Amid robust sales, especially of crossovers, dealers' profitability remains a concern. Often, that's tied to a brand's mix of trucks vs. cars.
Those were some of the topics raised repeatedly by 25 dealer council chairmen, or dealers holding equivalent positions, representing 31 brands in interviews. Dealers discussed the specifics of their brands and industry issues.
Here's some of what the dealers told us:
- Volkswagen dealers faced unique challenges. To remain profitable, said Michael DiFeo, dealer principal at Linden Volkswagen in Roselle, N.J., "we relied a lot on shifting our efforts to used cars."
Now they're pinning their hopes on crossovers. "The Atlas is the first time that we'll be in this large [crossover] segment," DiFeo said. "Getting the larger Tiguan is huge for us considering the growth of that segment."
- Timothy Kraemer, general manager of BMW Minnetonka in Minnesota, said: "We had too many sedans and not enough SUVs -- the X3 and X5. It is a matter of adjusting production and having the right amount of cars at the right time." Due in part to too many dealerships trying to unload poor-selling sedans at the same time, "there is a declining margin situation where we are fighting for front-end margins."
- Jim Morino, owner of Acura of Lynnwood in Washington, said 2016 "was a tough year." Sedan sales were off, the Takata recalls were a drain on service and used-car profits, and crossovers such as the MDX and RDX were often in tight supply.
"Profitability for Acura nationally overall is down," he said. "We're down from where we were in 2015, and that is definitely a concern for dealers." After some "very candid conversations" about Acura's advertising, he said, "now they're doing more call to action to get people in to the dealership."
- Mike Bowsher, owner of Carl Black Automotive Group in Kennesaw, Ga., says Chevrolet dealers have the same concerns as their peers.
"All dealers care really about two things. First and foremost is franchise value, and second is dealership profitability," he said. 2017 is "going to be the year of the crossover for us. We go in with solid momentum, and we're going to continue to build on the market share gains, which would continue to give us strong franchise values and profitability."
Dealers want more trucks. "I wouldn't say we're short. But with Colorado crew-cab trucks and full-size utilities, we all want more. Dealers are always screaming for that. For SUVs, I'll take every one we can get. Diesels, too -- we just can't get enough."
It's a simple message from dealers: Give us more -- trucks, marketing and profits.