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Debunking unfair myths about auto retailers - September 16, 2006
ROBERT MCMILLAN
While preparing today's subject, I kept thinking about the famous line by Rodney Dangerfield: "I get no respect."
The retail car industry also gets no respect, at least not as much as it deserves.
In my 20-plus years in this industry, public perceptions about car dealers have certainly improved. But there are still some outdated stereotypes and criticisms that irritate me.
Dealers are sometimes accused of committing any number of abuses: Ripping off customers, selling poor- quality vehicles and making obscene profits.
Of all the business sectors that deal directly with the public, the retail car industry is one of the most heavily scrutinized and regulated.
Dealers are subjected to regular government audits on all of the businesses that operate under the banner of a dealership (sales, leasing, parts and collision departments, etc.).
Dealers are subjected to regular audits and reviews by their respective manufacturers. If a manufacturer finds any hint of impropriety, it will move quickly to address the situation.
Dealerships have a vested interest in keeping customers happy. One of the measuring tools is a customer satisfaction survey.
All new-car dealers participate in some form of customer satisfaction survey.
Some are conducted over the phone, while others are more sophisticated and require customers to provide precise details about their experiences.
Dealers are required by their manufacturers to maintain high ratings.
This process allows dealerships to measure their performance against industry standards and to strengthen customer loyalties.
In 1997, the Toronto Automobile Dealers Association worked with the Ontario government to form the Ontario Motor Vehicle Industry Council.
OMVIC self-manages and oversees automotive dealings with the public. It's authorized to perform inspections of any registered car, truck or motorcycle dealership.
It has access to all of a dealership's business records, to ensure that dealerships comply with the Motor Vehicle Dealers Act.
If a dealership is suspected of breaching OMVIC's code of ethics, it could face disciplinary procedures, even financial penalties.
One of the biggest myths about dealerships is that they make too much money.
Special-interest groups are good at spreading the "high sales profit" misconception. However, within the GTA, successful new-car dealers usually earn a net operating profit (before taxes) of just 1 per cent to 3 per cent of total sales.
I know of many sectors of the Canadian economy that post net profit figures in the double digits. The retail car industry isn't one of them.
There is another side to dealerships that often escapes notice. Dealerships give back to communities by supporting many charitable events, amateur sports teams, fund raising initiatives and special causes. They do so without a lot of fanfare or acknowledgement.
When Hurricane Katrina struck last year, dozens of dealerships raised money for victims of the disaster.
The point here is that dealers (and their employees) are people, too. They are your neighbours and your friends. Each day, they go to work to service their customers. They perform their jobs with pride and integrity.
Despite the negative stereotypes, a new-car dealership is still the best place to buy or lease a new or used vehicle.
And it's the safest place to do business.
Surveys show that car dealers now rank well above many retail and service businesses. In 2002, Consumer Reports conducted a dealership satisfaction survey and found that 93 per cent of new-car buyers ranked their overall buying and dealership experiences from "very" to "moderately" satisfied.
Considering how closely the retail car industry is observed, scrutinized and regulated, and considering its track record for customer satisfaction, you would think that new-car dealers could shed its "bad boy" image and gain a little more respect.
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