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Monday, July 17, 2006 

Vol. 2 No. 27

Independence Day & the Independent Dealer Guys

At the risk of sounding redundant, I want to use this post in the spirit of July 4 to elaborate a bit on why I like the car business, car guys etc. – that is, one of the last industries where, for the most part, independence, on the retail distribution end of the business, is not only present but a vital ingredient to success. Witness the latest issue of Automotive News. They are soon to run a special Franchise Issue, and have been calling on automotive retailers to give them their unique stories for feature articles to the newspaper, saying “Each dealership has its own story. Tell us yours with pride.” Of course, other advertisements for this issue, while running the headline, “No Dealers. No Cars. No Sales” also qualify it with the follow-up sentence, “The sometimes difficult relationship between dealers and factories is durable, adaptable and profitable.” …and therein lies the story of independence…

A Lesson in Contrasts: “Organization Man” (OEM) v. “Independent Dealer Principal”

Nothing personal, but in my many years in the car business I very rarely find an effective “factory guy” (that is, someone who works for a large manufacturer), who even understands, let alone could operate effectively, as a “dealer guy.” It’s a different mind set, a different attitude -- the difference between working as a committee, with decision making in terms of weeks v. minutes or hours; the difference between having your own neck (capital, commitment, reputation) on the line every day with every transaction v. the protections and security of having a large corporation as reinforcement. Yes, some of the large OEM’s and Tier One parts manufacturers are feeling financial pressure these days, but I assure you it’s nothing like what a dealer feels, with his own name up on the wall, when times get tough. I can’t help observe that it’s the “neck on the line” reality that promotes fast decision making, the “make it work” mentality, and, in general the ingenuity of today’s (and yesteryears’) successful car dealers, large and small.

It’s a fact that throughout automotive history, every so often, manufacturers try their hand at running their own distribution points. Ford did it most recently a few years ago, Porsche wanted to tinker with the idea a few years earlier…and, without exception, these forays were unmitigated disasters. Flexibility, adaptability, market feel, and yes, good old American cowboy daring it what it takes for any independent small business to be successful. Without a doubt, these are common survival traits for US car dealers in the ever changing and challenging US automotive landscape - but these are the very traits rarely found in the DNA of anyone who succeeds in a large corporations.

Case in point: being branded a “revolutionary” or a “maverick” in a corporate environment is usually not a complementary moniker, but somehow these terms never seem to be a put down when they aptly refer to George Washington or Thomas Jefferson. For that matter, the “cowboy” in U.S. history is revered -- look at the icon of John Wayne in the movies. So why isn’t it a desirable label to have in big corporate America? There the definition of the term invariably means “unstable,” and not in a good way… There are exceptions certainly, and there are some mavericks lurking in some of the ranks of the OEM’s I’d bet, but, invariably, those are the guys (generic term folks, I mean men and women) who typically break out of the large organization structure and go on their own; they don’t (typically) remain in or even understand the benefits of bureaucratic process.

During the ups and downs of economic cycles, and, more directly, during the favorable and unfavorable times for individual vehicle manufacturers, the best dealer retailers seem to survive and make it work one way or another – witness Chrysler and Ford in the early eighties, or Nissan in the late nineties, etc. What is also very cyclical, unfortunately, are the opinions of some OEM’s towards their dealer distributors – it always amazed me that when times are good for the make, the factory guys treated dealers like “generic” sales outlets to be tinkered with, handing down facility upgrades, new standard colors and sales patterns, training on ways to sell, etc., but when times for the brand get tough, the manufacturers suddenly address their retailers as “business partners” , to be looked to for advice.” This hasn’t changed since I’ve been in the retail business (I think it may have something to do with each new “generation” that succeeds to the top of these structures repeating the patterns of the past…and they wonder why second and third generation car dealers look at each new crop of OEM leaders in a slightly cynical fashion).

Independence is the Character Trait of a Car Dealer

I’ve met a lot of car dealers in my day, lots were likable, some were less so, but the underlying characteristic that cut through them all was a fierce independence, in the true entrepreneurial sense of the word. These are people who are not afraid to work outside the plan, to challenge and change structure quickly, if circumstances change and the “way we have always done it” no longer produces results (or pays the bills). In many ways this is the antithesis of “big business,” at least in the level of inflexibility towards change that a bureaucratic multi-layered structure creates. And yet it’s the quintessential character trait that is celebrated on July 4th; it represents the spirit of “76” – don’t you think?

Maybe Carlos Ghosn said it Best

In closing, I’ll refer back to Automotive News and their advertisements for the upcoming Franchise Issue. One advertisement features a large picture of Carlos Ghosn, identified as President & CEO of Nissan Motor Co., Ltd (and now the CEO of Renault as well if I’m not mistaken), probably the most celebrated recent turnaround success in the car business on the world stage since Lee Iacocca (apparently Kirk Kerkorian thinks so). Ghosn states “The franchise dealership is THE way to distribute cars not just in America but throughout the world.” …A better testament to the independent cowboy, which still describes the typical American car dealer, has never been offered. Of course, what isn’t revealed is when Mr. Ghosn (representing the factory) made the statement. My guess is that, characteristically, it was said somewhere at the beginning of the Nissan turnaround, when the factory needed the dealer’s maverick spirit to “live long and prosper” as they say –which may be why his new title as Renault CEO isn’t noted in the identifier title. Chronologically, Ghosn was given that promotion and additional title after the turnaround results became clear and Nissan was a big success. It also, of course, doesn’t say what other organization guys at the top of the factory food chain think about such a statement, in the US or abroad… In any case, the statement’s accuracy has withstood the test of time and proved to be correct on these shores, where people celebrate a long July 4th weekend while motoring down the highway…




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drop you a note telling you how impressed I was with
the information you have posted here.
Keep up the great work, you are providing a great resource on the Internet here!
If you have a moment, please make a visit to my car sales site.
Good luck in your endeavors!

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