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More sales through smaller dealers

by David Zatz on

Editorial. Fiat Chrysler sales are still fairly strong within North America, but incentives are increasing — a sign of lower demand — and some believe it’s also hitting the limitations of the “Genesis model” where all brands are at all dealers.

five star dealers

For well over a decade, DaimlerChrysler, Chrysler Group, and then Fiat Chrysler have been pushing dealers to carry every brand — and have also been trying to get away from having smaller neighborhood dealers. Suppose, though, that one could get executives to re-examine their assumptions and strategies.

At the moment, no major American automaker wants small-scale, small-town dealers, but quite a few people live in rural and out-of-the-way places. Many who live in the suburban sprawl find it inconvenient to drive out to their semi-highway car-sales meccas. Why would FCA want to give up on those sales, when they are fighting every day to compete against Toyota and Honda in cars and SUVs, and against Ford and Chevy in trucks?

Chrysler Dodge Plymouth dealership dealer

Have you ever driven through large stretches of rural land? Once, we drove from Wisconsin to New Jersey via a short stretch of Canada and a long stretch of New York State (as opposed to City). You could tell which company had a local dealer by what brand all the cars and trucks were, for miles around (except Subaru which had a scattering everywhere).

I say it is high time FCA started to re-encourage truly local businesses. These rural dealerships have been discouraged as a matter of policy — one former owner told me all the American automakers had decided they didn’t like them. No doubt some cost accountant had compared profits from small and large dealers and concluded that only the large ones mattered. Well, that might be true when the cost of acquiring each new customer is low, but at FCA at least, each new customer costs a lot of money in advertising, marketing, and incentives.

For this to work, FCA executives would have to give up on their “Apple Store” ideas of how dealers should look — their big books specifying materials, acreage, counter space, proper signage.  Car dealers went for decades without all the expensive trappings. Maybe they’re important on Route 3 or Route 46 or Van Dyke, but they’re not important on Main Street in some small or suburban town.

What is important is having a couple of repair bays, at least one trained and trustworthy mechanic, and the ability to show a couple of key cars and order what’s needed for quick delivery. (That might require some changes to IT, including the ability to specify several acceptable paint colors so a car can be scheduled more quickly.)

In July 2016, Jeremy Sinek of Automotive News Canada wrote about a tiny Canadian dealer that became the biggest in Canada despite having space for just three cars in their showroom. Assuming that dealers need a huge footprint for sales is just that — an assumption, not a rule.

As Woody Allen said, 80% of success is showing up. It seems odd that a company that would spend tens of millions for a few seconds of TV advertising on the Super Bowl would not want to have dealerships with a captive audience…

Import-car companies have already figured it out; they’re opening small dealerships everywhere the Detroit Three have given up. This may be FCA’s last chance for a niche that will be hard for others to crack.

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