Automotive News - February 11, 2008 - (Page 12) 12 • FEBRUARY 11, 2008 opinion Every now and again, there is an attack on the automobile franchise system. It hasn’t happened in a while, and most manufacturers seem happy with the way things are working. Sure, the Detroit 3 have too many dealers, but basic economics will help correct that. Dealers will probably have to help themselves. GM, Ford and Chrysler have so many problems of their own that they’re not going to have much time or money to address the question of how many dealers there are and where. It could get interesting as the number of Detroit 3 dealers declines. It’s possible that the auto companies will be preparing dealerships all over the United States for the next wave of manufacturers from overseas. If you lose a Ford or Chevrolet or Dodge franchise and are still interested in the automobile business, you’re going to be 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. Factory-dealer Franchise system is alive and well relations are better, The auto business but not ideal is changing rapidly. The latest Automotive News survey of dealer attitudes (see Page 30) finds encouraging improvements in how dealers perceive their relationships with automakers. But work remains to be done to repair and rebuild factory-dealer relations on several fronts. First, the good news. Two-thirds of the dealers surveyed characterize their factory relations as Nearly one-third great or at least good, slightly more than last year. Significantly, nearly of all dealers say one-third of all dealers say their relations with the factory have imtheir relations proved in the past 12 months. Of course, the upbeat attitudes with the factory vary by make. But overall, dealer have improved complaints about factory inventory policies are receding, which bodes well for profit opportunities as well in the past 12 as friendly relations. Two-thirds of all dealers say they are getting the months. vehicles they want from the factory. To be sure, there also are challenges. Three-fourths of the dealers who sell Detroit 3 brands complain that they have too many same-make dealers in their markets. Nearly two-thirds of Detroit 3 dealers complain that their factory’s national advertising is ineffective in driving consumers to their showrooms. About the same proportion of Toyota, Honda and Nissan dealers say their factory’s advertising works. The survey also shows that for some manufacturers and their dealers, 2008 will be a challenging year. Only about one-third of the dealers in the survey say they expect higher sales and profits at their highest-volume stores this year. Another third expect 2008 to be about the same as 2007, and the other third expect lower profits or even losses this year. Given what’s happening to market share for some Detroit 3 brands, it’s surprising that Detroit 3 dealers this year are slightly more likely to anticipate higher profits than are their counterparts who sell Toyota, Lexus, Honda, Acura, Nissan and Infiniti. Some of the Detroit 3 dealers say they expect to do well with new products that are coming, which is a good reason to be optimistic. Even before the pipeline fills, changes to inventory policies and the elimination of inequitable factory incentives by Ford Motor Co. and Chrysler LLC will help. The soft market and challenging economy make this an auspicious time to seek more ways to improve dealership profitability and strengthen factory-dealer relations. looking for another franchise. What better time for a Chinese auto manufacturer to show up in America — or, for that matter, an Italian or French manufacturer? Every automaker that arrives in the United States is interested in the franchised dealer, and in the next five years we are going to see plenty of opportunities for dealers. Also, it’s interesting that the Internet finally has come of age in the auto business. Automakers are discovering how to get lots of information to potential customers after the customers have been motivated by traditional media advertising. An automaker can pass along plenty of information once a potential customer shows up on its Web site. The challenge is the same as always: First, you have to get him into the tent. But the basics seem to remain the same, and that’s important. Dealers all over the United States have discovered that the Web helps them communicate with their customers as well as sell vehicles. The auto business is changing rapidly. But the basics seem to remain the same, and that’s important. The dealership is still the place to go to get your car serviced and to talk trade-in. It’s the focal point between the customer and the factory. New technology helps everyone do a better job, but the franchise system is alive and well. addressing climate change and other pressing environmental issues. MASAO OKA Director General Tokyo Motor Show Office Japan Automobile Manufacturers Association Inc. Tokyo Stop whining; GM gets plenty of raves To the Editor: General Motors dealer Barry Nicholson seems to want no criticism of GM (“Why won’t media give GM a break?” Letters, Jan. 28). His perception of media bias is really a result of his own bias. For the most part, the media have raved about the new Cadillac CTS and Chevy Malibu. A headline on the cover of the new Consumer Reports, a publication that has long been singing the praises of Hondas and Toyotas, is “New GM models shine.” On the inside, the magazine rates the new CTS higher than a BMW, a Mercedes-Benz or a Saab. Another article in the same issue rates the new Malibu “among the best family sedans.” The cover of the new Car and Driver shows the new CTS-V with the caption “Cadillac’s 550-hp (BMW) M5 beater.” And those are just the magazines that were in my mailbox the day Automotive News carried Nicholson’s letter. The constant criticism of GM cars in recent decades made the company finally abandon its corporate culture of arrogance and face the fact that its cars were not the best on the market. The great new CTS and Malibu are the result of the media and consumer criticism. That’s how free enterprise works. It took many years of inferior products for GM to lose such a large share of its customer base, and it will take some time to win them back. The criticism over the years was well-deserved, and so is the praise GM is now receiving for those two new products. FREDRIC M. SILVERMAN Garden City, N.Y. THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Tokyo show is more relevant than ever To the Editor: In his Jan. 7 column, “Detroit show gets back on a global track,” James B. Treece stated: “Displays at the Tokyo show increasingly are devoted to vehicles that are not sold outside Japan. 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. autonews.com Did you know that you can write a letter to the editor on our Web site? Here’s how. Go to www.autonews.com. Scroll down on the left side of the home page until you see “Opinion.” Click on “Letters to the Editor.” At the top of the letters screen, there will be a gray bar that says “Send us a Letter to the Editor.” Click on that and follow directions. The show is steadily becoming less relevant to the global auto industry.” The reason he gave was that “minivehicles, defined as cars and trucks with 660cc engines, account for about a third of all vehicles sold in Japan.” Minivehicles do represent one-third of automotive demand in Japan, largely owing to steeply rising fuel prices. But at the 2007 Tokyo motor show (its latest edition), a mere 23 units out of the 542 models exhibited were minivehicles. That was 4.2 percent of the whole exhibit. Last year’s Tokyo motor show featured 77 world premieres and 46 environmentally friendly vehicles, most of which were also global or Japan premieres. In addition, exhibits of suppliers’ cutting-edge environmental technologies were highly prominent. The Tokyo motor show is in fact becoming more, not less, relevant to the global auto industry as that industry vies for technological excellence in http://www.autonews.com/signup http://www.autonews.com http://autonews.com http://www.autonews.com
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