus group.”

Auto makers should consult with dealers on an array of issues, says Michael Jackson, CEO of AutoNation Inc., the largest dealership chain in the U.S.

“Historically dealers were told to shut up and sit in the corner,” he says.

Some auto makers, such as General Motors Co., are stepping up efforts to get dealer input on various matters, including creating new products.

“We are changing the structure of the national dealer council and bringing dealers into the product-development pipeline,” says Mark Reuss, president of GM’s North American operations. “We’re already doing that. It’s extremely important to do it.”

Reuss attended his first NADA convention last year in the midst of a GM and NADA feud. Some top GM executives boycotted the dealer event because they were miffed at NADA for fighting widespread dealership terminations. GM and NADA subsequently patched things up.

“My first NADA convention was pretty rough,” Reuss admits. “At that time, our relationship with NADA, dealers and our customers was pretty poor.”

Today, new GM products are commanding “attention, good prices and respect,” he says. “If auto companies and dealers don’t have the right product to sell, it’s a difficult road, and it has been.”

Healthy communications are a centerpiece to strong dealer-auto maker relations, Tonkin says. He cites an annual NADA survey in which dealers are asked to rate auto makers by franchise.

“The manufacturers that dealers rank well in dialogue are the ones at the top of the marketplace,” he says.

Jackson goes so far as to suggest dealers play a “pulse-of-the-marketplace” advisory role of telling auto makers to make needed changes in existing products that founder in the showrooms.

That idea doesn’t resonate with Ernst Lieb, president and CEO of Mercedes-Benz USA LLC, a position Jackson held before joining AutoNation.

“Changes within production?” Lieb says. “That would be very, very difficult.”

Still, he adds, “I like to get feedback from the dealer body.” He tells of a new program in which Mercedes shows its retailers vehicles in the early development stages.

Lieb also praises U.S. Mercedes dealers for participating in a program to build new facilities or renovate existing ones.

Of 350 dealers, 300 have new or renovated facilities. The parent company kicked in $200 million to subsidize the project. “The dealers spent $1.4 billion,” he says. “That’s a hell of a lot of money for 300 dealers.”

Also lauding dealers is Bob Carter, general manager of the Toyota Div. of Toyota Motor Sales U.S.A. Inc.

Last year was rough for Toyota as it faced a series of recalls and allegations of product malfunctions. Dealers worked overtime to fix the recalled vehicles.

“I have to thank our amazing dealers,” says Carter, who once ran new-vehicle showrooms in Massachusetts with his brother, who remains a dealer. “Without our dealers, we couldn’t have survived.”

Despite the troubles Toyota faced in 2010, “I’ve never started a new year with more excitement,” Carter says.

Jackson adds, “No one is more optimistic about the auto industry than I am.”