Two years of head-spinning acquisitions and the debut of Internet marketing have had little impact on the way cars are sold.
Most of the panelists discussing the 'retail revolution' at the Automotive News World Congress did not seem convinced that there has been a revolution at all. Although they agree dealers and manufacturers must change to woo a more demanding, sophisticated consumer, the changes seem to be gradual.
'Maybe this is not the revolution everybody thinks it is,' said John MacDonald, vice president of sales and service for DaimlerChrysler Corp. 'Maybe this is just another evolution in the industry.'
Although the Internet, as an inexpensive medium, has potential to reduce dealer advertising costs, it has not seen enough volume to make a dent in dealer ad budgets. The Net is used mainly as an information-gathering tool for consumers, who still must go to a dealership to test-drive a vehicle.
And even though dealer groups are growing rapidly, some doubt that big is better. MacDonald said that in most cases the public dealership groups have taken over strong dealerships and have failed to make radical improvements in the bottom line.
Tony March, CEO of March/ Hodge Holding Co. in Hartford, Conn., worried that large public companies could dim opportunities for small, entrepreneurial operators, particularly minorities. 'Will this consolidation virtually eliminate the access of minorities to the larger, better dealership?' he asked.
B.B. Hollingsworth Jr., chairman, president and CEO of Group 1 Automotive Inc. in Houston, said his chain preserves the entrepreneurial spirit, leaving the dealers who sell out to Group 1 with a substantial stake in their dealerships. He says consolidation has helped cut costs substantially. But for the most part, the chain buys good operators and lets them continue to run the show. There is no revolution, he said.
And Ford Motor Co. is installing its Ford Retail Network in just five markets, though it is looking at 130 major markets. The concept is in its infancy and expanding slowly. 'We are going as fast as we can, but we don't have the expertise to expand at the rate a lot of people would like us to do,' said Ross Roberts, president of Ford Investment Enterprise Corp., which was set up to run Ford's joint ventures with dealers.
THEN THERE'S REPUBLIC
When it comes to revolutionary change, perhaps the one company big enough to make it happen is Republic Industries Inc. With $18 billion in annual pro forma revenues and almost 400 new-car dealerships, it is the nation's largest dealership group.
Though the company's stock price has nose-dived since Republic launched its acquisition spree just over two years ago, Michael Maroone, president of Republic's Automotive Retail Group, said the stock should turn a corner once the chain refines its new retail strategy and rolls the concept out nationally. Republic is testing no-haggle pricing and a package of customer incentives in Denver, where it has debuted the AutoNation brand on new-car dealerships.
The new sales approach has been in place only since Christmas, but Republic's competitors already are complaining about the company's aggressive advertising. Some also are threatened by its no-haggle prices, griping that the prices are too low - especially on hot models.
'Denver is the Armageddon of automotive retailing,' said Sheldon Sandler, CEO of Bel Air Partners LLC in Princeton, N.J., an investment firm serving car dealers. Sandler thinks that Republic, though still an unproven retailer, could use its financial prowess to force fundamental changes in car sales, potentially ending conventional price negotiation.
Said Maroone: 'We believe the speed of change driven by the customer is accelerating, and there's going to be a lot more (change) to come.'