WASHINGTON - What's the stronger name?
Chevrolet Corvette? Or Joe Smith Auto Group? Ford F-150? Or Great Deal Motors?
If you can believe executives of some of the industry's biggest dealer groups, the dealership's name is fast becoming more important to car buyers than the vehicle's brand.
'Dealer branding is going to be a whole lot more important than manufacturers' brands,' Tom Gibson, chairman and CEO of the privately held Asbury Automotive Group, said here last week.
NEED A 'HALO'
'I'm not saying the manufacturer's brand isn't important. You still need that national halo out there. But what we're seeing evolve is less and less loyalty to the manufacturer, and more and more brand loyalty being developed by the dealer.'
Gibson spoke at a panel on 'The Evolution of Auto Retailing' at the American International Automobile Dealers Association annual Automotive Congress here.
The other panelists - Ben Hollingsworth, chairman and CEO of Group 1 Automotive Inc.; Bill Gilliland, president of Cross-Continent Auto Retailers; Jack Pohanka, chairman of Capital Automotive REIT; and Walter Huizenga, AIADA president - agreed that the deterioration of customer loyalty to a specific brand of car or truck is alarming.
Poor brand management.
Incentives got much of the blame for eroding factory brands.
'What happens is, you change the makeup of your owner body,' said Mike Jackson, president of Mercedes-Benz of North America Inc. Mercedes lowered prices and swore off incentives, starting with the present C-class model, introduced in May 1994.
'You end up with a lot of opportunists, who only bought you because you had the deal of the month. Then when they're ready to buy again, they may not buy you if you don't have the deal of the month. Not only that, you can convert your loyal buyers into opportunists.'
In a separate interview in New York, United Auto Group Chairman Marshall Cogan said his group renames some, but not all, of the dealerships it buys. He also said he disagrees that the dealer name could be more important than the factory brand.
'We will not do it (change the dealership name) where we have a lot of brand value, such as a Landers (Auto Sales Inc. in Arkansas) or a Sun (Automotive Group in Arizona),' he said.
The AIADA panelists said moves by Ford Motor Co. and General Motors to buy dealerships open a new area of potential conflict - or cooperation - between the factories and 'consolidators.'
Conflict is possible because, sooner or later, a dealer chain and a factory may find themselves considering buying the same dealership.
'The potential is there for a conflict of interest, since the factory can approve or disapprove a buyer,' Gibson said.
Cooperation is possible, however, because consolidators may be able to help Ford and GM consolidate their dealerships.
'You'll see joint ventures with the manufacturers, where somebody says, 'Let's go in and fix up Tucson,'*' Gilliland said.
Gibson questioned the factories' motives for getting into retailing.
'Are they doing this because it's a test, because they want to try new ways of doing things?' he asked, which is what the factories have said.
'Or are they getting into retailing to take the profit out of that link in the distribution system?'
The panelists all agreed there will be fewer car companies in the U.S. market in the next five years, fewer than the 22 operating today.
The guesses ranged from six, by Gilliland, to 20, by Pohanka.
'I think they're all in play,' Gibson said.
' 'Global Motors' is here, it's going to happen.'
Huizenga, the AIADA president, said the consolidation will be driven by what he called an 'unprecedented gap' between industry haves and have-nots.
'I've never seen it when companies are setting sales records on the one hand and closing plants on another. I've never seen it,' he said.
'That may be one of the real storm warning signals for what's coming in the industry.'
National Editor James R. Crate and Staff Reporter Harry Stoffer contributed to this report