The trouble with senior management to an outsider is that there are too many one-ulcer men holding down two-ulcer jobs.-Prince Phillip

When two men in business always agree, one of them is unnecessary.-William Wrigley, Jr.

Live together like brothers and do business like strangers.-Arab Proverb

 

In a recent release from NADA News, the association reports that their latest Dealer Attitude Survey shows that dealers are less optimistic about the future of the retail automobile industry. Those results may be influenced by a number of factors, but each time retail attitudes turn down, it is almost axiomatic that some dealers will turn new attention to fleet sales, since every fleet sale must go through a dealer. Dealers, particularly in the larger metro areas, want and need volume sales to maintain precious points toward quotas (read incentive trips and self-esteem with the factory) plus bottom-line net income.

The shock to some newcomers in studying the scene may be a heavy one. Fleet sales continue strong at record levels, with nearly one of every five new sales directed into the fleet sector, year after year. Any dealer new to fleet sales will also find that profit margins have eroded in the past few years to the point where the bottom line may not be attractive. Buyers have shopped, sharpened their pencils, and even lease and commercial sales are mighty thin. At the recent AFLA meeting, one long-time fleet dealer pulled out his 3 ´ 5 cards and showed me that he no longer looks for the "opportunity" to be the ordering dealer; rather he prefers to make the courtesy deliveries where he can gain an acceptable profit margin. It's a sign of the times caused by wiser and more price-conscious buyers.

Public stock ownership for dealerships has already won GM's approval, with Ford expected to follow. This single action is a most profound move for fleet marketing. The financial institutions that are currently providing financing for dealerships, brokering their leases and flooring their vehicles, could move quickly into this last virgin area that has avoided "mergeritis" during recent years. Some of these firms are already tied into a lessor. The question is what is to prevent one firm from forming a massive string of multiple-make dealerships in each of the major metro areas across the country? With the average dealer-owner between 57-58 years of age, one can visualize a dozen conglomerates owning chains of dealerships and passing on any savings to lessor-buyers; and collectively having an awesome influence on Detroit and import marketers. Lessors could also use the dealer retail used-car lots. It's truly revolutionary.

Finally, more than one of the major lessors have thoroughly studied their heavy cost of internal ordering of vehicles with factory sub-codes. The results clearly indicate that a full-line dealer properly equipped with software and administration and bidding competitively can create a huge savings for the lessor. It is only a matter of time until lessors locate responsible and capable dealers or dealer groups who can guarantee performance before switching the ordering/administrative follow-up/delivery process to an outsource. Some may start it soon.

Fleet-minded dealers are an integral part of the buy-sell process. Only the professionals will prosper and survive.

 

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