Automotive News - May 5, 2008 - (Page 44)

44 • MAY 5, 2008 Dealers must choose: Reynolds, GM — or start over Ralph Kisiel rkisiel@crain.com How they compare Key differences between the contracts GM REYNOLDS Reynolds and Reynolds Co. won’t let 400 of its General Motors dealership customers go without a fight. But the incentives that the company is offering them to remain with Reynolds are not as liberal as the terms dealers now have with GM under the GM Integrated Dealer Management System. Reynolds services the systems it installed for those 400 dealers. But it is scheduled to drop out of the GM program. So dealers have three choices: Switch to another GM-approved vendor; drop the GM contract and sign a new deal with Reynolds; or scrap their current equipment and go with a � 7 years � 5 years � 30 days’ notice � Can’t cancel to cancel � No price changes � No price bump until 2010 new vendor and system. They must decide by July 31. If they choose Reynolds, they will keep the hardware and software they are using by signing a new Reynolds contract. There are significant differences in the GM and Reynolds contracts (see box, above). The differences indicate why Reynolds bowed out of the GM Integrated Dealer Management System program. These terms give Reynolds the stability of having contracts in place for at least five years and the ability to raise prices during that term. In contrast, GM sought to provide its dealers with a contract that would provide flexibility and price stability over a lengthy period. Reynolds does not expect a mass exodus of these dealers, even though GM is actively encouraging them to stay with the GM IDMS program. The dealers signed up initially for a variety of reasons, says Reynolds spokesman Tom Schwartz. “I’m sure price comes into consideration, but it’s not a single dimension, nor is the length of a contract a single dimension.” Paul Gillrie, founder of Paul Gillrie Institute Inc., a dealer consultancy in Odessa, Fla., warned that dealers should be sure they understand what they are signing. He notes that the Reynolds proposals have built-in price increases that escalate costs over the long term and that the governing contract is subject to change without notice. “If an IDMS dealer carefully examines the current R&R offer, he will likely conclude that the deal is simply not as good as the deal that he had before,” Gillrie says. “The new contract they are being asked to sign has a five-year term without provision for cancellation. “This is in sharp contrast to the existing GM IDMS contract that provides a clean out with a 30-day cancellation clause.”c AutoTrader’s “Big Guy” commercials use an oversized shopper to compare vehicles. - AutoTrader.com makes big pitch to bump up new-vehicle sales Mary Connelly mconnelly@crain.com ® SM ACTION INTEGRATED MARKETING PROVIDES FULL-SERVICE & EVENT MARKETING SOLUTIONS FOR DEALERSHIPS NATIONWIDE A new advertising campaign by AutoTrader.com emphasizes new-vehicle sales at the automotive Web site. AutoTrader is devoting a “significant portion” of its $100 million annual marketing budget to the campaign, said CEO Chip Perry. The campaign encompasses TV and radio commercials, Internet ads and event marketing. The online marketplace previously focused on used-vehicle shopping, but the site has achieved “a critical mass” of listings of new cars and trucks, Perry told Automotive News. The site lists 1.6 million new vehicles for sale at 16,000 dealerships, Perry said. About 2,000 of those dealerships advertise sales promotions on AutoTrader.com, he added. AutoTrader.com also lists inventory from American Suzuki Motor Corp. and the Gulf States Toyota distribution company. The Suzuki listings include nearly 30,000 new vehicles at the company’s 475 U.S. dealerships. The Gulf States listings include new vehicles at the 148 Toyota dealerships the distributor serves. Starting today, AutoTrader will run a 30-second TV commercial on 19 cable networks. The spot features “Big Guy,” an oversized character who lifts new vehicles out of dealerships to compare them. Company research led to the emphasis on new-vehicle advertising, Perry said. “One-third of the 15 million shoppers who come to our site each month are considering a new vehicle,” he said. But industry data suggest that only 22 percent of newvehicle shoppers who use Internet sales sites end up contacting a dealership by e-mail, Perry said. Campaign ads aim to show dealers how AutoTrader can attract buyers to their showrooms, he added. The campaign is designed to direct shoppers to the site’s dealership inventory listings and sales promotions, Perry said. “People want to see actual cars, actual prices shoppers who come to our site each month are considering a new vehicle. “ One-third of the 15 million CHIP PERRY AutoTrader.com ” and real deals and compare those things,” he said. AutoTrader.com is working with dealerships to post photos of vehicles for sale on the site rather than stock images, Perry said. Actual vehicle photos and pricing information are especially useful to consumers, he said. Doner Advertising, of suburban Detroit, created the AutoTrader campaign. Cable TV shows such as “Friday Night Stand-Up” on Comedy Central and “PowerBlock” on Spike TV will make the Web site part of their content. Radio commercials will run in 20 markets. AutoTrader will extend its sponsorship of National Basketball Association telecasts to include ads on the league’s Web site and mobile-phone messages. AutoTrader has recruited former relief pitcher Rich “Goose” Gossage, who will join the Baseball Hall of Fame this year, as spokesman for an eight-city tour tied to the campaign. The Web site is collecting signatures of baseball celebrities on a 2008 Chevrolet Tahoe SUV. It will auction off the vehicle and donate the proceeds to youth baseball programs. c http://AutoTrader.com http://www.insigniagroup.com/ROI http://AutoTrader.com http://AutoTrader.com http://AutoTrader.com http://AutoTrader.com http://www.actionIM.com http://www.actionIM.com

Table of Contents Feed for the Digital Edition of Automotive News - May 5, 2008

Automotive News - May 5, 2008 Dodge dealers battle to bust Ram logjam Used-car price slump slams luxury makes INDUSTRY IN DISTRESS Tesla opens first dealership in L.A. Los Angeles Top auto execs to talk marketing at seminar Nader and the Corvair: GM edition tells whole story Dealers take Tundra to the people UAW official expects American Axle buyouts Ford plans more UAW buyouts at 2 plants Honda to some dealers: Upgrade or else Hyundai: Powertrains will take us halfway to mpg target Diesel dynamo Daimler cuts Chrysler value, again Ford domestic dealer count dips below 4,000 Seems like old times: More cash on the hood Toyota sister car poses a challenge for Subaru Suzuki to offer standard navigation in $16,000 car Mpg plan fuels states-rights battle Kerkorian interest buoys Ford stock Henderson: GM will keep tight rein on inventory Is it real, or is it just temporary? Ford Motor must stay focused on recovery 'Have you lost your mind?' Dealers are victims of Axle strike Federal oversight? Good heavens, no Geoff Polites: A salute Save a board seat for the UAW A car for everyone or cut, cut, cut, cut? Think of Buick as part of B-P-G Costs up in China, but bargains still abound Mexico sales fall 17% in March Obituary Hyundai reworks Sonata sooner rather than later Nissan's Dominique gets to the big dance Dana seeks new business with Japanese companies ZF will supply Nissan Certified Tool closes a plant German engineering company plans Ala. factory Dealers A Lexus colossus Used-vehicle leasing boosts showroom traffic Certified buyers opt for extended service contracts Repossessed vehicles offer dealers a profit opening Prepaid plans spark service visits beyond oil changes Key to managing floorplan costs: Be realistic Long-term loans: Convenience or bad deal? Dealers hunt upside-down buyers with leases, incentives and long-term loans Where have all the investors gone? Dealer rebounds from contract mess Dealers must choose: Reynolds, GM — or start over AutoTrader.com makes big pitch to bump up new-vehicle sales CAW, Ford reach extensive early labor deal Infiniti asks: Do you smell something? Sure, Nissan GT-R is impractical — but what a rush Faurecia: We'll break even in N.A. Suppliers join carmakers' charge into Russia Chrysler small cars, Jeep crossovers are hot A dreary April in Detroit Penske earnings rise in 1st quarter Lithia posts $1.9 million loss GM makes 2nd ethanol deal Group 1's earnings slip Magna profits down; sales rise AIADA picks dealer of the year Vox(wagen) populi — plus a sales pitch Wagoner's pension shift: More earlier, less overall COMMENT: Bargaining barbs will sting for a long time Bugging the boss: Who's listening to Porsche CEO? New models from the post office Critics have kind words for Pontiac's G8 Ford can't picture kids at design studio

Automotive News - May 5, 2008

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