Automotive News - March 17, 2008 - (Page 12)

12 • MARCH 17, 2008 opinion Ford must close stores but remain open to diversity The Ford Motor Co. plan that offers a one-time buyout to the 81 members of its dealer development program is a twoedged sword that the company must wield with care. Under the offer, Ford Motor will refund dealers’ full investments if they give up their dealerships — even if their current stake is worth less than the original investment. Using factory cash as a lifeline to dealers who are underwater seems generous and fair. But there is a potentially damaging unintended consequence: Since 62 of the 81 development dealerships are minority-owned, Ford could be cutting out the heart of its efforts to diversify its dealer group. Ford Motor, like most other automakers, says it is committed to increasing the number of minority-owned dealerships, yet the total continues to erode. Last year, Ford’s number of minority-owned U.S. dealerships declined by 28, to 309. Some of that may be the result of general market conditions. But a tough retail environment isn’t an excuse for Ford to lessen its commitment to diversity — or to ignore the chronic complaints of minority dealers that they’re too often stuck, without adequate capital, training or support from the factory, in aging, unprofitable points where previous dealers have failed. Ford needs to shrink its U.S. retail network, substantially and quickly. But it needs to do so in a way that shows sensitivity to its rapidly eroding complement of minority dealers, especially blacks and Hispanics. Ford has decided to get the ball rolling and has offered some of its U.S. dealers the opportunity to fold their tents. But Ford doesn’t have enough money to buy out all the dealers that need to be eliminated. Nor does anyone else for that matter. Ford, General Motors and Chrysler all have way too many dealers in the United States. Each automaker knows how many dealers it needs and where it needs them to be in the years ahead. The challenge is to get it done without breaking the bank. With all the information available today, factories know about customer trends, population trends and other demographic information that tells them where to put dealerships. Information about how the population has shifted is available to everyone. So the Detroit 3 can determine almost DAILY AUTO NEWS >> You can get the news you need every day. Go to www.autonews.com/signup and sign up for our daily e-mail newsletter. It’s time for dealer-factory collaboration exactly where, in a perfect world, they would like to have dealerships. They also know that customers won’t travel great distances for sales and service. The customers are there; all the Detroit 3 need is to have dealerships in the right spots. Newer franchises have had the luxury of taking advantage of demographic information and already have dealerships in the right spots. Now the Detroit 3 must re-establish their footprints across the nation. But they don’t have the money. So it will take factory money plus dealer commitments and a lot of negotiation. There are plenty of dealerships in our country that date back to before World War II. Some are much older. The customers are there; all the Detroit 3 need is to have dealerships in the right spots. The population shift and the loss of market share mean there has to be a huge relocation. Even Starbucks, which seems to have a store on every corner, has realized that all its stores aren’t in the right places. The number and location of dealerships can’t be left up to the factory, nor can it be assumed that the dealers will take care of the situation themselves. It’s going to take collaboration to make sure that each franchise has the right dealers in the right spots. It’s not an easy task, but it’s critical. cheering a 1-2-3 finish at Le Mans. I applaud GM for not forgetting where it has been and for building those worldclass Corvettes and Cadillacs for the same customers who bought those “ridiculous, gas-guzzling” muscle cars of the past and are still loyal to the brand today. GEORGE T. LYONS Dealer Principal Roth Cadillac Erie, Pa. The small print As a matter of public policy, we don’t want to clog the courts with lawsuits over dealer-customer disputes. That would be the effect of a bill before Congress that would ban mandatory arbitration of such disputes. The National Automobile Dealers Association is neutral on the bill, but the American International Automobile Dealers Association opposes it. Unfortunately, dealers may not be in the best position to make the argument. Dealer opposition to this bill seems disingenuous because NADA fought hard six years ago to persuade Congress to prohibit mandatory arbitration of dealer-factory disputes. A better approach would be to require dealers to inform customers explicitly during the F&I process that the sales or lease contracts include a binding-arbitration clause and to have customers sign off on it. That way, informed consumers will realize they are forfeiting their right to sue. If they don’t like it, they can negotiate it the way they negotiate other provisions. Didn’t you ever hear of a halo? To the Editor: In response to Doug Gardner’s March 3 letter: Perhaps Gardner needs to seek some information on halo marketing in order to understand GM and other manufacturers’ involvement in the horsepower wars. This might also explain to him why manufacturers get involved in motor racing. This cements the notion that you don’t have to be a car enthusiast to sell cars. An enthusiast would understand. Hurray for affordable performance cars To the Editor: I sit here shaking my head after reading the March 3 letter from Doug Gardner, an automobile salesperson, who finds much fault with General Motors for its continued commitment to leading the world in affordable highperformance automobiles (“550 hp? 620 hp? Is GM crazy?”). Gardner is greatly mistaken if he sees that segment of the automobile business as nonessential. From the early days of the automobile, THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Keith E. Crain, Publisher and Editor-in-Chief Peter Brown, Associate Publisher and Editorial Director David Sedgwick, Editor Edward Lapham, Executive Editor HOW TO REACH US Web site: www.autonews.com Editorial staff autonews@crain.com Phone: 313-446-0361 Fax: 313-446-0383 Circulation Advertising subs@crain.com lschlagheck@crain.com Phone: 888-446-1422 Phone: 313-446-6790 Fax: 313-446-6777 Fax: 313-446-8030 Editorial data/research To locate information that has been published in Automotive News, call 313-446-1662. Customer service To start or renew a subscription or to report an address change or a delivery problem, e-mail subs@crain.com or call 888-446-1422 (in the U.S. or Canada) or 313-446-1662 (in all other locations). AUTOMOTIVE NEWS (ISSN 0005-1551) is published weekly at 1155 Gratiot Ave., Detroit, MI 48207-2997. Periodicals postage is paid at Detroit, MI and at additional mailing offices. Postmaster: Send address changes to AUTOMOTIVE NEWS, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. Canadian Post International Publications Mail Product (Canadian Distribution) Sales Agreement #40012850, GST#136760444. Canadian return address: 2-7496 Bath Road, Mississauga, ON L4T 1L2 Printed in the U.S.A. We invite letters from readers. Please limit your letter to 250 words and tell us whether we may print it. We reserve the right to edit it. Include your name, title, the name of your company, city and state. Also include your phone number or e-mail address. E-mail letters to: autonews@crain.com Or send them to: Letters Automotive News 1155 Gratiot Ave. Detroit, MI 48207-2997 every successful manufacturer has made an effort to build “flagship” models that excel in performance and appeal to a quite influential group of customers. The guy or gal who devours every bit of information on the newest Corvette, Shelby, Hemi or other high-performance model from our domestic automakers is the loyal customer driving that brand’s pickup, SUV or sedan and very often influencing others. America’s huge car culture is proud that the Detroit 3 can build affordable performance that has little or no competition from the Japanese and European cars costing two to three times as much. That is one place in this turbulent industry where American cars really shine, and Gardner sees it as a detriment. I don’t think so. I am sure GM understands the need for economical, green, quality-engineered cars. But GM apparently also recognizes that there is a market for enthusiast-type vehicles just as there has been from the time of the Duesenberg brothers racing at Indy, Zora Arkus-Duntov running the sand at Daytona and Henry Ford II JEFF VAN BUREN Caledonia, Wis. The writer works for an auto auction company. Here’s a question for Obama, Clinton To the Editor: Presidential candidates Barack Obama and Hillary Clinton should ponder one big question before redoing the North American Free Trade Agreement: If NAFTA has cost the United States so many jobs, why do we have 13 million illegal immigrants (“Detroit 3 shun talk of NAFTA do-over,” March 3)? Ross Perot’s “giant sucking sound” wasn’t jobs going to Mexico; it was the logic of protectionists going down the toilet. JEFF HITCHCOCK Paradise Valley, Ariz. The writer is a former Ford finance executive. see LETTERS, Page 14 http://www.autonews.com/signup http://www.autonews.com

Table of Contents Feed for the Digital Edition of Automotive News - March 17, 2008

Leases grow as alternative to long loans Toyota dealers balk at upgrades Up for grabs: China importer Testing Chevy's Camaro Escalade first vehicle to get full LED headlamps Hoops fans take a shot at China Toyota will cut Tundra, Sequoia production F-150's risk-reward strategy: Ramp up before the revamp As UAW, American Axle talk, CEO Dauch in Fla. Ex-GM purchasing executive indicted Court allows higher Plastech credit line Saab sticker prices rise as sales fall; will U.S.-built 9-7X offset losses? VW plant capacity in U.S.: 250,000 units Bad cruise control switch haunts Ford Continental plans to bring r&d in-house Rieter expects to increase its global footprint Stadler: Audi considers U.S. plant Another General charges into electric cars Toyota sees its first checkered flag as sign NASCAR's paying off A pickup may figure in Kia's future Analysts: Lampert no threat to AutoNation More likely to be spent to keep suppliers alive in '08 2 suppliers plan Alabama plants UAW seeks job guarantees to end American Axle strike Revolving door continues to spin at Nissan GM, top marketers to share research Electric power steering is grabbing the wheel Delphi completes sale of interiors unit to Renco Mercedes again is true-luxury king How electric power steering works It's time for dealer-factory collaboration Ford must close stores but remain open to diversity The small print Here's a question for Obama, Clinton Didn't you ever hear of a halo? Hurray for affordable performance cars Politics can age a car overnight Good for planet, good for GM What 'scientific consensus'? Lutz may be right but said it wrong Lutz had the courage to tell the truth Big Apple isn't very green 23 finalists in running for PACE honors Canada sales up 14.5% in Feb. RV shipments drop 7.1% in Jan. Wagoner: No sure thing on state air rules Conquest sales, Asia growth boost ADP Brockman: Reynolds focuses on service OEConnection links to ADP Geneva goings-on Judge: Dealer suit over transfer of GM franchise can proceed Honda will build Ridgeline in Alabama So who's running the show at Chamco? GM seeks Plastech tooling Federal-Mogul reports gains Chrysler sells plant to Fiat BMW's new sales boss Odell is named COO at Ford of Europe Strike dents GM truck output Tony Stewart blows a gasket Illingworth leaving — and staying with — Toyota A note to eager auto execs: Invaders sometimes get icy reception in Russia Hush, hush: Baby Nason on board For rent: Ford's PAG palace on the West Coast Chrysler cuts Calif. studio

Automotive News - March 17, 2008

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