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J.D. Power: Many Prominent Dealers Expect Republic, Driver's Mart, and CarMax to Fail

8 October 1997

J.D. Power and Associates Reports: Many Prominent Dealers Expect Republic, Driver's Mart, and CarMax to Fail 

    AGOURA HILLS, Calif., Oct. 8 -- A new special report from
J.D. Power and Associates entitled, Public Ownership: A Dealer
Perspective(SM), finds that about half of the nation's largest auto dealers
are not betting on Republic, Driver's Mart, and CarMax to be long-term
successes -- only about 25 percent vote for CarMax.  Their stronger belief in
Driver's Mart and Republic is fully attributable to the fact that peers --
other dealer principals -- are leading and running these operations at the
dealer level.
    "Dealers do not see the new publicly owned retail operations of Republic,
Driver's Mart, and CarMax as being a significantly better customer option,"
commented Brian Walters, senior analyst at J.D. Power and Associates.
"Dealers feel their experience has taught them that auto retailing is a
personal service business, and they see the CarMax type of sales process as
being very impersonal and subsequently unattractive to consumers.  Dealers
also believe that auto industry knowledge is intrinsically necessary for
retail success in this market," Mr. Walters said.
    The report also points out that their large size and access to large
amounts of capital is the primary advantage these dealers see for
organizations such as CarMax.  Surprisingly however, only 13 percent of these
organizations mentioned their ability to gain cost efficiencies as an
advantage.  In fact 25 percent of dealers in the survey mentioned that
Republic and CarMax's costs will be too high, both in inventory and in
acquisition.
    "Declining stock prices and uncertainty of Republic, Driver's Mart, and
CarMax's long-term commitment to the automotive industry, has made dealers
very wary of selling to them for stock," Mr. Walters continued.  "They have
already seen other dealers receive less than expected payoffs and they fear
falling victim to the same trap," concluded Mr. Walters.
    The J.D. Power and Associates 1997 Public Ownership:  The Dealer
Perspective(SM) summarizes recent interviews with 200 of the largest car
dealers in the country.  The report gathers the honest feelings from prominent
dealer principals regarding the emotionally charged subject of public
ownership and retail initiatives by leading manufacturers.  The report
augments the upcoming J.D. Power and Associates 1997 Dealer Attitude
Study(SM).
    J.D. Power and Associates is an international firm best known for its
marketing information services in key business sectors including market
research, forecasting, and customer satisfaction.  The firm's quality and
satisfaction measurements are based on actual customer responses from over a
million consumers annually.  With its headquarters in Agoura Hills,
California, the firm also has U.S. offices in Torrance, California; Michigan;
and Connecticut.  Its international locations include Japan, Korea, England,
Canada and Brazil.
    J.D. Power and Associates can be accessed through the World Wide Web at
 http://www.jdpower.com.  Email:  info@jdpower.com.
    No advertising or other promotional use can be made of the information in
this release or J.D. Power and Associates survey results without the express
prior written consent of J.D. Power and Associates.

SOURCE  J.D. Power and Associates