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Business Update

by Bob Hagin

March 26, 2001

The auto business encompasses many aspects, from research and development, to consolidation, advertising and marketing. The following tidbits cover many of these eclectic business aspects:

DEALERSHIPS DIMINISH - According to a recent survey, the year 2000 produced the best sales records in eight years. But it also recorded the greatest loss in new car dealerships in a two years. Since 1992, the number of franchised dealerships in this country had dropped by nearly 2500. But the numbers don't reflect the realities of the business. Over the past couple of years, mega-stores have bought up smaller family-owned operations and in many cases, have merged them into larger single stores. For many years, Ford, General Motors and Daimler/Chrysler have been trying to reduce their number of retail outlets in an effort to consolidate their distribution networks and as such, they've "lost" the greatest number of stores. On the other hand, Daewoo, Kia, Volkswagen and Nissan have increased their retailer networks around the country in the area of "stand-alone" organizations; dealerships that handle and service only those brands that they sell new.

PREMIERE FORDS IN ONE BASKET - Although the economy is undergoing a shake-out and the sales of cars and personal-sized trucks are not as good as they've been in the past, the sales of luxury cars ($38,000 and up) is still inching higher. The theory is that buyers of these luxomobiles are not much affected by economic downturns. Ford is banking on this and in the past decade or so has been adding luxury lines to its stable. It now owns Aston Martin, Jaguar, Volvo and Land Rover, as well as its 80-year old standby, Lincoln. They're all lumped together in what Ford call its "Premier Automotive Group" (PAG) and the company has big plans to overtake Mercedes Benz, the world leader in the sales of expensive iron. Wolfgang Reitzle, former head of BMW, runs PAG and has plans to open mega-make stores in this country to put all its luxury brands under one luxurious roof. He wants to keep the brands individually focused and put more than one make in into each upscale four-vehicle garage. Those garages better be very upscale to afford a $150,000 Aston Martin alongside the prerequisite Land Rover SUV.

MG TESTS AMERICAN WATERS - We sports car enthusiasts have been hoping, waiting and, yes, even praying for the return to these shores of that venerated icon of the genre, the MG Car Company. Actually, it hasn't gone by that name for a long time and the revered octagon logo is now owned by the Phoenix Consortium, a British venture capital organization that "bought" MG and Rover (the passenger car branch) from BMW. That German company retreated from England a few years ago after selling Land Rover to Ford. The reported sale price of MG Rover to the Phoenix Consortium was under $20, just to make it legal. But at a recent trade show in Detroit, a single MGF roadster was on display along with other British goods. The lone representative was evasive about a return of "our" car to these shores, saying that it's possible if there's enough interest. But it won't be the current mid-engined MGF since the company only makes 15,000 of them annually and easily sells them all in Europe. There's an international rumor of a tie-in with the Malaysian Proton company, which means that the future MG lines might be Asian owned.

NASCAR SAYS NO-NO TO FOX - By now, an American who isn't aware of the impact of the National Association for Stock Car Racing (NASCAR) watches no TV, reads no newspapers and never leaves the house. The phenomena of the packaging and selling of NASCAR's premiere Winston Cup series draws multitudes of spectators through its turnstiles at each of its 36 races and millions more follow them live on TV. Its commercial value to a TV network is big money and this year Fox outbid its competitors for exclusive rights. So at the Budweiser Shootout, a short 18-lap event that preceded the Winston Cup Daytona 500, Fox digitally "erased" the logos on the competing cars that hadn't bought advertising spots for the race. At this point sportsmanship came to the fore and not only did NASCAR officials step in to complain, but so did the automakers who had bought commercial time. They said that Fox wasn't playing the game. Fox relented and all the cars raced with hood logos intact. Jim Julow, head man of the Dodge effort said "... Fox made the right decision by showing all the logos." This, despite the fact that Dodge had bought considerable commercial time during the race.

CROCODILE TEARS - Not long ago we commented on the return of Sam Isuzu, the former lying salesman who put a smile on our faces 15 years ago but not too many buyers behind the wheel of Isuzus. The reason for his demise was that he was so popular, he outshone the product. Now it appears that another famous spokesman may be headed for a supporting role. Subaru, that champion of all-wheel drive passenger cars, is picking up other celebrities to tout some of its products and relegating Paul "Crocodile Dundee" Hogan to a co-starring role representing only the Subaru Outback. Sports figures and other recognizable celebrities will be featured in TV ads extolling the all-wheel drive virtues of other Subaru vehicles and especially its new 230-horsepower compact sports sedan, the Impreza WRX. Hopefully, Hogan's new, less-than- starring role won't lead to a retirement farm in Australia.

Are you looking for a position in the industry? There's plenty of room for newcomers. Just ask Joe Isuzu or Crocodile Dundee.