#Dealers

After the reveal of Fiat Chrysler Automobile’s Dodge Demon at the New York Auto Show, I thought all the hooplah would be over. We all did. Little did I know Automotive News’ editorial board would pen a screed calling for the Demon’s banishment from American roads, which then caused others to cry foul at the bylineless editorial, and subsequently triggered Larry Vellequette — the author of the original piece — to double down on his thoughts, name attached.

In the last piece, Mr. Vellequette claims, “It is still a stupid idea for Fiat Chrysler to outfit the Dodge Demon as a high-performance drag racer and then sell it to the motoring public in a form that makes it inherently more dangerous off the track.”

He’s not wrong. Drag radials come fitted to the Demon from the factory, and he claims they’re “prone to lose traction in even a light morning mist under that much torque — regardless of electronic intervention.” I won’t argue with that.

But I will argue with the logic upon which Mr. Vellequette bases his call for exorcising this Demon from America’s roads, and who he thinks should do something about it.

At least 20 Fiat and Alfa Romeo dealers in California have filed protests against Fiat Chrysler Automobiles after the manufacturer altered franchise agreements last December. Dealers objected to the changes, claiming it placed the struggling brands at a further disadvantage.

While the grievances vary between dealers, the protests revolve around a few key issues. FCA’s obligation to provide vehicles to the franchisees, the legal standard dealers must meet to sell those units, alterations to the definition of parts or accessories and how that might enable third-party distributors, and the constantly changing language surrounding dealer responsibilities were all common themes among the filed complaints.

Cadillac’s rollout of Project Pinnacle has been, let’s face it, a categorical mess. The program faced an immediate backlash from dealerships when General Motors explained it would categorize them based on sales projections and require an adherence to a higher standard of customer service. This was followed by smaller dealers refusing to take Cadillac’s buyouts, forcing the company to delay Pinnacle’s launch on two separate occasions.

The most recent postponement was so dealers could have more time to understand the program’s finer details — or so Cadillac claimed. However, now the automaker is altering portions of the incentive program so that dealers receive payments sooner and are eligible for partial bonuses even if they fall as much as 15 percent short of monthly sales goals. Caddy is also easing on some of those high standards it demanded of dealers and eliminating the appeals process for those deemed noncompliant.

The cornerstone of every healthy relationship is frank and frequent communication. Last year, consumers wanted more sport utility vehicles, but automakers still had too many cars rolling off assembly lines. Caught in the crossfire were forlorn dealerships that were incapable of providing the trucks and crossovers that customers cannot seem to get enough of.

At the 2017 National Automobile Dealers Association Conference & Expo, this issue is apparently weighing so heavily on the minds of America’s automotive purveyors that it wouldn’t be surprising if gray matter began leaking out of their ears and onto the expo floor.

Ford Motor Company’s parts division, Motorcraft, has undergone a massive overhaul intended to improve dealer sales and reduce overhead costs. Executives from the Blue Oval spent much of 2016 focusing on how to boost the profitability of their dealers’ service centers and body shops while addressing concerns with the division.

Their solution involved expanding coverage on older model vehicles, expansive pricing reductions, and a monumental decrease in parts complexity — making for a leaner, more efficient Motorcraft.

“I’ll tell you something,” the grizzled used car veteran said to me menacingly from across his massive, oaken desk. “The internet has ruined this business.”

Tell me something I don’t know, old man.

It’s a variation of the same thing I’ve heard for five years. The car business used to be a place where men of little to no education or intelligence could make veritable fortunes, simply by preying upon the ignorance of their customers. Pre-internet, it was completely realistic to make $4,000 of front-end gross profit on the sale of a used car — and sometimes even more! Pull up a chair across from the more tenured sales guy at any Cadillac store, and he’ll gladly spin you a yarn about that one time he made $10,000 in gross on a little old lady who was on a fixed income, and he’ll laugh as he’s telling it.

Of course, he’ll have plenty of time to tell you this tale because he’s the guy who doesn’t take ups and instead lives on his book of referrals — and those are dying faster than the baby boomers who made them an integral part of the car business in the first place.

But now? Why, that rotten internet and all of its information has made it impossible for dealers to screw customers. Or has it?

There are 350 Hyundai dealers in the United States currently offering vehicles from the automaker’s new Genesis Motors brand inside Hyundai showrooms. It’s a model Genesis wants to change — simply too many stores for a fledgling auto brand; too much affiliation with proletarian Hyundai.

It’s also entirely unlike the non-dealer model Genesis Motors began employing in Canada on Monday, November 21, 2016. Genesis began business operations 48 hours ago with no physical locations whatsoever.

Dealers? Pfft. Someday.

Not today.

With Amazon teaming up with Fiat Chrysler Automobiles to sell cars online in Europe and companies like Lynk & Co wanting to destroy the dealer model, it’s had to know exactly what the future of car buying will look like. Retailers are equally confused, so the National Automobile Dealers Association hired a consultant to study the future of U.S. dealerships.

The study’s findings hinted at leaner times and the dark cloud of an autonomous transportation network looming in the distance.

There’s no denying the strategy behind Hyundai’s Genesis Motors luxury brand is unusual. By its very nature, the contrived launch of a new Korean luxury marque — more than a century after the dawn of America’s favourite luxury brand, Mercedes-Benz — is going to differ in a multitude of ways.

Genesis intends to maximize the possibility for consumers to shop for their cars online, for instance. And Genesis owners won’t need to take cars to dealers for servicing — valets will provide pickup and delivery.

Yet one aspect of a new brand’s U.S. launch is nevertheless set in stone: dealers.

Genesis Motors has 350 dealers inside Hyundai’s U.S. showrooms, Wards Auto reports. Genesis Motors’ general manager Erwin Raphael wants a different number.

A smaller number.

An Erie, Pennsylvania Buick-GMC dealer, its owner and general manager, and another man were indicted this week for wire fraud over a bogus loan application scheme.

A U.S. District Court handed down the indictment on Tuesday, Automotive News reports, with court documents alleging the three men submitted fake car loan applications through “straw individuals.”

The r/askcarsales subreddit is a great source of information about car buying and the inner workings of dealerships. Flaired users are verified to be actual salespeople, which makes for highly qualified car buying advice. They’ve helped a great number of people save money and help calm the adversarial nature of the buyer-seller relationship.

Buying a car is a big decision. We all like to think that we are unique in the choices we make and how we go about negotiating a sale, but buyer stereotypes do exist. When one subreddit user posted a question about typical buyers for each brand, many of the salespeople jumped in to offer their opinion on the type of buyer that shops each brand. Some of the opinions might cross into racial profiling territory, but many are just hard truths about the customer base each brand has built up.

Michigan doesn’t want its residents to order a Tesla, but it sees no problem in owning $72 million in stock to bolster its state retirement fund.

According to The Detroit News, the Michigan Department of Treasury bought a further $48 million in Tesla shares in the second quarter of this year, boosting its stake to 339,623 shares — more than triple the amount it owned in March. Meanwhile, Michigan won’t budge on laws that prevent Tesla from selling vehicles in the state.

There’s been a slow, yet steady change in the automotive marketplace over the last eight years, and you, the consumer, have been the lobster sitting in the pot as the change has occurred. The market has gotten significantly worse for car buyers. The number of franchise and independent dealers has been reduced by almost half. And yet, those surviving dealers have had an unprecedented run of year-over-year growth since 2008.

But as that growth has slowed in 2016, car buyers find themselves paying more money for used cars than ever before. We know that the typical American household can’t afford the typical new car sold in America, but we may soon be approaching a day when that same household can’t afford the typical used car, either. In fact, according to NADA Data, the average used car transaction price in 2016 will crest $20,000 for the first time in history, and will be 59.1 percent of the average new car transaction price of $33,903.

What does all of this mean to you? That buying used may not be the smartest financial choice you can make. In fact, it might not be very smart at all.

If sales and service reviews were gold, Cars.com will soon the the richest third-party shopping website in all the land.

Cars.com plans to buy DealerRater, making it the largest soundboard of criticism and praise for dealers, salespeople and servicing in the industry, Automotive News reports.

Imagine that you owned a successful business. For many of you reading this today (including me), you don’t have to imagine, because you’ve done it. If you owned anything from a lemonade stand to a global airline, you’d have a pretty good idea of your costs and profits. You’d know which advertising sources worked best for your business. You’d strive to know where your customers came from. You’d have a system for hiring and training employees.

You’d do all of this and more, because you must have all of your ducks lined up in pretty little rows to be successful.

Well, that is unless you’re a car dealer. In that case, you may have no idea about any part of how your business works and still make money hand over fist.

Don’t believe me? Over the next several weeks, I’ll prove it to you. Today we’ll start with a simple concept that befuddles most dealers: online merchandising.