“STOP WHINING” AND GET USED TO IT, DECLARES WAGONER
General Motors dealers are applauding an announcement by CEO Rick Wagoner that high-level incentives are effectively a permanent part of the automaker’s marketing strategy. “It’s time to stop whining and play the game,” Wagoner declared during a session of the J.D. Power and Associates International Automotive Roundtable. High incentives helped GM gain share for the second year in the row, even while increasing profits, the exec said, adding that since “GM’s strategy is working very well for us…this year, we’re going to keep pushing.” That’s just fine with Glenn Ritchey, a GM dealer from Daytona Beach. “We’ve raised a generation of consumers who’ve gotten used to rebates and incentives. But we’ve also raised a generation of salespeople used to marketing with rebates and incentives.” But other GM officials acknowledged that the cost/value equation could change, the longer the automaker plays the game. “Pure cash on the hood does have diminishing returns,” said John Middlebrook, GM vice president and general manager of vehicle brand marketing. For their part, competitors also seem resigned to GM’s incentive equation. “He’s right,” Ford Chairman and CEO Bill Ford said of Wagoner, “You have no choice but compete.” The big challenge, though, will be to ensure that the number two automaker can offer matching levels of incentives and maintain the necessary spending levels on product, Ford stressed “all at the same time.”
SAN FRANCISCO’S WINTER OF LOVE
More than a third of a century after the City by the Bay’s original Summer of Love, there’s something of another love-fest going on, and it pairs two unlikely partners: automakers and dealers. While both sides had a few contentious issues to discuss during the annual convention of the National Automobile Dealers Association, there was nowhere near the contentiousness of past years. “From where we were three years ago to where we are today is a tremendous turnaround,” suggested William Bradshaw, a GM dealer in Greer, S.C., General Motors is, in particular, now averaging a bit above average in the NADA dealer attitude survey, but there’s been a general improvement in relations between manufacturers and retailers, according to industry insiders. Of course, it helps that dealers are, on the whole, reporting earnings at or near record levels. But there’s also a recognition that carmakers can’t go it alone, said Bill Ford, noting his company’s ill-fated attempt to get into the retail side of the car business. “In the ‘90s, some of us manufacturers thought we could do a better job selling vehicles ourselves,” he said. “We found out we couldn’t and that we’d do better when we cooperate, rather than compete.” After years of antagonizing dealers, Ford said the industry is now improving relations, but cautioned, “It’s a long grind.”
KUDOS FROM COMPETITORS
Imports and domestics typically mix like oil and water, or perhaps cats and dogs. But Toyota’s top American executive, Jim Press, had some nice words for General Motors, crediting his Big Three rival with “saving the American economy after 9/11.” Accepting a Distinguished Service Citation from the Automotive Hall of Fame, Press added that “I don’t think General Motors got the recognition it deserves.” But the AHF’s annual event, timed to coincide with the NADA convention, did provide some recognition for GM CEO Rick Wagoner, who was named Industry Leader of the Year. Wagoner seemed to take in the spirit of the moment when he acknowledged that members of the auto industry “focus too much on splitting up the pie and getting our own piece, rather than working together.” “We’d all be better off” taking a more cooperative approach, Wagoner suggested. That apparently did not refer to GM’s “aggressive” approach to incentives and market share.