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News & Insights

Renier & the Resurgent Auto Market

Resurgent auto market spurred by quality boost

by Dan Eaton, Staff reporter-Business First

Selling cars is a lot easier when there are good cars to sell.

The Detroit Three domestic automakers were taught that lesson at the hands of the Great Recession. While those economically difficult times yielded improvements to their businesses – more affordable labor, improved production and smaller, appropriately sized dealer networks – the biggest lesson may have been the one driving off dealership lots every day.

“I think GM has the best cars they’ve ever had, and I’ve been with Chevy for 30 years,” said Ben Stroup, general manager of Bobby Layman Chevrolet on Columbus’ west side.

That wasn’t often the case and it showed in Central Ohioans’ preferences for what sits in their driveways. With Honda of America Manufacturing Inc. sitting in Columbus’ backyard for decades, the area’s auto market has seen a strong Japanese influence for decades.

Yet that hasn’t meant the U.S. brands – General Motors Co., Ford Motor Co. and Chrysler Group LLC – haven’t been making inroads after losing their grip when the era of the fuel-thirsty highway cruisers skidded to a halt nearly 30 years ago. Of the 20 largest Central Ohio dealers of Big Three cars and trucks – every one of them sold more vehicles last year than in 2011. And each outpaced the national growth rate for their brands.

“People who may not have looked at us in the past are looking at us now because the quality has come up,” said Mitchell Gadd, general manager of Germain Ford in Columbus.

Indeed, while domestic automakers have spent decade trying to keep up with the Japanese Joneses, they’ve caught them in some respects.

“(The domestics) have a more complete lineup,” said Jessica Caldwell, senior analyst at automotive researcher “They can take advantage of the market, no matter what the trend is.”

Bigger on smaller

Ford was the only manufacturer to register fewer Columbus-area sales in 2012 than the prior year, but that came about because of fewer fleet sales, says information from AutoView Online, a provider of vehicle registration data. But sales to non-fleet customers were up in the region.

Gadd thinks the brand also paid a price for being too successful lately. For example, the newest iteration of the Ford Fusion was launched last October, so the bulk of the year’s sales were from a 2006 design. Once the remodeled version reached dealer lots, they flew off faster than Ford could make and ship the car.

“The Fusion is absolutely tearing it up,” said Alec Gutierrez, Kelley Blue Book senior market analyst. “It might be the top midsize car if it had the production capacity.”

The Toyota Camry is the top-selling midsize car in the U.S.

Ford’s Focus compact and Escape crossover also have become strong sellers.

“It’s not just styling; technologically, it’s just more advanced,” Gadd said, ticking off changes to the line, including improved engineering and more powertrain options.

The line is attracting young, frugal buyers who are in the market for practical transportation.

At GM’s Chevrolet dealerships, the Lordstown-made Cruze, a compact, is the star. Stroup rattled off a similar list of advances by Chevy – fuel efficiency, technology, comfort.

“By 2014, the 2011 Cruze will be the oldest badge we have,” Stroup said. “Everything will be three years old and newer.”

The Cruze didn’t crack the top five in sales in the combined midsize and compact segment nationwide last year, but the Ford Focus was in the top five in Central Ohio. The domestics fare even better with crossovers, the Ford Escape and Chevrolet Equinox ranking second and third nationally and in the Columbus area, behind only the East Liberty-made Honda CR-V.

“They’ve closed the perception gap,” Gutierrez said. “They all took a gut check. They had to look at their portfolios and figure out what works. In 2012 and 2013, a lot of those efforts are coming to fruition.”

Old reliable

It wasn’t all back to the drawing board for Ford, GM and Chrysler, however. They are also riding a resurgent truck market, long an area where the domestics have had a wheel up on foreign competitors. For all the talk and press about small and midsize cars, the Ford F-Series and Chevy Silverado pickups maintain their status as the top-selling vehicles in the U.S.

American drivers love pickups, though that is more of a national feeling than a local one. The F-150 doesn’t dominate Central Ohio sales charts as it does the nation, but it was fourth on the best-seller list in the region last year and the top non-Honda-made vehicle.

Gadd said sales of the F-Series are strong because it comes in a variety of models, from regular truck to heavy duty, providing a range of uses and durability. “It has all the tech features too,” he said.

For GM, it ended last year with its best month for pickup sales in four years for its Chevrolet and GMC badges, an upturn that spilled into 2013. The Silverado will be redesigned for the 2014 model year, which is expected to boost sales.

Chrysler’s biggest sellers are its Dodge and Ram trucks, as well as Jeep’s SUV lineup. That means a consumer move back to trucks bodes well for the smallest of the Detroit Three.

Nor is the company’s car lineup confined to the backseat. Chrysler brand sales soared 39 percent nationwide last year, while Fiat, which returned to the U.S. in 2011, was up 121 percent. Italy’s Fiat SpA owns a controlling stake in Chrysler Group with designs on taking full ownership.

Caldwell said trucks are rebounding thanks to improvements in the housing market and small businesses investing in new vehicles after holding off on purchases during the downturn.

Those trends are good for Ford, Gadd thinks. Coming soon will be Ford’s new Transit van and the smaller Transit Connect, both aimed at the commercial market.

“That gets us back into the van business,” he said. “After that, we would want for nothing. We’ll have a full complement of vehicles.”

Long-term gains

Confidence in what sits in showrooms is helping drive reinvestment into facilities because new sales and service operations are expected to help attract and retain customers.

Bill Heifner, president of Renier Construction Inc. in Columbus, said GM, Ford and Chrysler all are pushing dealership remodeling programs to create a fresh, consistent look.

“The domestics hadn’t been reinvesting,” he said. “By 2005, 2007 they looked outdated and lacked consistency.”

They took a page from the Japanese and European brands and provided incentives for facility improvements.

Germain Ford is building a facility set to Ford’s dealership requirements.

“What helps with customer retention is service more than sales,” Gadd said. “You’re going to be in there every three to six months for oil changes, service. That drives our future sales.”

Germain’s dealership will include a lounge for customers, a new interior service drive where customers can pick up and drop off cars, and a Quick Lane tire and auto service center.

Inside the new showroom, vehicles will be plugged in so customers can test the technologies such as the voice-activated Sync and MyTouch communication and entertainment systems.

Bobby Layman recently opened a revived dealership after bulldozing its home of more than 30 years last fall. The new design is about comfort for consumers, Stroup said.

Heifner said Renier has been working with dealerships since 1987 and business is as robust as ever. The company is working on 17 projects in six areas and 14 are dealerships, including Jim Keim Ford in Columbus, Germain Ford and Chesrown Chevrolet Buick GMC in Delaware. Jack Maxton Chevrolet in Worthington recently completed a remodeling project, too.

Dan Eaton covers retail, restaurants, manufacturing, automotive and the advertising/PR industry for Business First.

Renier & the Resurgent Auto Market

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