In the Dec. 6 issue of Automotive News, a headline read, 'VW dumps Lopez system,' with the subhead, 'DaimlerChrysler is new model for supplier relationships.'
In the article, a VW source said: 'If you want innovative and advanced technology ahead of your competitors, you need motivated suppliers and relationships based on mutual trust.'
Sounds like the old-fashioned concept of partnership.
In 1998, General Motors learned the same lesson when the UAW went out on strike and cost the General a cool $2.5 billion in profits. Clearly, when it comes to labor, trust and positive long-term relationships are critically important.
Involvement, trust, teamwork and long-term relationships will always beat competitors who believe in abusive relationships and short-term gain.
So here we are today acknowledging the need for long-term and trusting relationships with suppliers and with labor. What about our retailers?
Well, having 'improved' other parts of their business, some automakers are taking the shortsighted approach to dealers. The herd says distribution costs represent 30 percent of the total selling price of the car. What a ripe area for plucking!
What's forgotten is that this is the marginal-return part of the equation where we all fight for market share and at times spend inordinate amounts of money to attract the last few customers. Some money can be saved, but the competitive nature of the marketplace will largely dictate selling expense.
We are going through a technical revolution with the Internet, and it is changing the face of retailing. To some, it feels like an opportunity to disenfranchise the franchised dealer. How many manufacturers are asking the tough question of how can we beat the competition using the Internet in partnership with our dealers?
On the surface, Ford Motor Co.'s Auto Collection has been done in partnership with regional dealer groups. Some noble ideas have been tried, but the experiment has had an unintended consequence of alienating many Ford dealers.
GM's attempt to become a retailer was nothing more than a frontal assault on its dealer body with a resulting backlash that was totally predictable. This is an out-of-trust partnership that's crying to be rebuilt.
The importance of partnership is a lesson I learned a long time ago from Jim Fuller at Volkswagen of America. He used to call the VW dealers our dealer-partners, and he meant it. He understood that partners at times can have different goals and will not always see eye to eye, but all great partnerships depend on mutual need and mutual respect.
The Internet brings with it a huge opportunity to improve dramatically the way new cars are sold. It can provide in-depth information along with a more efficient, private way to handle financing with a fun, full-sensory shopping experience at a dealership. But not dealerships as we know them today.
The current dealership business model dates back to a different time and need. The facility design - a three-sided glass box attached to a butler service building surrounded by a large macadam parking lot - is the single biggest brand homogenizer in the history of the car business. In the future, stores will have to be the brand.
You might guess I would say this, but Land Rover Centres do this quite nicely.
Dealers also must add value by being entertaining, efficient for the customer, special and specializing, territorial and memorable. What we ask of our retail associates may have to change most of all. Each brand will have to find its own formula and apply it consistently from store to store.
Dealers must embrace the need for change as well, and not by running off to their state legislatures. Most of the new legislation is transparently anti-consumer, and our society does not reward limiting consumer choice.
The required change runs deeper than setting up a Web site, although everyone will need one. Dealers must again listen to their customers and discuss with their manufacturing partners the changing retail needs of today's customers in the same spirit that they discuss changing product needs. Then, dealers and manufacturers can jointly make the appropriate improvements.
So what is the future of automotive retailing? The future will be fresh and exciting, and will lie in the hands of those dealers and manufacturers who see it together. For them, retailing can become a significant competitive advantage, perhaps the greatest competitive advantage of all.