Car dealers are ‘poised for a really good year’

Published 4:00 am Friday, February 17, 2012

LAS VEGAS — As the nation’s auto dealers gathered for their annual convention, the mood was driven by growing profits, the anticipation of new vehicles and the potential of social networks to boost sales as the bad memories of 2009 fade.

From 2008 through last year, the domestic automakers trimmed their dealer networks in the wake of the industry’s financial meltdown.

Four General Motors brands and Ford’s Mercury brand no longer exist. But in a National Automobile Dealers Association survey last March, 57.4 percent of dealers said they expected to be more profitable in the next year, the highest percentage expecting better results since the mid-1990s.

With the news that the nation’s unemployment rate fell to a three-year low of 8.3 percent in January, the optimism is more sustainable.

“The energy coming out of the Detroit auto show and heading into the dealer convention is a reflection of a stronger industry,” said Rod Alberts, executive director of the Detroit Automobile Dealers Association. More than 20,000 dealers, auto executives and exhibitors attended the NADA convention earlier this month. They came in search of information on future products and marketing plans, as well as tools to improve their businesses, especially online car-shopping services and how to use social networks to lure buyers.

Throughput — sales per dealer — rose substantially from 2010 to 2011 and will be up again this year, said John Frith, vice president of retail channel solutions for Urban Science, a Detroit-based dealer consulting firm.

Urban Science is finalizing its annual study on dealer trends, and the latest statistics will show that sales and throughput will be up substantially for a second year, Frith said.

Bill Golling, who has two Detroit dealerships selling Chrysler, Jeep, Dodge, Ram and Fiat brands, attended for the first time in 20 years.

“I want to see it firsthand,” Golling said of the convention and its sprawling exhibit hall. “I want to see how we compare and what works elsewhere that might work for us.”

Golling is one of 2,336 Chrysler dealers in the U.S. today who survived Chrysler’s brutal 2009 downsizing, during which the company terminated 789 dealers. Since early 2010, 43 former Chrysler dealers have regained their franchises, and 14 applications for reinstatement are still pending, said Chrysler spokesman Mike Palese.

Today, 85 percent of Chrysler’s dealers are profitable, up from 70 percent in 2009, said spokesman Ralph Kisiel.

Ford has more than 3,300 dealers today, after losing hundreds when it phased out the Mercury brand and consolidated Lincoln dealers in the largest 130 metro markets.

General Motors’ retail network has shrunk from 6,375 dealers at the end of 2008 to 4,400 today as four of eight GM brands were terminated.

“Everything should be poised for a really good year in the car business,” said Autobytel’s Coats. “The last time I said that was 2006 or 2007.”

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