Skip navigation

Few honor students, but manufacturers' marks improve over last year

To view grades, click here. Automakers finally seem to be making some progress in their relationships with dealers, according to results of Ward's Dealer Business' second annual Industry Report Card. The Report Card surveyed dealers in December, asking them to assign a letter grade (A - F) to their manufacturer on 11 categories. Dealers gave the manufacturers an overall B this year up a grade from

To view grades, click here.

Automakers finally seem to be making some progress in their relationships with dealers, according to results of Ward's Dealer Business' second annual Industry Report Card.

The Report Card surveyed dealers in December, asking them to assign a letter grade (A - F) to their manufacturer on 11 categories.

Dealers gave the manufacturers an overall B this year — up a grade from last year's C.

“It's tough for dealers to complain when they've had such a great year,” says analyst Jim Hall of AutoPacific.

Automakers received the lowest overall grade in e-commerce initiatives — with a low C.

“That's the dealers' fault, not the manufacturers,'” claims Hall. “Dealers have succeeded in getting 34 different state franchise laws passed the past few years. That makes it hard for any automaker to develop a consistent e-commerce strategy.”

As evidence of some of the great product recently put on the market, dealers gave the highest grade overall — a high B — to the automakers for product styling.

But before the manufacturers start congratulating themselves too much on their comparatively higher grades, consider this:

The survey also asked dealers if they thought their manufacturer treats them as partners.

Sixty-three percent of responding dealers said no, 33% said yes and the rest didn't say.

One dealer says, “It's not in their interest to do so. No hard feelings — it's just business.”

Another dealer, who believes a partnership exists, says, “As partners in any venture, we must both give or take, and that occurs.”

Hall thinks that as the industry starts to see tougher times, dealers may begin to view the OEMs as partners. “The dealers are going to rely on those institutions that they perceive can help them be the most profitable — and that will be the manufacturers,” he says.

Ford and Lincoln Mercury appear to have work to do in repairing their relationships with dealers, the survey indicates.

Ford and Lincoln Mercury dealers deliver the harshest comments, with some dealers saying that Ford is arrogant.

One dealer says, “Ford's arrogance is astounding.” Another adds, “Ford is arrogant and does not care about their customers nor their dealers.”

Regarding a possible partnership, one dealer says, “Ford/LM has been treating their dealers as a necessary evil — there is no partnership.”

But other dealers are more optimistic, especially with Jacques Nasser out and Bill Ford Jr. in as Ford Motor Co. CEO.

“They are getting back to having dealers as partners with the firing of Mr. Nasser,” says one dealer.

Dealers graded Ford and Lincoln Mercury about the same as they did last year — with C's. Despite all of the problems in the relationship, Ford dealers consider their franchise to be valuable, grading the OEM as a high B in that category.

The two categories receiving the lowest scores were communication with dealers and respect for franchisees — both with low C's. Some of the low scores are because of that pesky Blue Oval dealer certification program that many dealers still take issue with. (See page eight for a Ward's poll on what dealers think of Blue Oval.)

Despite some of the low scores, the emphasis at Ford and Lincoln Mercury right now is restoring product quality, and not so much on dealer relationships.

Richard Beattie, Lincoln Mercury's vice president of marketing, sales and service, acknowledges his approach to the dealer relationship may be different than others.

“My approach is to make dealers feel better about the product and the brand. It's not necessarily about whether we've had a good meeting or not. The relationship is based on what we deliver,” he says.

Toyota A
Categories Average Grade
Communicating with Dealers A
Product Styling A
Product availability B
Advertising/Marketing A
Respect for franchisees A
Facility planning B
Ordering process B
E-Commerce Initiatives B
Handling warranty claims A
Value Of Franchise A
Assistance from factory rep A
Overall Grade A

The division is launching six new product in the second half of 2002 and its focus is making sure those go smoothly, says Brian Kelley, Lincoln Mercury's president.

“Our dealers have done a great job in recent years with an aging product,” he says. “Hopefully, with the new product and smooth launches, we can regain some of that market share.”

General Motors, meanwhile saw its grades improve from last year by moving four of its brands (Buick, Cadillac, Chevrolet, Pontiac/GMC) from C's to B's. Oldsmobile, on automotive death row, was the only GM division with an unimproved score.

“GM has made genuine and real strides in the last two years,” says one dealer, referring to previously strained relations stemming from various disagreements, including the manufacturer's plan to run up to 800 dealerships. GM subsequently scrapped that idea after dealers vehemently objected.

Honda B
Categories Average Grade
Communicating with Dealers B
Product Styling A
Product availability B
Advertising/Marketing B
Respect for franchisees B
Facility planning B
Ordering process B
E-Commerce Initiatives B
Handling warranty claims A
Value Of Franchise A
Assistance from factory rep B
Overall Grade B

“We've worked hard as a team to make a vast improvement in our relationships with our dealers,” explains Darwin Clark, GM's head of dealer relations.

Part of GM's strategy is to increase the level of communication the management team has with dealers. Both Chairman Robert Lutz and President Gary Cowger of GM's North American operations will speak to dealers at the GM franchise meeting at the National Automobile Dealers Association's convention in New Orleans this month.

“Having that face time will help,” says Bill Lovejoy, GM group vice president of North American sales and marketing.

Adds Mark LaNeve, Cadillac general manager, “We're focusing on getting a lot of face to face time with our dealers right now.” Cadillac management will meet with 300 of the division's biggest dealers in New Orleans this month following the NADA convention.

GM overhauled its national dealer council last year, giving more dealers a voice in the decision making process. “We have national councils, regional councils and advisory boards now,” says Clark. “And 588 of our dealers are involved with these councils in some way.”

GM also has simplified the incentive part of the business. “Six months ago it was very complicated,” notes Clark. “Now everyone, including the customer, understands what the incentives are.”

GM still has work to do, he acknowledges.

Smaller dealers appear concerned that the automaker doesn't have their best interests in mind.

“GM has no desire to keep the smaller dealers around,” says a dealer in the Ward's survey.

Nissan B
Categories Average Grade
Communicating with Dealers B
Product Styling A
Product availability B
Advertising/Marketing B
Respect for franchisees B
Facility planning B
Ordering process B
E-Commerce Initiatives C
Handling warranty claims B
Value Of Franchise B
Assistance from factory rep B
Overall Grade B

Another dealer adds, “GM has two standards — one for big dealers and one for all the rest.”

Meanwhile, Toyota scored an A this year — the only manufacturer in the two years of the study to do so.

Toyota's decision-making process is critical to the success of its dealer relationships, says Don Esmond, senior vice president and general manager for Toyota Motor Sales USA.

He says, “Our decision making starts with Toyota's philosophy — the customer is first, the dealer second and Toyota comes third.

“For example, if there is a problem with a part on a vehicle, and we know about it, we don't sit around and calculate how much it will cost to fix the problem — we fix it right away. That's how you build your reputation for quality.”

Also, Toyota looks to its dealers when evaluating whether to implement various programs. Taking a subtle shot at Ford's Blue Oval program, Esmond explains, “If it's the right thing to do, then the dealer will want to do it.”

Surveyed Toyota dealers believe they are true partners.

“Toyota seems to consider the dealer to be a partner in both words and actions,” says a dealer.

Another adds, “Toyota and Lexus support the dealers, they don't compete with them.”

One area Toyota was able to improve in 2001 was its dealer communications, according to the survey. That isn't a surprise, says analyst Hall.

“Toyota wants its dealers to improve operations so it is probably communicating with them a lot more,” he says.

Volkswagen/Audi B
Categories Average Grade
Communicating with Dealers B
Product Styling A
Product availability B
Advertising/Marketing B
Respect for franchisees B
Facility planning B
Ordering process B
E-Commerce Initiatives C
Handling warranty claims B
Value Of Franchise A
Assistance from factory rep B
Overall Grade B

Toyota is looking for ways to help its dealers improve their operations, Esmond acknowledges.

“Our dealers requested that we work with them to develop a signature program that helps them analyze their in-store processes,” he explains.

The automaker has piloted a program at 53 dealerships and will begin to roll it out later this year. Toyota launched a similar program about three years ago after its dealers scored low in customer satisfaction.

Two areas Toyota's dealers graded as B's include facility planning and order processes.

“We're working on that too,” says Esmond. “We want to give the dealer the ability to respond more quickly and efficiently when placing orders — but we don't want the dealer to have to increase floorplan expenses and storage facilities.”

Nissan also received a higher score this year — improving last year's C to a B. Nissan has received praise for its recent product design — the new Altima won the Detroit Auto Show's car of the year award — and dealers are excited about it, says Bill Kirrane, Nissan North America vice president and general manager.

Cadillac B
Categories Average Grade
Communicating with Dealers B
Product Styling B
Product availability B
Advertising/Marketing C
Respect for franchisees C
Facility planning C
Ordering process C
E-Commerce Initiatives C
Handling warranty claims B
Value Of Franchise B
Assistance from factory rep B
Overall Grade B

Also, Nissan is financially supporting a facility renovation program that's underway. The number one challenge for Nissan, Kirrane says, is improving customer satisfaction.

Honda, Volkswagon and the three Chrysler brands — Jeep, Dodge and Chrysler were consistent, receiving the same grades as last year — high B's.

Despite having a new management team last year — and from another country no less — Chrysler dealers seem relatively happy with the relationship as the manufacturer has taken steps to improve bruised feelings. (See story on page 26).

But it's a pragmatic relationship, say some dealers.

One explains, “It's getting better. Chrysler needs its dealers to survive, so they are treating us better than before.”

Another dealer agrees, saying, “DaimlerChrysler is better than most. But they only wish partnership when they feel they need us, which now, they do.”

About the survey

The research department of Ward's parent company, Primedia Business Magazines and Media, conducted the survey.

Thirteen brands were graded this year. Dealers from 15 other brands did not return enough surveys to provide statistically sound analysis and thus, were not included in the final results.

TAGS: Dealers Retail
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish