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2Get your upfront, locked-in price from the dealer
3Go to the dealership to buy your car with no haggle
[awr - fuhn]
Replace the words "both parents" with "your car dealer" and you will quickly get my drift.
Due to the drastic dismissal and consolidation of Chrysler and GM dealers, two core relationships are being severed for the automotive customer: sales and service.
However, opportunity arises for the dealers that remain. To capitalize on this opportunity, you need a well thought out plan, one that is executed with great speed.
Edmunds is forecasting that there are potentially 50,000 sales per month in the balance. If margins increase as expected, and you're capable of totaling $2,000 per copy, front and back end, that translates into $100 MILLION per MONTH in gross profit up for grabs. That's $1.2 BILLION annually.
To "adopt" these "orphans" and to protect yours, it's imperative to look at where the opportunity and pitfalls lie. After sound analysis and proper planning you can attract these folks to your store and welcome them into their new home.
Edmunds analytics forecasts a potential redistribution of 30 points of sales share based on the percentage of GM and Chrysler brands that will likely lose significant share (28%) and the percentage of GM brands that will go into extinction (2%). -April 2009 share data.
In addition to the 50k sales units per month, there is also service to consider.
Look at the facts:
That translates into 3 million vehicles at an average of $700 per vehicle, per year in repairs and maintenance. That is a $2.1 BILLION opportunity in service revenue. You cannot underestimate the value of these new relationships and the prospect of converting these service customers into future new SALES.
"A wise man will make more opportunity than he finds." - Sir Francis Bacon
Undeniably, the upheaval in the automotive business is not limited to the GM and Chrysler bankruptcies and subsequent dealership closings. Upcoming changes in CAFE standards, China preparing to enter the US market, shifting segment consideration, hybrids and government incentives are also contributors. The key is to identify the area you need to concentrate on based on your store(s) in your market.
Smart operations will look to quickly seize some market share from Chrysler and GM. I've noticed the first newspaper ads in automotive sections with specific headlines calling out to GM and Chrysler customers. Okay, good idea for some consideration, however, the lineup of cars advertised were not those that are typically cross-shopped or even in the same segments of strong GM and Chrysler models.
Advertising in the above fashion and highlighting cars that attack weak domestic lines doesn't make much sense. Here are a few examples of consideration marketing that might be used:
"Studies show that companies cutting ad spending during a recession are slower to grow after the recession than are companies continuing to invest" - The New Yorker, April 2009 Study by Strategic Planning Institute
Advertising in local rags, flying the largest American flag, stringing up 400 balloons and 10 miles of streamers is not enough anymore.
For stores belonging to groups that have other brands, be sure YOUR stores capture shifting consideration within YOUR brands. Top management at dealer groups need to address this on the showroom floor and BDC departments. Be sure a system is in place to inquire what lines are in a customer's sights and keep that customer in your world.
If you are a surviving GM and/or Chrysler store, exhibit a positive future and utilize the incentives at hand to protect your backyard and even look to advance in your strong segments.
"Failure is opportunity to begin again more intelligently." - Moshe Arens
In most adoption cases, case workers first look to remaining relatives, no matter how distant. History, familiarization and loyalty are compelling fundamentals to start with new "parents". However, unless Chrysler and the remaining stores reach out to these orphans quickly, even a fiercely loyal Mopar head is more susceptible to conquesting if his local dealer is gone. In the early going, it seems that Chrysler sales and service have not taken the dramatic hit that was forecast by the pundits on the bankruptcy announcement.
Talent and Training:
As painful as it is to report, thousands of dealership employees will be released. Regardless of the ultimate fate of their former employers, it cannot be denied that there will be quality salespeople, managers, service writers and technicians looking for a job who are familiar with your product AND the customers you need to meet. Look at where you may need help for this added business and where these new employees may be able to help contact customers. Grab some talented people. Train and retrain staff members to properly display your brand attributes. With shifting consideration, good salesmanship and customer service are paramount more than ever.
I analyzed the list of Chrysler store closings in search of a pattern. I concentrated on full line Chrysler stores over single or double points, as those are more consolidations. It quickly became clear the lion's share of these dealers adopted the Internet late or not at all. I also looked at a list of GM closings being compiled on a forum of pro-active auto Internet managers. The list was very thin and had little activity. Needless to say, the GM stores with more robust Internet presence are NOT going away and hence not on the list. Though other dynamics may have also hurt them, it's important to take this into account.
Reassess Your "New" Natural Market:
At the risk of sounding a bit unsavory, there are some tactics that should be considered.
Online Market Activity:
Edmunds has not seen a decrease in online shopping activity for new cars. If you are going to be in the game, you are going to have to invest in Internet marketing.
Although GM has committed to repurchasing inventory from dealers being phased out, Chrysler will not. CPO at all stores closing may be a great way to replenish new and used inventory and even just round out selection. It might be a good idea to make access to sales and service client lists, and even possibly a warm "introduction" campaign, as part of a negotiation ("Your new service location is: "Location, GM Name, map, etc."). Trying to package some market intelligence with an inventory buy can be a great bargain.
Times they are a-changin'! Be on the welcoming side for these orphaned customers.
John Giamalvo, Director, Strategic Marketing
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