Is the Joke on Dealers?

Let's pretend I'm from Mars and, through a cosmic joke, wind up in Detroit as sales executive for a domestic auto makers.

How long do you think it would it take me to understand that the last week of the month is important for dealer sales and that skittish consumers can trash the month-end if news of an impending super sale is in the wind?

How much longer would it take for me to understand that neither the press nor the dealers ever keep secrets from the public about such sales? I'm guessing it wouldn't take long to figure that out.

So, how do we explain that I'm sitting in my office a week before the end of the month of June, answering questions from customers and sales people on whether we now can sell the new incentives which, according to today's news, won't kick off until the beginning of July?

I suppose the factory folks, who were so giddy that they had to tell the press about upcoming sales promotions before they offered them to the public, are from a different planet. I know they aren't from a place populated by retailers.

This brings me to another joke on dealers. Witness the wave of dealer-funded, pampered shopping experiences demanded by manufacturers and justified by the belief that such programs boost sales and revenues to levels heretofore only achieved by top franchises.

It's a concept that seems so right — right up to the part where someone has to pay for it. And yet many people seem so confident that manufacturers who demand this of their retailers will win the war.

This kind of confidence stems from buying into the idea that customers like to be pampered, as if that were a startlingly new revelation. It also supposes that such customer “likes” will translate into changing what's on shopping lists. This ranks right up there with expensive studies that conclude that people like “choice,” “discounts,” “free stuff,” and “their own way,” but stop short of concluding which “likes,” if any, would encourage consumers to pay more or to switch brands.

A recent J.D. Power and Associates survey has been interpreted to reveal that customer satisfaction with the overall dealership experience can affect a dealer's revenue per customer. The survey asks about things such as service quality and user-friendly service.

What caught my eye is not that Lexus ranked highest with an overall score of 912 points on a 1,000-point scale, but that immediately following Lexus are Buick (911) and Cadillac (909).

I don't want to take anything away from the superb efforts Buick and Cadillac dealers are putting into achieving those results. And I concede that they couldn't do it without the helping hand of a lot of folks at General Motors.

But give me a break if you think Buick and Cadillac are winning the battle of which franchises dealers pick when ranking profitable brands.

I admire Buick and Cadillac dealers who are tough enough to survive today, but I haven't spoken to a single one who's pinned his or her survival to customer pampering.

Used cars, special-finance programs and a whole lot of catering to the best of their staff are high on the list of profitable Cadillac and Buick dealer skill sets.

Yet, some manufacturers believe that if those darned dealers would only build better facilities and treat their customers like Lexus dealers do, everything would be all right.

I'm not one to bash customer service, and I recognize the strides Lexus has made in wowing customers.

But can other dealers, on their own dimes and without hot franchises, achieve profitability by wowing customers in the same ways? No. It takes volume and margin to pamper customers. And unless you have both, it takes cost cutting and discounts to survive.

Dealers who can't say that gross profit from new-car sales is the strength of their financial success are kidding themselves if they believe pampering customers and building fancy buildings will save the day.

Peter Brandow is a dealer in Pennsylvania and New Jersey.