BACK ON THE ROAD....to SUCCESS

DEALER and MANAGEMENT REPORT
Dave Kemp, the Automotivator

Hey, despite the media clanging alarm bells regarding the challenges of our auto manufacturers, retail vehicle sales continue to surprise everyone—except the car dealers. The Canadian car retail business is pretty darn good—all makes, import and domestic. Why?
Because automobile dealers take action when threatened and overcome the threat. They have made positive decisions in these negative times to increase sales staff effectiveness, decrease overhead and improve the buying experience. That is what my clients have done, with great results. Most General Motors and Chrysler, Saturn dealers have retailed vehicles very well despite the best efforts of Presidents and Media moguls pitching bad news. The customers have responded voted with their bucks too.

With inventories falling as sales people work their repeat client sales, and showroom walk-ins come in ready to deal, production should be kicked into gear real soon. A report released late April says, "The sharp cutbacks in industry output and the recent sales improvement will likely reduce U.S. dealer stocks to a more manageable 80 day supply by the end of April, down from a peak of 125 days' in January," said Carlos Gomes, Scotiabank auto industry specialist.

Interesting to quote a bank representative, isn’t it? I know he isn’t personally responsible for this gigantic mess-this automobile manufacturing bailout. But it is clear, bankers, particularly in the US but certainly all over the planet, helped create the biggest bubble in credit, the world has ever seen. False profits in the financial sector rocketed up and gigantic bonuses were paid out on paper profits. And naïve, trusting, ordinary people all over this continent and the world have paid the price—pensions destroyed and retirement plans shelved. Greed overtook business sense. But the bubble bus and became a big black hole. The house of cards in the financial and real estate sectors had to fall and the consequences of terribly greedy bankers and equally inept or corrupt government overseers have created one of the worst financial disasters ever.

Resilience and compassion
But nobody should count out the creativity, guts and resilience of the car dealer entrepreneurs. They have weathered economic disasters before and came out strong. Yes there will be dealership causalities, in all makes unfortunately, totally beyond their control. They didn’t create the problem but they are paying the price.
Without a doubt we all feel pain for the quality dealers who invested and worked their butts off to create viable, profitable business and substantial employment in their communities. Car dealers not only are major employers in every city, town and village, but they are also the major community supporters for hospital, sports teams, charity drives. Car dealers make a significant difference in their communities. It is a shame to see the rug pulled out from under them by the banks and corporate bunglers.

Thousands of dealership retail staff will be looking for work. Some 310 dealers now selling GM cars will be asked to shut their doors permanently in community’s coast to coast—over 12,000 jobs will be lost. GM Canada spokesman Stew Low declined to provide specifics on how the cuts will be made. There will be similar dealer losses in Chrysler.

I am not sure how the politicians on either side of the border can square this result with their stated goal of increasing employment to return the country to prosperity. These good paying, middle class jobs in the retail auto sector are going to be hard to replace.

Things will get better…sooner.
It is not all doom and gloom for vehicle production employees, considering Canada will remain a critical source of vehicles for North America, said Ray Young, GM's chief financial officer. He noted that of six new vehicles being launched this year on the continent, three are built in its Ontario plants including the new Chevrolet Camaro. Ford is building world class vehicles people want to buy and they are rebounding big-time in the retail business. The so called imports, although that is not a valid definition anymore, are committed to building quality vehicles in Canada and United States. They are having a positive impact on both economies.

Like it or not General Motors has to achieve this brutal downsizing. It has to get lean and mean enough to make a profit in a marketplace in which all automakers combined are only selling 10 million vehicles annually, the current trending for 2009. Imagine, in 2008 North America produced and sold 16 million vehicles. But bigger sales volumes will come back within two years.

There is a deep disappointment regarding the demise of Pontiac. This Pontiac franchise has been successful in Canada for a long time. The dealers are clearly competitive in most model sectors and well complimented with Buick and GMC. This is another example when wrong headed thinking at the corporation level did not encourage this wining combination in the United States.

But don’t count the GM and Chrysler dealers down for the count in this next round. I believe the import dealers are doing terrific and will continue to do so. But they had to learn to compete against the big three and compete they did. The domestic dealers are ready for the race too.

Bottom-line
I believe there will be a vibrant, exciting and highly profitable retail car business for all dealers, all makes. It will only get better. The vehicle quality is great, the designs are dynamite and the consumers will be the winners along with their retailers.
As a Ford dealer before I founded Automotivator Professional Development I am proud to be a member of this group of motivated and enterprising people. It will be the dealers who take the manufacturers out of this recession, that you can count on. Yes this too shall pass.

“Sources are Nicolas Van Praet, Financial Post , Jeff Kowalsky Bloomberg News, Paul Waldie and Greg Keenan, The Globe and Mail”

Dave Kemp, the Automotivator, is President of Automotivator Professional Development and Trackstar International Follow-up Systems. Dave, a car industry expert who focuses on improving the sales process for dealers and manufacturers with great results. Contact info. http://www.automotivator.com/ Email Dave@Automotivator.com 1-800-668-0362

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