ORLANDO, Fla. - Last year's dealer nightmare followed a familiar story line. Dealers, often wary of the factories' motives, thought the automakers wanted to sell directly to customers on the Internet.
But that was old news at the National Automobile Dealers Association convention last week. The new fear was dot-com companies forcing themselves into the new-car business. Imagine computer billionaire Michael Dell buying dealerships and selling vehicles nationwide via flatbed truck.
That flatbed phobia brought dealers and factories together at the NADA convention. After two years of bickering over the factories' Internet intentions, dealers and factories realized they have a lot more to gain by working together.
If dealers and factories cooperate, they believe they can turn the Internet into a friend, not foe. In short, the Internet can be a heck of a sales tool.
Jerry Reynolds, chairman of the Ford Dealer Council, puts it this way: 'What's the best way to get the leads to the dealer?'
Fujio Cho, president of Toyota Motor Corp., said his company is walking down the same path: devising the best way to get Web prospects to Toyota dealers.
'We want to work with the dealers and get them to help us come up with a new approach,' he said in Orlando. 'In whatever we do, it's important that there be trust.'
That notion of partnership is a long way from the paranoia that overwhelmed the NADA convention in 1999.
'Last year you heard all the manufacturers saying, `We're going to sell direct.' This year they all seem to be saying, `We're going to go through our dealers,' said Jim Kowalski, senior director of industry operations at Manugistics Inc. of Itasca, Ill.
It's far from certain whether companies such as CarsDirect.com, backed by computer billionaire Michael Dell, will become significant threats to established dealers. (See story on Page 102.)
'A lot of these third-party companies are thinking about selling direct to consumers,' said Mark Hogan, president of e-GM. 'Our dealers are sensitive about that and we are, too. Some are well-capitalized and they are trying to buy dealerships to receive product. Only time will tell if they are going to be successful. I think they are going to have a tough row to hoe.'
But the threat was real enough for dealers and factories to find significant common ground in Orlando.
'Dealers will still do the sales and the service,' said Jim Schroer, director of global marketing for Ford Motor Co. 'People think there will be another distribution system. That's not the case.'
Ford Division went so far as to warn dealers at the NADA make meeting about selling to a dot-com company. (See story at right.)
'Ford said that if any dot-com company approached, `Come to us and let us try to find a buyer. Do not sell to an Internet company,'' said Jay Kilheeney, president of Jay Kilheeney Ford-Lincoln-Mercury in Lock Haven, Pa.
General Motors didn't beat around the bush last week. Hogan declared GM had no intention of selling to a dot-com auto retailer.
'We have not granted and will not grant a franchise to a dot-com company,' he said. 'We are committed to our dealers. The state franchise laws don't always allow us to veto that (sale to a qualified buyer).'
Subaru dealers at their make meeting sought a written assurance from Subaru of America Inc. that it wouldn't grant a franchise to a dot-com retailer. (See story on Page 36.)
Subaru President George Muller stopped short of a guarantee, but he sympathized with the dealers.
'The dealers want us to say we would never, ever, ever, ever sell cars to anyone else. That's the whole buzz at NADA this year, I think,' Muller said. 'While I want to give the dealers an assurance that will satisfy them, I also don't want to tie our hands, legally.
'The point that we can all agree with, I think, is that we don't want people to go outside the Subaru family, so to speak, to get Subarus.'
So peace broke out among dealers and factories last week - at least about Internet sales.
Staff Reporters Lindsay Chappell and Jim Henry contributed to this report