Do I think the super retailers like CarMax, United Auto Group or AutoNation have the formula to avoid disintermediation and lock in the customer's loyalty to their organization?
(EDITOR'S NOTE: As Pyle uses it, disintermediation is the dire fate that awaits retailers who do not meet the increasing and changing needs of today's consumers.)
I don't quite know what makes the super retailer super, but here's what I do see they have: A financial plan and some very snappy showroom tricks and technology. What I don't see yet is their identification of the processes necessary to deliver real, quantifiable value to the newly empowered consumer.
My company and our Toyota partners are asking Wayne Huizenga and his Republic Industries to respect our market representation policies in their purchase of Joe Myers Toyota in Houston. I hope they ultimately will agree because those policies protect both Toyota's brand equity and Toyota dealers' investments.
(EDITOR'S NOTE: Myers has postponed the sale of his dealership, but the Toyota-Republic conflict continues.)
While the disintermediation concept may not have made everyone's radar scope, there is no doubt that Toyota, Ford, Chrysler, Honda - in fact, all the manufacturers - are trying to deal with the new customer realities.
At Gulf States Toyota, we are committing huge resources to the effort. Our company calls it our Enterprise Improvement Program. I call it our Manhattan Project.
For those who are too young to recall the Manhattan Project, it was our country's effort to build a nuclear weapon in the early 1940s. We were in a race to the finish line with German scientists. Finishing second would have been no good - a disaster. Finishing second in the race to bring real value to the customer in the automotive distribution channel will likewise be a disaster.
We have assigned the best and brightest talent from various components of our company. We have assisted them with multimillion-dollar budgets and the wisdom of world-class consultants. Toyota Motor Sales has a similar process called the New Era Business program, and we are working in close sync with them.
What is it I think we'll uncover? What is it that represents real value to today's consumer? Here are some of my guesses:
Our industry wizards estimate that close to 40 percent of a car's cost is buried in the distribution process, including advertising and incentive costs. The customer wants those costs to be reduced dramatically, and he wants to share in the associated dividends.
Remembering that tomorrow's new-car buyer will be older, better educated and more affluent, we must expect that he (or, more likely, she) will demand more choice. But rather than wait six weeks or longer for exactly the car she wants, she'll be willing to allow us 10 to 14 days.
Tomorrow's buyer will demand that the negotiation process be stripped of fear, anxiety and tension.
Convenience will be a huge hot button, more even for service than for sales. The industry will have to come to the party with wide-ranging service satellites and/or mobile service concepts.
Let me digress for a moment to talk about the Ford Indianapolis plan. If the dealers buy it, Ford Motor would go from 20 Ford and Lincoln-Mercury stores in the area to five or six Ford and two or three L-M megastores.
It's a good idea for Ford; it's a bold idea; it's a refreshing idea, but it's probably not an idea that will see the light of day. And that would be unfortunate for Ford Motor Co. and its dealers, in my opinion.
The domestic manufacturers have a serious over-dealer situation that will demand an Indianapolis solution or a Republic solution.
In the meantime, the import nameplates can concentrate on bringing value to their customers.
Some in the industry won't share my vision of the new reality. Others strongly believe that you can use conventional methods to play through the issue. Still others are way ahead of me and have already begun to create new value for the changing consumer.
All those reactions are fine, but I can promise you that to stand on the sidelines on these issues is to insure that you will be blind-sided by nontraditional distributors and retailers and have your head taken off. Another way of saying, 'You're disintermediated, baby.'
When I begin to think too much, talk too much or worry too much about our changing fortunes, my son Dan is my reality check. Dan has an MBA. He has worked for two automotive manufacturers (not Toyota). He spent two years selling Lexus in Dallas.
A little over a year ago, that dealer asked Dan to be used-car manager at his Cadillac-Chevy store in New Orleans. Dan is committed, enthusiastic and successful in the retail car business. He believes in its present and its future.
When I lay my disintermediation ideas on Dan, he listens respectfully and brings me back to earth by saying, 'I'm just surprised that you guys didn't start working on this 10 years ago.'
So the target for us is no longer shelf space. It's which manufacturers, which distributors, which dealers, which technologies will win the customers' purchase loyalty by creating processes that deliver honest-to-God value.
Excerpts from Jerry Pyle's speech to the American International Automobile Dealers Association convention May 19 in Washington.