Uncertain Times

Uncertainty. That word best describes what some automotive dealers were feeling when they came to Las Vegas for the National Automobile Dealers Assn. convention.

Yet, despite the questions, dealers I have talked to this year sound positive and ready for the challenge.

There is no question, though, that dealers are exiting the business in greater numbers. Since January 1, 10 domestic dealerships have shut down in Connecticut alone. There have been numerous other closures across the rest of the country.

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.

Ford is another brand for which managers may face tough questions from dealers. 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 understands the need for profitable dealers and is taking measures to make that happen.

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.

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.

LaSorda, meanwhile, is acting as sales and marketing chief in addition to gearing up for the UAW talks this summer while trying to manage Chrysler's comeback or sale.

Some of Chrysler's largest dealers say LaSorda is asking them for ideas. Dealers trust LaSorda. But the restructuring plan, announced on Valentine's Day creates more questions, as it appears Daimler is trying to sell the U.S. brand.

Others see opportunities and believe the combined strength of the Chrysler Dodge Jeep brands mean the dealers will survive any sale or restructuring.

Although the times are challenging, many of you will find ways to grow and become more profitable this year.

And we would love to hear how you are doing it. Send me an e-mail or give me a call. I'm at [email protected] and 248-799-1649.