Chevy dealers hope 13 launches will boost market share
Steve Hurley on the Chevrolet Malibu: "I think Chevrolet put forth their best effort when they made the new Malibu. We may not be where we need to be now, but we will be when it's all done."
Chevrolet dealers are gearing up for a busy year, with General Motors scheduled to launch 13 new, redesigned or refreshed models this year.
During the first half of 2013, Chevy will launch a redesigned Impala, the next-generation Silverado and a diesel version of the Cruze compact. Dealers hope the influx of products will help Chevy win market share this year, after Chevy sales nationally increased 4 percent in 2012, trailing the market's overall 13 percent growth.
In addition to intense training for both sales and service personnel to gear up for the new models, dealers' biggest focus will be customer retention, especially for service customers, says Steve Hurley, dealer principal at Stingray Chevrolet in Plant City, Fla., and co-chairman of the Chevrolet National Dealer Council.
Hurley spoke with Staff Reporter Mike Colias.
How was 2012 for Chevy dealers?
Of course it's a different story for different parts of the country. Some areas were up quite a bit; others not so much. A lot of it is related to housing. Overall I think it was a little bit better for Chevy dealers than in 2011. Obviously we have pretty high expectations for '13 because we have so many new products coming.
Cars and crossovers are making up a larger percentage of Chevy dealers' sales, while trucks decrease as a percentage of overall sales. How are dealers adjusting?
I think they're adjusting surprisingly well, and rapidly. You'll continue to have strong Silverado markets in places like Texas and the Midwest. And when it comes to the full-sized sport-utility market, with the redesigned Tahoe and Suburban coming [in 2014], that'll be an area where Chevy and GM will continue to dominate. I think lot of people have been driving SUVs with the current body styles for quite a long time, so we're poised for a nice uptick in that market. But Chevy dealers are quite pleased with the passenger-car lineup and the higher volumes they're bringing.
Have the high pickup inventories over the past year been a burden on Chevy dealers?
They really haven't. Inventories have been heavier because of the factory changeover to the next-generation trucks, but dealers realized that early on. The pickups are one area where incentives have been really strong. It helped us to have a good December. I carry a lot of Silverados and we'll have no problem selling those down as we head into the new truck launch.
What do dealers think of the next-generation Silverado? Can it keep loyal customers and conquest new ones?
The reaction has been very favorable. You can still see the Chevrolet DNA, but it's a more modern, sleek look with the raked windshield. It's a little more sharp-edged and it's got a beefier look. I think we'll do extremely well. It's not a great departure from the current truck, but with the shape of a truck, you can only do so much. And the current truck is a handsome truck. It's weathered the test of time so well.
I've heard some dealers say that they think the exterior updates were conservative.
I think the first time you see any redesign, you have expectations to be blown away. It's still a pickup truck. It still has headlights and a grille. Once people get them on the lot and get acclimated to the new vehicle, then I think people will look at the old one and go, "Wow, that looks really dated." What's really remarkable is the new technology and the interior of the new truck. It's so far ahead of the current one.
Dealer since: 2008
Dealerships: Stingray Chevrolet, Plant City, Fla.
Average monthly Chevrolet sales: 130 new, 80 used
Quote: "We want to make sure we're doing everything we can to embrace our guests who come in on the service drive. ... These service customers are our customers to lose."
GM is counting on a redesigned Colorado to fill the needs of fuel-conscious buyers. Do dealers like that two-truck strategy, which is different from Ford and Chrysler?
I think this new Colorado will be more of a personal vehicle. It reminds me more of a sports truck. It's unique. It's for buyers who may every once in awhile want to carry something, but who really don't have big hauling needs. They'll buy it for something that's fun to drive and for fuel economy. You're not going to see contractors buying the Colorado. Ninety percent of the time, those buyers won't be using the bed for much. But it's fun to drive a vehicle with a lot of versatility. I think there will be much less cannibalization of Silverado when we get the new Colorado.
Chevy will finally have a competitive Impala. How will that change dealers' sales approach?
We're looking for a little bit of a new buyer. The current Impala is what we call a push vehicle. It's a basic, generic, nice four door, but not something that people will buy because of the looks. The new one is stylish. It's more personal, warmer, more attractive. We'll get a lot of traditional Chevrolet buyers who will really gravitate toward that car. But I also think we can conquest with it and appeal to businesspeople and others who've shied away from the brand in the past.
Sales of the 2013 Malibu have been slow early on. Do dealers think that car is good enough to compete in the tough mid-sized sedan segment?
There's no doubt it's good enough to compete. That's probably the most fiercely competitive segment possible for the Malibu to compete in. There are a lot of fine competitors that are just juggernauts. I do believe the Malibu is a good enough car. I'm driving one right now. I could drive any Chevy, but I'm driving the Malibu. It's a big improvement from the prior generation, which was a good car. I don't really know what the answer is in terms of what it's going to take to get us to where we want to be with that car. Because I think it's a great product.
What do you think it will take to get more traction?
It's probably creating the awareness in the marketplace that we do have a good enough car to compete with Toyota and Honda. We broke through that barrier with the last- generation Malibu. To me, the new one is not only competitive, it's a better looking car than the competition. And it stacks up well on a feature-to-feature basis. You just have such a strong following of so many years of success with Toyota and Honda buyers in that segment. It's just a tough nut to crack. It's going to be challenging. But I think Chevrolet put forth their best effort when they made the new Malibu. We may not be where we need to be now, but we will be when it's all done.
What's the biggest focal point for Chevy dealers from a customer-service standpoint?
We're looking strongly at retention. That's the key opportunity. We want to make sure we're doing everything we can to embrace our guests who come in on the service drive. We want to do everything from having seamless processes to having nice current facilities so we provide those things that they expect when they come in the door, like Wi-Fi or computer stations or TVs or a coffee bar. These service customers are our customers to lose. We sold the new vehicle to them. It's up to us to do a good job to retain them. The margins are shrinking on the variable side. So it's that much more important that we retain every customer that we can.
What's an example of a retention initiative that Chevy dealers have deployed?
I think a big part of it is our Every Day Hero program, our Disney training. We're trying to make it a kinder and more transparent experience for our guests, to make it so they don't have to get out of the vehicle to have their car written up in service, for example.
What's next for Disney training?
It's going to be an ongoing program, because dealers don't change their culture overnight. There will be ongoing training for dealership managers and other personnel to continue to improve the process.
Is the Chevy facility-image program, supported by the Essential Brand Elements bonus program, helping to transform the brand's image?
It's hard to not sound like someone who's a card carrying member, but I really believe in the program. Because I think that's what a lot of our chief competitors have done a good job with in the past, and we haven't. Now that you see most of our larger-market Chevy dealers having done the facility image, it'll increase the value of our franchise. And it's going to improve the impression of our brand with the consumer. By having a consistent look, you'll drive by and immediately know that's a Chevrolet dealership. I think that's nothing but a positive for our brand.
Some dealers -- mostly owners of small stores, but some bigger, too -- feel like EBE is tilted in favor of bigger dealers. What's the council's position on this?
There's no doubt there's been some discussion about that. But it's kind of interesting, because nobody talks about the fact that for all of these years, larger dealers have had such a higher percentage of fixed costs in our businesses.
I've got one of the largest physical locations in the country for Chevrolet. My fixed costs are much, much higher than the average Chevrolet dealer. When I started the facility image here last year, my dealership was less than 7 years old. Yet, you'd think I had to completely knock down the showroom and start from scratch based on the money we spent. That's because of scale.
There's no doubt that for the smaller dealers, what they have to spend is a higher percentage of what they earn in EBE. However, they have nowhere near the big fixed operating costs like I've got. And, I'm starting to hear fewer and fewer complaints.
I think when a dealer sees that everyone else is jumping on board, and you'll be kind of left out of the party if you don't participate, I think a lot of those dealers will come around. I don't get very many phone calls like I used to.
What do Chevy dealers think of the marketing and advertising? Is the vision clear?
It's mixed. A lot of dealers are looking for more from the Under the Blue Arch campaign. Most of the dealers don't have as much of an issue with the Tier 1 level. And this year, clearly, our Tier 1 focus is going to be launching products. At the Tier 2 level with the Under the Blue Arch campaign, there has been better reaction later with the greater focus on features and benefits of the actual product, and focusing less on the characters. The dealers are very happy about that.
Are Chevy dealers profitable? Do they expect to be profitable in 2013?
They're much more profitable than in recent years. We had a pretty good percentage of dealers who weren't profitable at all at the bottom of recession. I don't know the number, but a very high percentage of Chevy dealers are profitable now.
Are they making money on new-car sales?
In the new-vehicle department, it's less so. They're much better off on the fixed ops and used-car side. It's the toughest area to make profitable because you have much more expensive improvements that are allocated to the new-vehicle department.
How's the availability of consumer financing been? Is GM Financial providing more options?
What an improvement. Rates are excellent. It's loosened up considerably. It's a lot easier to get that near-prime or subprime consumer bought. GM Financial continues to fill that near-prime and subprime gap for us, specifically on the leases in those areas. They're obviously not buying what we're seeing from Ally in the prime space.
What do dealers think of Chevy's relatively new sales chief, Don Johnson?
There's not a better person to work with. He's not only friendly and easy to talk to, the council is very willing to ask him the tough questions because he's willing to listen. He's surprised me with his candor: if something is not right or if there's something the company can improve on, he'll tell you. The guy has earned a lot of respect from the dealers on the council because of that. He's definitely a dealer guy.