What's the most important product for Chevy dealers in 2020?
There are quite a few. 2020 is going to be an awesome launch year for us. Our No. 1 and 2 priorities are always dealer profitability and franchise value, enhancing those. That's why we work every day. But 2020 is going to be an awesome year in terms of launches with new Tahoe, Suburban, especially with the Trailblazer — which is going to sell like crazy. As well as the new Corvette. It's probably the most exciting car that's hit the market in the last 12 months for anybody. We've sold our production already, and the enthusiasm is huge. As we go through 2020, we've got to have flawless launches. We've got to work together — both GM and the dealers — to make sure we get this thing perfect, each one of these. This is a big year.
How do you make up for lost sedan volume?
It is very, very easy to switch people from a compact car to a small SUV, so the Trailblazer is going to sit perfect in that price point where we can walk people over to that. The Trax is where we have made up a lot of that volume. In fact, we're looking for increased production of the Trax and trying to get as many more of those as we can to try to fill the hole for the Cruze. We'll have the Trax and the Trailblazer on our lots at the same time, and it just makes for a nice complement.
What challenges will Chevy dealers face in 2020?
The biggest challenge we're going to face in 2020 is probably going to be to execute these launches flawlessly. We've got these awesome, insane products coming at us. One thing we have to do is make sure we're all in step in terms of getting these vehicles on the lot, getting everyone stocked up, getting all the sales folks trained and getting ready to go.
Another thing we're going to have to work through in 2020 is we have website choice, which we go from a traditional CDK website model to choice. And we've got to make sure that's all working perfectly.
How did the UAW strike affect your business?
The biggest hit that we took is in the parts area. That one hit us fast, but the dealers did what they could to keep those folks happy with our loaner fleet. GM has been very helpful to the dealers for that in terms of working with reimbursements and things like that so we can get these customers taken care of. On the sales side, we didn't start feeling the inventory effect during the month of mid-September to mid-October because a lot of cars were built and they were being shipped to us. We're feeling it now [in December]. Production was lost for six weeks. That's been a major effect, especially in full-size trucks because that's what GM predominantly sells. At this point, we're just waiting to restock everything. We're seeing customers cross-shop multiple Chevy dealers just trying to find the product at this point. That will be cured in short order. GM hired about a thousand temp parts workers to help get these backlogs out, and there are procedures that if you have a critical part, these folks … [can] overnight it to you.
What do you think of the Tahoe and Suburban redesigns?
I think any issues we've had in the last gen product, all the issues or concerns or wants and needs have all been fulfilled. We're going to sell them in large volumes. Chevrolet dealers should be ecstatic on where Chevy is and especially what we'll be seeing in the future with exciting new products. We as Chevy dealers are in extremely good shape.
What do you think of GM's strong commitment to electric vehicles? How is that commitment translating to dealers?
We may be exploring different ways to sell these vehicles. If the auto business can be transformed, this is the opportunity to do it. We are working with GM on looking into any opportunities to enhance dealer profitability into the future, especially what's coming on the electric vehicle side. There will be a percentage of these vehicles that must be sold by OEMs at some point, and from what we have seen, the Chevrolet dealers and GM dealers are in extremely good positions.
How are dealers working with Chevy's revamped leadership team since Brian Sweeney transitioned to vice president of dealer operations and innovation in November and Steve Hill, vice president of U.S. sales, service and marketing, began overseeing Chevy?
I talk to Steve and Brian almost daily. Chevy dealers absolutely thought the world of Sweeney and still do. His new role will entail dealer profitability. People should be excited about that because there's no better or more trusted executive in General Motors than Brian Sweeney, as far as the dealers are concerned. He's always had a way of looking at both the dealers' wants and needs, as well as what GM is trying to accomplish and finding a great spot in the middle for both of us. That's his forte. He is the right guy for that job, no question.
Steve Hill is one of the smartest guys I've ever worked with on the planet. I talk to Steve daily on multiple issues. I was excited when they announced that Steve was not only going to do his current job but would step into the role as the leader of Chevrolet. The Chevy dealers going into 2020 are in great shape in terms of leadership.
What's your take on Chevy's marketing strategy? Is the "Real People" campaign still resonating?
If all the dealers saw the metrics and the way we have moved consumer consideration, I think Chevy is doing the right job sticking with it. This is resonating. It's breakthrough. Our numbers are climbing. It's paying off. We lost the Cruze this year, and we've kept market share the same. That just doesn't happen. I think they should stick with this campaign and if dealers saw the same metrics, they would understand that.
Digital marketing is great, but we are really going to have to execute this entire website choice strategy flawlessly. This is a lot of moving parts. You have 4,000 dealers that you're moving over to a choice. So making sure that all integration … coming off one platform and onto another is going to be quite an undertaking.
How has Chevy prepared dealers to sell EVs?
Dealers are going to need a lot of help in terms of training. This is a whole new arena for a lot of folks. And especially as this portfolio rolls out over the next many years, it's a whole different approach that we're going to have to be looking at here.
GM is 100 percent committed to training every aspect of our dealerships and every aspect of our customer-facing folks because this is an all-new go-to-market.
Are incentive levels in line with what dealers need?
Dealers always want more. We always want more incentives. With competition, especially full-size trucks, that kind of forces those incentive levels. Our job is to fight our local competitive dealer. GM has to take on the other OEMs, so they have to be competitive. I think GM has been aggressive in giving us what we need to move this product.
Are Chevy dealers looking to cut costs?
Absolutely. That is 100 percent all the time. Good habits are created in bad times and bad habits are created in good times. In terms of a strike or any shock to the system or in the market, dealers have had to streamline the business. We can't do business like we did 10 to 15 years ago. We're in a digital way of selling cars now. It's more transparent. You have to streamline your operations to handle that. Dealers can make a lot of money but they have to be streamlined, and they have to constantly look at their expense structure.
Do you have fleet business? How many dealers participate, and how is it going?
My guess is probably 35 percent of dealers are in fleet/commercial, which includes Chevrolet medium duty. It's going great. If dealers have a want and need, it would be that GM would invest in a new cargo van. Ours has been out there quite awhile. In terms of fleet commercial, that's a growing business. This market is hot. It's a huge business. With commercial, it's not only the commercial and fleet sales you're getting. It's also the ancillary sales from other employees, family members. Once you have a strong commercial business, it also feeds into a lot of retail business.
How are declining new-vehicle sales affecting Chevy dealerships' profitability?
You have to look at your other profit centers. Most dealers believe the market is going to hold stronger in 2020. That's why we have opportunities with used cars, CPO, parts and service. We can always do a better job with parts and service. There's other opportunities there: fleet/commercial business, F&I are massive. If this market drops a little bit, dealers will survive. That's one thing about us … we'll figure it out.
How is Chevy improving franchise value?
If we do a good job as dealers and grow this business and grow our stores, we have the products and what's coming in the future in terms of EVs to have an extremely high franchise value. That's something we work on every day. That's why we come to work every day. All things we do is to increase our franchise value.
Are Chevy's production and inventory levels in line with demand?
Post-strike, they're running these plants around the clock to make up for some of the lost production. We're not going to have the product availability problems in 2020 that we've had due to this massive strike that we had in '19.