Chevy sees big payoff from new-model introductions

Age: 51
Dealer since: 2008
Dealership: Stingray Chevrolet, Plant City, Fla.
Average monthly sales: 130 new, 75 used
Quote: "It's important for Chevrolet to get off to a strong start in the first quarter of 2014, and the most important vehicle we have is Silverado."

Chevrolet's market share in 2013 slipped to 12.5 percent, from 12.8 percent in 2012, despite a slew of vehicle introductions. But Chevy dealers are confident that there will be a payoff this year, says Steve Hurley, chairman of Chevrolet's National Dealer Council.

Hurley believes that sales of the Silverado pickup, which was redesigned and launched last summer, will accelerate this year with a "modest improvement" in incentives to combat rivals Ford and Ram. Many Chevy dealers have expressed concern that sales of the Silverado, the brand's highest-volume nameplate and one of its most profitable vehicles, have suffered because of hefty discounts offered by Ford and Ram.

Sales of fleet and commercial vehicles also should provide a tailwind for Chevy dealers, Hurley said. The City Express cargo van, produced through a joint venture with Nissan, and the addition of the Colorado mid-sized pickup will give Chevy dealers a full truck lineup for fleet customers this fall.

Meanwhile, Chevy's dealer council is working with GM executives on strategies for dealers to retain customers whose leases will expire this year. GM expects a surge in off-lease customers in 2014 -- as many as three times the levels it had in 2013. Hurley says retaining those buyers is a priority for Chevrolet and its dealers this year.

Hurley spoke with Staff Reporter Mike Colias this month.

Q. How was 2013 for Chevy dealers?

A. I think dealers were pleased with the pace of sales for most of the year. But we didn't really finish that strongly. That was disappointing. We're confident going forward because of all of the great product we've got. It continues to get better and better.

But the competitive product is so good, too. You see that in the mid-sized sedan segment, where we've got a great car in the Malibu, but you've got some absolute stalwarts in that segment.

Are all of the great reviews for the '14 Impala translating into decent sales?

Impala has been steady, but dealers would like to see more volume. It's such a good car and has been so well received. I think in time the demand will build. It was such a vast improvement from the old one that it'll take time for the market to grow to appreciate how good it is.

How will dealers position the Colorado mid-sized pickup when it lands this year?

There's a lot of anticipation for that truck because it looks like it will offer tremendous versatility. It's more of a personal sport vehicle that offers a lot of opportunity for upfit and accessorization. And fewer and fewer brands have a full truck lineup like Chevrolet will. I think that will give us an edge, even at the fleet and commercial level.

What about the new Suburban and Tahoe SUVs that are coming out by spring? Some dealers have been expecting a big sell-off of the outgoing models.

I don't expect a big incentive binge to sell those out. I think they'll sell down just fine without a huge incentive spends. We own that big SUV market.

Those new SUVs have a lot of promise because the market has become acclimated to current fuel prices.

And people want full-sized SUVs for a lot of reasons, like carrying capacity and towing. Tahoe and Suburban are the kind of vehicles that a family holds on to. I think many people have been anticipating the new ones. We've already got some orders.

Does Chevy have an opportunity to market its performance lineup better, given all of its recent sports car introductions?

I think we'll be seeing more of that. I think between the Z/28, the Camaro ZL1, the Stingray and the SS, there is an opportunity to market the performance end of the brand in a more defined way.

Are dealers happy with sales of the redesigned 2014 Silverado?

Our competitors have been really aggressive. Because it's a brand-new truck, you're going to see some of that. That's what we've been up against with Ford and Ram.

This year a lot of that should normalize and you'll see a modest improvement in incentives. It won't be a burst, but a slow increase. We've seen steady sales. It's important for Chevrolet to get off to a strong start in the first quarter of 2014, and the most important vehicle we have is Silverado.

What's missing in the product lineup?

We're excited about the City Express coming for fleet and commercial. That's something that is missing, yet there's a plan for that smaller type cargo van.

I also think that, because Chevrolet is going to be the only ones keeping the classic commercial van, as Ford has discontinued its van, that's going to be a tremendous advantage. That van has proven reliability. It's well known in the market.

Are dealers happy with Chevy's competitiveness in fleet and commercial?

With Eddie Peper leading the fleet and commercial segment for GM and the fact that it's now its own dedicated channel, I think Chevy is poised to take away some market share in fleet and commercial in 2014.

With the continuation of the full-sized van, the introduction of City Express and the new heavy duty pickups, I think we're going to see a real surge in business.

GM is planning for a big increase in off-lease customers coming into showrooms. Is the Chevy council discussing ways for dealers to make sure they retain those customers?

With GM, our circumstances are a little different because, rather than having a full-line captive, we have the combination of GM Financial, Ally, U.S. Bank and Wells Fargo. It makes it a bit more complicated than other manufacturers to have a comprehensive strategy.

That's an area of focus that we talk about at a council level. We need to retain these customers. We know how expensive it is to go out and find a new customer. I think the introduction last year of two years of paid maintenance across the lineup will help.

Are dealers happy with Chevrolet's marketing efforts?

Dealers always want more and better marketing and advertising. In general, I think they'd like to see more product features and benefits shown to the consumer.

We've done a pretty good job of that at the Tier 2 level, with our "Under the Blue Arch" campaign, which is set in the dealership. The dealer advertising committee has given a lot of feedback on that and the changes have been good.

What are the dealer council's priorities for 2014?

There is always a lot of concern over the [Standards For Excellence] program and continuing and enhancing that for dealers and for GM.

Leasing will be big focus. And there will continue to be a lot of discussion around the Silverado. It's so important to us right now. We need to get the marketing and advertising and the incentives right.

Have there been any big changes to the SFE program?

There has been surprising success with last year's merging of SFE with the Mark of Excellence program, which pays salespeople up to $200 per vehicle, up from $100 previously. It's been extremely popular and successful with the dealers.

I think that particular program has helped dealers to retain salespeople much better. And when you do that, it starts to improve your customer retention.

There is also the addition of some business-development-center training to the SFE requirements?

It's to attend one-day training for the dealer principal, and possibly one other person from the dealership, for BDC training.

We want to make sure that dealerships have been exposed to and are aware of the processing of all the information that comes from GM. Because we have everything from off-lease customers to manifest lists.

It's in GM's interest to make sure that the dealers have the internal capability to work those lists and prospect off of them to generate business and retain customers. It's a great process for dealers to follow up on their process and handle their incoming calls and Internet leads.

Is Chevy keeping up the training with the Disney Institute? Dealers were required to go to a theme park last year.

This year it will be more sales managers and other store managers, with a focus on ongoing training. And there will be optional in-dealer training and Web-based training modules.

What are Chevy dealers doing to attract more service business? Is the factory helping?

I think our same-day service initiative is going to help quite a bit. We've been stocking more fast-moving parts with the idea to getting the customer in and out more quickly.

Dealers are rewarded for stocking and turning these parts. The whole purpose is retention. There's a lot of focus on retention.

Are dealers satisfied with the profitability on new cars?

New-car profitability is up, but it's definitely an issue and a concern. That's definitely something we've talked about on the council and at the dealer executive board, is new-car department profitability. It's improving, but we'd like to see that go a lot higher. We're going to have to watch that.

Can you give a sales forecast for 2014?

I don't have an official one. But the impression I've gotten is that they're expecting continued modest growth. Most people expect industry growth to start flattening out. So I think that 10 percent growth for Chevrolet will probably be expected, given all of the new product that we've got. If the market was up 5 percent or something close to that, I think they'd like to get that 5 plus another 5. I would be surprised if Chevrolet wasn't expecting at least 10 percent growth next year.

You can reach Mike Colias at autonews@crain.com



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