It's a Matter of Degrees

What do you get when you take ambitious but raw young people who want to be auto dealers and match them with dealers' experienced children who plan to work at the family store, but might be not be so hard driving?

You get a dynamic classroom learning experience, says David E. Fry, president of Northwood University in Midland, MI.

He explains: “We purposely mix green students who are highly motivated with children of dealers who already know a lot about auto retailing but never went hungry.

“They teach each other. Learning about marketing cars in a class of people coming from different backgrounds and different places is very important.”

Students who graduate from Northwood's automotive marketing program are in high demand. There are three to six job offers for each graduate, says Fry.

Northwood raised some eyebrows 43 years ago when it established a degree program for prospective dealers and dealership managers.

“Some people derided it. They said, ‘You mean you are training those guys in plaid coats?’ They thought it was foolish,” says Fry, addressing a J.D. Power and Associates conference in Dearborn, MI.

Looking back, those silenced critics may seem like the foolish ones. About 3,000 Northwood graduates have become dealers, joining what Fry calls the bastion of North American entrepreneurship.

“Dealers are uniquely characterized as virtually having all their money tied up in businesses that could sink tomorrow,” he says. “The real risk is not the corporate risk. It's at the end of the chain.”

Auto makers are good at building vehicles, bad at selling them, says Fry, alluding to car companies' failed retailing attempts, such as Ford Motor Co.'s aborted try in Tulsa, OK.

“Their history of failure is not from lack of capital but because they lacked the skill,” he says. “Dealers in that regard are smarter and much closer to local markets. Entrepreneurs do these types of things better, which is why dealers are the backbone of the industry. I don't see that changing.”

Marketing and selling vehicles is “extremely complex,” making an automotive marketing program such as Northwood's so necessary, says its president, who joined the faculty as an economics professor in 1965.

The university also provides counseling on the sometimes-touchy subject of dealership succession.

Fry says it is especially tough to transfer assets in families with children who are loved equally and desire to be treated equally, but who possess varying skill levels when it comes to running a dealership.

“We have targeted discussions with students and dealer parents on how to handle the process,” he says. “Ultimately, you have a kid say, ‘My father will not move out as dealer and doesn't understand the market, and my sister is taking too much money from the dealership.’

“This is a family that needs five years of help. But it can be handled, even though it is hard for a dealer to give up a business to a kid you diapered. There is no magic model. Everyone is different.”

Fry sees dealerships' high staff turnovers as a big problem, often resulting in desperate hiring. Providing career ladders helps keep good employees, he says. Not all dealerships are big enough to do that.

“But they can create stature and give people a vested interest not to leave,” Fry says. “It often is not about money. Dealers in their own areas must figure out what it is about.”

He notes that some dealers are reluctant to trust and train employees, fearing they might thereafter seek employment elsewhere. “It happens,” says Fry, warning dealers not to get too hung up by it.