With Dealers, Auto Makers Lighten Up, Listen Up

No one in the auto industry gets closer to car buyers than dealers. Auto makers finally realize the importance of what that means.

In the past, including the not-so-distant-past, the so-called “factory” could get heavy-handed in trying to boss dealers around. Particularly egregious was demanding that dealers order more inventory, including models that sold poorly.

Dealers were expected to move those dogs, no matter what. That often led to low customer-satisfaction survey scores. Auto makers forced cars on dealers, then seemed horrified that desperate dealers would force those cars on customers.

Manufacturers have ended that vicious cycle by better matching supply to demand. Their current disciplined approach to production has solved a lot of problems.

Auto makers have wised up in other ways. They realize that, while they are the experts in producing cars, dealers are the pros at selling them.

“We should let dealers be dealers, and not come in and tell them how to run their businesses,” Reid Bigland, head of Chrysler’s Dodge brand, says at an auto conference put on by the National Automobile Dealers Assn. and IHS. “Let dealers do their own thing.”

Good auto maker-dealer relations depend on “being on the same page,” not on each other’s cases, says Jonathan Browning, president and CEO of Volkswagen of America. “It is important to know what works and what doesn’t.”

Toyota enjoys close relations with its dealers. Much of that stems from the auto maker’s philosophy that customers come first, then dealers, then the company. In general, auto makers agree on the first priority, but not always on the order of the other two.

“First and foremost is listening to your dealers,” says Jim Lentz, president and CEO of Toyota Motor Sales U.S.A. Why heed what dealers say? Because, Lentz notes, “Dealers are talking to customers every day. They are closer to the customer.”

Much of an auto maker’s success depends on dealer profitability. “You need to allow decent margins,” says Ludwig Willisch, head of BMW of North America.

BMW is the top-selling luxury-car brand in the U.S. Excellent product has much to do with that, but so does a professional dealership network.

“People should be properly trained,” Willisch says. “Not just once in a while, but continuously.”

Auto companies can help their dealers by not overcomplicating things, says Jim Farley, Ford’s group vice president-global marketing, sales and service.

Ford currently wants to make it easier for dealers to stock their lots, he says. “We want to improve the ordering process. Many Ford dealers are employing people full-time just to order cars. It’s far too complicated. “

Life sometimes is complicated for the auto industry. But it doesn’t always have to be.