Auto manufacturing, distribution and retailing are all one business - or at least they should be, said Henrich Heitmann, chairman of BMW (US) Holding Corp.
Like it or not, manufacturers already hold many responsibilities that traditionally belonged to the dealer, in areas such as marketing, finance and warranties, Heitmann said in a speech at the Automotive News World Congress.
For instance, BMW of North America Inc., the U.S. sales and marketing arm, offers three years of free scheduled maintenance across the lineup.
Yet other automakers continue to act as if they are selling 'washing machines and refrigerators, not cars and trucks,' Heitmann said.
An appliance maker sells to a wholesaler, pockets a profit, and pretty much forgets about the product, Heitmann said. Autos are different.
'Today, you transfer the car to the dealer, and in many cases he leases it to the customer or sells it through your captive finance company. The dealer pockets the profit, and you are left holding the paper for a period of two or three years - you've got the risk,' he said.
Heitmann's speech was a fictional conversation with himself, while shaving. He advocated an evolution in auto retailing, not a revolution. His reflection, the devil's advocate, said only a revolution will do.
Without offering a prescription, Heitmann raised issues like poor owner loyalty, and the issue of whether 'brand management' applies to a make, like Volkswagen, or a model, such as the New Beetle.
Heitmann quoted his reflection as saying, 'Most of us in the auto industry must have our heads in the sand.'
'Actually,' said Heitmann of his reflection, 'he didn't quite say 'heads in the sand,' but he did refer to our heads being somewhere they normally aren't.'