DEARBORN –Motor America’s chief operating officer says the “arrogance” of some auto makers has put many dealerships in an unprofitable position – a situation that requires new action and not just more lectures from vehicle manufacturers.
In a blunt assessment, COO Steve Wilhite takes some OEMs to task for flooding dealers with over-produced models instead of providing them the flexibility to order vehicles customers want, leaving dealerships to push products through sales incentives.
“If we’re not capable of selling the value of our brand, why do we expect our dealers to sell the value of our brand,” Wilhite says. “This is crazy.”
Speaking here at this week’s Automotive News World Congress, Wilhite citesGroup’s recent oversized inventory; Motor Co.’s efforts to cut more than 600 Ford, Lincoln and Mercury dealerships; and Corp.’s elimination of 3,000 Oldsmobile dealerships in the last few years.
“It never should have come to this,” he says. “We know better in this industry. This isn’t rocket science.”
Nor does Wilhite spare his own company from criticism, pointing out that 24% of potential customers leavedealerships because of a poor experience.
Wilhite hopes new initiatives, including a telephone survey to track customer feedback, will help change that. Soon, every Hyundai buyer will get a call asking them to rank their dealer experience on a scale of one to 10.
Customer feedback will be recorded by Hyundai and forwarded to dealerships and will be used as a direct tool in monitoring dealer performance.
“We’re not going to try to tell dealers what to do,” Wilhite says, explaining the effort is to provide dealers with timely and unvarnished feedback from consumers.
At the same time, he says Hyundai needs to do what it can to help dealers achieve better per-vehicle margins. The South Korean auto maker has a 4- to 5-year goal to increase its U.S. dealers’ net return on sales to 2.5% from the current average of 1.6%.
“For every $100 (dealers) currently sell, they make less than $2 pre tax,” he says, noting most furniture and jewelry stores make higher margins than car dealerships.
While the initiatives may not remedy all the problems, Wilhite says “they’re a start.”