WARD'S 500 FEATURES A NEW NUMBER 1

You sometimes hear of a son taking over a family business and making a mess of things. Greg Penske did the opposite.

THIS ISSUE CONTAINS OUR 15TH ANNUAL WARD'S Dealer Business 500, a compilation of the top 500 dealerships in the U.S. The “List” always generates interest and excitement.

This year's No. 1 spot goes to Longo Toyota of El Monte, CA. Ricart Ford in Columbus, OH, which held the top spot two years in a row, is No. 2 this year.

Greg Penske runs Longo. He represents the modern dealer professional. He's smart, polished and articulate. Like so many dealers, on and off the Ward's 500, he's also a nice guy.

He's the son of Roger Penske, entrepreneur extraordinaire. You sometimes hear of a son taking over a family business, and messing it up. Greg Penske did the opposite. He turned Longo Toyota into a huge success. He's the type of son a father wants working for him, not has to have working for him out of family loyalty.

Don't play that song for me?

James C. Schroer, the Chrysler Group's new chief of sales and marketing, took the stage at a recent dealer gathering in Las Vegas, and struck up the band — to prove a business point.

He had one band member play a few notes.

“That's the Chrysler Group sales department,” he said.

He had another musician play different notes.

“That's the marketing department,” he said.

Other band members subsequently played different tunes representing service, financing and, finally, dealers.

Then Mr. Schroer had the whole band play their respective parts all at once.

“It was sheer cacophony,” he recalls. He then turned to his audience of dealers, and said, “And the name of that song is ‘April Sales.’”

The message is that it won't work if everyone isn't working together.

Mr. Schroer left a vice presidency at Ford Motor Co. to join the Chrysler Group Feb. 26. He's made quick changes. One is to try to get people working as a team.

“We had marketing people communicating with dealers, and we had sales people communicating with dealers, but never did everyone sit down as a group to communicate,” he says.

Mr. Schroer is trying to come up with ways to end Chrysler's woes. The division lost $2 billion in six months. And those April sales were horrible — an 18.3% drop for Chrysler, the worst of the domestics.

Mr. Schroer vows to reverse that. He also vows to keep dealers in the loop.

“We sent all our new marketing people, including George Murphy, and our new sales head, Gary Dilts, to visit with 25 zones out in the field, 200 dealers a zone, listen to what the issues are, ask where have we got our programs with dealers stuffed up, and then go fix them.”

One solution they came up with is the “Summer Challenge.” It replaces a makeshift scheme, the market performance allowance. That intended to reward dealers who met sales goals. But it backfired. When April sales started missing target levels, dealers started cutting back orders.

Says Mr. Schroer, “We have too many programs with the dealers tied up in sales contests rather than in how do we sell better to the consumer. We're moving in that direction.”

Part of the “Summer Challenge” strategy is to co-market advertising with dealers in an effort to jump-start car sales.

“We'll pay a portion of the dealers marketing to put the deal — which the dealer traditionally does — together with the product message,” says Mr. Schroer. “We haven't done that in some time.”

Why Blue Oval-certified dealers dislike Blue Oval

I do a weekly automotive report for a Detroit radio station, WJR-AM. A recent broadcast was on Ford's Blue Oval dealer certification plan. A dealer who heard the report contacted me. He thought I made it sound like Ford dealers dislike the customer satisfaction part of Blue Oval.

If it sounded like that, it wasn't my intent. It's a challenge to cover all aspects of Blue Oval — Ford's determination to launch it, the controversial two-tier invoice pricing, dealer objections, the legal challenges — in a 45-second broadcast.

But the dealer also offered insight as to why so many dealers who are Blue Oval certified, as he is, still disdain Blue Oval.

He said, “The objection to Blue Oval is that the lack of trust and communication between Ford and the dealers will lead to a lessening of dealers' franchise rights and to dealer attrition.

“With the economy souring, Ford dealers definitely need the Blue Oval income. This comes at a price, however. Ford has absolute control over its dealers' every action.

“Before Blue Oval, a dealer could be only terminated for fraud committed in new-vehicle sales incentives or warranty service. Now there are 123 criteria that dealers are measured for. Eventually, missing one criteria could cost a dealer Blue Oval certification, a lot of money and the prospect of being driven out of business by financial attrition.”

Steve Finlay is editor of Ward's Dealer Business. His e-mail address is: [email protected]