Media breakoutDealer advertising expenditures per dealership by medium in 2001
|2000 AVG.||2001 AVG.||DEALERSHIPS BY SIZE (NEW-VEHICLE UNITS SOLD IN 2001|
|*Includes billboards, magazines, sides of buses|
According to National Automobile Dealers Association data, total dealer spending of $6.6 billion was up 3.7 percent from 2000 and pushed dealer spending the closest to factory ad spending - $7.7 billion - in at least five years.
Paul Taylor, chief economist for NADA, says dealers are optimistic about profits this year.
He expects dealer ad spending to stay strong as retailers attempt to woo customers after 0 percent financing and as large dealership groups spend more promoting multifranchises.
"Advertising will be up slightly," Taylor said, adding there is "the need by dealers to move some customers toward other services as new-car volume slows in the wake of 0 percent financing."
The ad results are based on 600 responses from 5,700 dealership locations surveyed in February.
The 2001 increase was the smallest since 1997. Automakers, on the other hand, decreased their spending by 8.1 percent last year, from a total of $8.4 billion in 2000 to $7.7 billion, according to Competitive Media Reporting.
The $1.1 billion gap between dealer and factory spending is a big turnaround. Since 1998, the factories had outspent dealers by at least $2 billion annually.
Dealers pick up tab
Taylor predicts dealers will continue to pick up more of the tab.
That's because many of the large dealer groups spend more of their own money advertising their businesses. Automakers, he said, will not provide co-op money to advertise multimakes.
"It's the gradual process of consolidation that's driving a lot of what you see," Taylor said. "There's an increasing trend toward dealerships with four to nine franchises in any given location, and it makes sense to take out one full-page newspaper ad and do all the franchises so the dealership presents itself as a one-stop shop. Manufacturers will not support multimake ads."
In another NADA survey, dealers said they are growing optimistic about profits this year. Based on dealers' answers to a quarterly survey in January, NADA assigned an index number of 136. January's 136 is up from 110 in October and 114 in January 2000. The peak index was 180 in January 1984 and April 1994; the low - 54 in April 1980.
Some dealers were more optimistic. When asked in January what his plans were for ad spending this year, Dale Walker, chairman of Subaru's National Dealer Council, was a man without a plan.
"I don't know that I'm really planning on anything at this point in time," said Walker of Walker's Renton Subaru in Renton, Wash. "More than anything, I'm planning on watching what sales do and then try to react when I see a pattern there." Walker spent about $850,000 on advertising last year. He plans to increase that budget for 2002.
"I wanted to wait to see if sales dropped off," he said. "At least at my store, they have not. In fact, they're up over last year, so I'm increasing a slight amount."