Automotive News - February 4, 2008 - (Page 4) 4 • FEBRUARY 4, 2008 Mercedes takes local money for national TV Media strategy is opposite of rival BMW Diana T. Kurylko dkurylko@crain.com United Nations The top 5 home countries of international delegates registered to attend this year’s NADA convention 1. Australia: 335 2. Canada: 312 3. United Kingdom: 245 4. Brazil: 146 5. Italy: 105 Source: NADA Ad blitz Mercedes-Benz cranks up marketing Spending more than $100 million on TV in 2008 Pushing C and M class Setting up 30 AMG Performance Centers Mercedes-Benz USA LLC will stage an unprecedented $100 million TV blitz this year with at least six new commercials, primarily for the C-class sedan and M-class SUV. Steven Cannon, vice president of marketing, says Mercedes will shift the money from local dealer marketing. The push is necessary to win TV viewers’ attention, he says. “There is just so much TV advertising out there, and we have to tell our story in compelling ways,” says Cannon. Starting in the second quarter, Mercedes will spend more than $100 million on the national TV spots, using money traditionally dedicated to advertising in local markets — “money built into the invoice of the car used in the 169 individual markets,” says Can- non. The money used to be allocated to the markets based on their sales volume for local dealer advertising. It’s the opposite of what BMW of North America LLC is doing. Jack Pitney, vice president of marketing, says BMW will heavily focus on Internet, interactive marketing and print. BMW will spend no more than 25 percent of its budget on TV — a medium Pitney says is costly and doesn’t effectively market to the brand’s buyers. “The days of the 30-second TV Mercedes’ “The Legend of S” TV campaign emphasizes the S-class sedan’s heritage, including its use as a vehicle for world leaders. commercial are coming to a close,” Pitney says. vehicle for world leaders. It is from Mercedes’ U.S. advertising agency, Merkley+Partners of New York. The S-class campaign runs through February, with campaigns for the see MERCEDES, Page 102 NADA reaches out to dealers in many lands David Sedgwick dsedgwick@crain.com ‘Legend of S’ The S-class campaign now running, “The Legend of S,” emphasizes the sedan’s heritage, including its use as a ■ High-stepping into retirement About 180 colleagues, clients, friends and family members gathered at Detroit’s Roostertail nightclub last week to say goodbye to Tony Merpi, longtime sales and marketing director of the Automotive News Group. Merpi, 64, retired last week from Crain Communications Inc., ending a career that began in sales at Automotive News in 1976. His most recent position at Crain was publishing director of AutoWeek magazine. Merpi was named a Crain vice president in 2000 — before the company knew he could dance. Joining Tony here on the dance floor of the Roostertail are son Tony, wife Mary Ellyn and daughter Maureen. JOE WILSSENS Suzuki’s problem in ’07? Allocation Kathy Jackson kjackson@crain.com Leveling off New vehicles helped Suzuki nearly double U.S. volume in recent years, but sales were flat last year. 2007: 101,884 2006: 100,990 2005: 82,101 2004: 73,946 2003: 58,438 Source: Automotive News Data Center DETROIT — It has been a great decade for Suzuki in the United States, with sales soaring almost 75 percent between 2003 and 2006 to 100,000 units. But the little Japanese carmaker hit a standstill last year — flat sales after a 23 percent spurt in 2006. What happened? Suzuki’s dealers point to an antiquated allocation system. They complain that they simply cannot get the right cars at the right time. “My new-car sales would go up 25 percent if I had the proper product,” says Roy Greenblatt, who sells about 200 Suzukis a month at three stores in New Jersey. “We just couldn’t get the product. The whole country was hurting for product.” American Suzuki Motor Co. executives agree and say they are doing something about it. The company has approved a multimillion dollar plan to upgrade the system. Information Technology Resources Inc., an IT consultant in Buena Park, Calif., has been hired to develop the new system, says Gary Akin, American Suzuki’s vice president of sales. Akin joined Suzuki in February 2007 from Volkswagen of America, American Suzuki’s Gary Akin: “A good allocation system allows dealers to specify the cars they want.” SUVs. In the fall of 2003, Suzuki added the small Forenza and midsized Verona sedans, both from GM Daewoo Auto & Technology Co. in Korea. In 2004, GM Daewoo began shipping the Suzuki Reno five-door hatchback to the United States. Sales began to take off, aided by the four-wheel-drive SX4 crossover and SX4 sedan and redesigned Grand Vitara and XL-7 models. But allocation problems began to surface. “One of the challenges we had is that it was a manual system,” said Tom Carney, president of Driving 2000, a dealership group in Huntsville, Ala., that operates three Suzuki stores. Carney preceded Akin as American Suzuki’s vice president of sales. “Suzuki relies on the district manager selling from port stock,” Carney says. “It’s a blind way of selling. We were constantly battling the wrong colors, transmissions, etc. Suzuki couldn’t adapt quickly enough to change.” Akin says vehicle allocation had been based on dealers’ sales history. Keeping up with changes in the marketplace was difficult. Now, Suzuki allows monthly input from the regional field staff and dealers, but it’s still a slow, manual process. Lineup changes “Sales history tells you what has sold but not changes in marketplace,” Akin says. “What we envision is that dealers can order from their desks. The new system will show dealers not only their sales history but their sales rate, how fast they sell them. Suzuki will stop selling the Forenza and Reno at the end of the 2008 model year, but a version of the Nissan Frontier pickup will be added this fall. Also coming for the 2009 model year is a two-wheel-drive SX4 crossover and a base sedan priced under the SX4 Sport sedan. But Greenblatt says the products won’t sell if dealers can’t get them. “Under the new system, the dealers will be able to order what they want rather than Suzuki Japan just shipping us the cars they believe we need,” he says. “That’s an important issue for the dealers.” c where he headed Western region operations. He says a new vehicle-ordering system probably will be in place by early next year. “When I came on board, it was a big issue,” Akin says. “It is absolutely critical for our growth. A good allocation system allows dealers to specify the cars they want. That helps the turn rate, reduce inventory and increase profitability.” Onrush of products A sudden proliferation of Suzuki products made things more complicated. For the 2003 model year, Suzuki sold only three products in the United States: the Aerio sedan and the XL-7 and Vitara/Grand Vitara If you look closely, the annual auto dealers’ convention that starts Saturday, Feb. 9, is going to look a bit like the United Nations. According to the National Automobile Dealers Association, delegates from 32 countries have signed up for its convention in San Francisco. NADA expects to beat last year’s total, when 1,700 delegates from other countries came to the convention in Las Vegas. “From Botswana to Barbados, we’ll have people attending,” says Albert Gallegos, NADA’s director of international affairs. About 27,000 dealers, exhibitors and industry officials are expected to attend this year’s convenAlbert Gallegos: tion, so the interGlobal effort national delegation will remain a relatively small minority. But NADA is catering to those delegates. For example, the association will translate four workshops into Italian for the benefit of more than 100 Italian attendees. Over the past two years, NADA has cultivated ties with dealership groups around the world. Foreign dealers like to attend the NADA convention because they are wrestling with the same issues — Internet marketing, tight profit margins, service and parts — as their American peers. And it gives NADA an opportunity to monitor events in fast-growing markets such as China and India. For example, the association has scheduled a seminar on Chinese automakers — part of an effort to educate American dealers who might want to sell Chinese brands. “Dealers need to do their due diligence” on Chinese imports, Gallegos says. “They need to ask: ‘Does it fit my local market? Does it fit my business plan?’ There is so much distorted information.” The Chinese are gathering information, too. Gallegos says 10 Chinese dealers and industry officials will come to San Francisco. That’s a relatively modest number, but visa problems and the Chinese New Year — a major holiday — limit the number of visitors. These overseas initiatives aren’t going to change NADA’s fundamental focus on the United States. But as the auto industry globalizes, Gallegos thinks these efforts will help the association see how the auto industry is changing. “The challenges that dealers face around the world are the same: competition and the pressure on margins,” Gallegos says. NADA’s international program “is still in its infancy, but we’ve laid the groundwork.” c
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