John MacDonald, DaimlerChrysler's senior vice president of sales and service in North America, attended both the Dodge and Chrysler-Plymouth-Jeep make meetings at the National Automobile Dealers Association convention in San Francisco. Afterward, MacDonald spoke to reporters, including Staff Reporter Ralph Kisiel, about the Internet, publicly owned dealerships and other changes in auto retailing. His edited remarks follow:
How do you view all the retail changes?
For the past 70 years, the good entrepreneurial dealers have always adapted to market conditions. We think it's an evolution, by the way, not a revolution, because we are doing a great job. We just came off record sales, record profits, record customer satisfaction. We think we are on track at 15 million cars and trucks as an industry to take good care of the customer, and we're going to do that with our own dealers, the good ones.
Do your dealers have to change?
One of the things we told the dealers here today, if the best dealers in the room do nothing to change and improve, they will be the worst dealers in five years. So we're demanding that dealers become involved in Five Star - keep moving, keep changing, keep adapting - to become better, not stand still. We're not trying to propagate that the old channel of distribution is OK. We're saying it's got to change, and it's got to change a lot.
How far have you progressed with the Five Star program?
There are 1,200 dealers certified as Five Star, representing 52 percent of our volume. We make them record everything, document everything, call every customer. Not one out of 100 is missed. The program says we communicate with every customer and get that kind of feedback as to what we're doing right and wrong at the dealership. It's a commitment to the customer that we're going to stay in touch with them.
What is your experience with your publicly owned dealerships?
Most of the publicly helds have bought great dealerships. They have purchased great talent in the right locations. They are not out buying marginal dealerships. So when we look at the dealerships, we get mixed reviews. Some of them are doing a little better, and some of them aren't doing as well.
We have not seen any marginal improvement across the board because the operators stay the same in the same dealership with the same personnel. So there has been no rocket science brought to this publicly held forum. So we haven't seen anything that's really dramatic in improvement.
What will happen to publicly held dealerships in a recession?
They haven't been tested yet. We have never had a bad month of sales since this new wave of publicly helds started. If we hit a recession, I think that when the dust clears, I'll have more entrepreneurs standing by me than they will have stockholders standing by them.
What does the Internet mean for the dealer and customer?
Forty percent of the households now have personal computers. So people are coming into the dealership armed with all this information about the cost of cars. These customers are extremely well prepared on cost and equipment. The dealer has to adjust to that customer and has to be as sophisticated.
Twenty-five percent of the customers have had some kind of Internet exposure before coming into dealerships today. The dealer is very happy because that customer is educated and has interest in our products. We just have to make sure our salespeople are trained to handle Internet customers. They want to be treated differently.