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JEREMY ANWYL : Selling the Car Dealers : Changes Predicted in Way Autos Are Advertised, Sold

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Times staff writer

It’s an image ingrained in your mind, particularly if you watch much late-night television. There he is, with his bad suit and slick spiel, waving a fistful of dollars and promising you the deal of the century on the car of your dreams.

Do you believe him? No. Do you frequent his car dealership? Probably. For in the public’s view, there’s not much choice. One car dealer is just as pushy and uncaring as the next, you think.

But with predictions that the car sales boom of the ‘80s may be ending and the value of the customer increasing, Jeremy Anwyl sees an opportunity to improve the image of dealers and revolutionize the way cars are advertised and sold.

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Anwyl is president of USP Automotive Advertising in Irvine, one of the largest agencies in the nation to specialize in car dealer advertising. Since he started USP in 1979, Anwyl, now 33, has built a client list of more than 60 dealers across the country. Ad billings are expected to top $20 million this year, he said.

While dealers traditionally have tried to lure customers by advertising the lowest prices, Anwyl creates themes for his clients that will build customer trust and loyalty.

This year, shortly before state investigators made allegations of false advertising at Wilson Ford in Huntington Beach, USP client McLean Cadillac began a print ad campaign entitled, “How to Know When You’ve Been Had by an Ad.” The series described techniques often used by dealers to get a quick sale, and it instructed the consumer to be informed.

Anwyl, who was born in England and moved to the United States in 1973, recently talked with Times staff writer John Charles Tighe about declining sales at dealerships, the chronically tarnished image of dealers, and changes he foresees in the way cars will be sold in the future.

Q. Car sales have been slow so far this year, and there has been a tremendous increase in the supply of cars on dealer lots. What does this mean for dealers?

A. A lot of dealers are losing money. We’re heading into a real crunch, and it’s going to get worse. I don’t think manufacturers know what to do about it, and I don’t think a lot of dealers know what to do about it.

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Q. How many dealers are losing money?

A. It varies by market, but in Southern California, and in Orange County, about 30% are losing money. They’re totally in the red, even taking in the operations of the service department, which usually is a major profit center.

Q. A lot of manufacturers are offering dealer incentives. Are these working?

A. They’re not working as well as they used to. And they can’t keep offering these incentives.

Q. General Motors has developed an extensive dealer improvement plan that requires higher sales levels from its dealers. Is this another kind of an incentive?

A. That’s a disincentive plan. They punish you, but they don’t give you a reward. It’s a sign of frustration. I know of a lot of manufacturers who are really frustrated with their dealer bodies right now. I feel a lot of empathy for the manufacturers because their future really is in the dealers’ hands.

Q. What are the manufacturers’ frustrations?

A. They are frustrated with the fact that customers are not being taken care of the way they would if the customer dealt directly with the factory. The manufacturers can create the product, but they have no control over what happens after the car leaves the factory.

In its ads, the car maker tries to create a quality image of its cars, for dependability or comfort or style or performance. The manufacturer is emphasizing to the buyer that it is making a car pleasurable to him. But the dealer for years has been advertising his impossibly low price, and his $1 over invoice sale. Often the dealer’s advertising negates the image that the factory is trying to create. And the sales experience on the car lot is not positive.

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There are exceptions. I think Acura and Mercedes dealers do a pretty good job as far as really making the customer feel he’s important. But most do not.

Q. What do dealers need to do to improve their image?

A. They need to create their own image, and not with price advertising. Price is a reason to buy a Chevrolet versus a Rolls-Royce. But the customer isn’t going to perceive that one dealer is less expensive than another. The dealers are paying the same for their cars.

Q. What image should dealers have?

A. It should be like a department store’s image. People choose to go to Nordstrom or the Broadway or another store because of the store’s image, whether it be for service or style or selection, but not price. A car dealer should be the same way.

I’m talking about developing loyalty, which at most dealers is non-existent. The manufacturers are frustrated with declining customer loyalty that has been created by the dealers. I think the dealers need to recognize that for them to succeed, the loyalty should be to them, and not to the manufacturer.

Q. Why don’t consumers have loyalty to a dealer?

A. Primarily they don’t have loyalty because dealers have never given customers any reason to be loyal. Why go back to the dealer you did business with before? You probably didn’t like that experience, so why will you like the next time around any better? When you want to go buy a car, is it something you look forward to doing? It’s not.

You want to find out about dealer image, ask anyone on the street. The dealer does not really like talking about it. In my view they have no one to blame but themselves. Look at the advertising for 40 years, and how could you expect anybody to respond to that in a positive way? If you treat the customer with no respect, it’s going to be that way. It’s not that dealers are bad guys. They have simply been doing business the same way for years, and nobody has ever presented them with viable options.

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Q. What types of ads work well at building the loyalty image?

A. One of the things we’ve been doing is the use of emotion, trying to make the car-buying process come off as an enjoyable experience. We do that a lot with music, using a popular sound for the market we’re after, and then on a subliminal level we’re selling with the association between that music and the person putting on the commercial.

And we convey the emotion in the theme. With McLean Cadillac it’s “We’ll make you look good.” If you buy a Cadillac, the car will make you look good. But on a non-visual level, the fact that you bought it there will make you look good as well.

With Mossy Nissan in San Diego, the theme is “Mossy moves you.” And with Moon Nissan in Cerritos, it’s “We’re making it happen for you.” The theme is not as important as how you back it up in the ad and at the dealership.

Q. If dealers are going to change the way they advertise, aren’t they also going to have to change the way they operate?

A. Yes, the dealership must change. If they don’t, then the advertising would backfire. For instance, McLean Cadillac is located in the heart of the Tustin-Irvine area, which is full of families. Cadillac traditionally has been purchased by an older market and sold by older sales people. We’re advertising McLean for a young buyer, and so a lot has been done at the dealership to relate to that market. McLean’s managers are far more progressive than at most Cadillac stores, and the sales staff is younger. When young people go into McLean, they’re going to relate to the business.

Q. What else does the dealer need to be doing to improve image?

A. The dealer should be in the business of taking down barriers to the sale. Financing is a barrier, finding the car with the colors and options you actually want is a barrier. And knowing what to do with a trade-in or where you can get a good deal on insurance, these are barriers. In most cases, dealers have made it more difficult, not less difficult, to go through all these things.

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Q. Does the negotiating process that typically takes place on the lot make car buying a more difficult experience?

A. I think most people feel an obligation to negotiate. They don’t want to pay full sticker price. And the dealer is convinced the customer will not let him make any money on the automobile. So the dealer wants to negotiate on everything and the customer always has his defenses up. That’s not a good way to do business.

Q. How could that be improved?

A. If it were a much more up-front transaction where the dealer would say, “I need to make $1,500 on the sale of a new car, and I need to make $900 when I sell your car,” I think the dealer might be surprised at how reasonable customers can be. Instead of the games, he could agree in an open atmosphere what a reasonable amount of money is. Whenever I buy a car, that’s basically how I approach it.

Q. How much money does the dealer need to be profitable?

A. The dealer is going to want to make about a 10% gross profit, which is not a lot, considering all the interest costs he has. If he makes a 10% gross profit, the dealer is probably going to make, bottom line, about a percentage point, or a point and a half.

Customers must recognize the dealer has to make a profit. But typical sales approaches don’t convey this. When the dealer says he is selling the car at invoice, or under invoice, it creates the impression that something must be wrong with the invoice price. Customers aren’t stupid. They realize that either the dealer is lying or he’s making money somewhere else.

Q. Hasn’t it made a lot of dealers successful?

A. Only because the customer hasn’t had a choice. If you’re a dealer making $100,000 or $200,000 a month, why change? It’s been pretty hard to go in to a guy making $200,000 a month and tell him that things are all wrong. Today it’s real easy to go in because they’re not making that money.

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Q. Are the losses making dealers dramatically change the way they operate and advertise?

A. They’re changing the attitude that people walking into dealerships are replaceable. And the feeling that perhaps the sales outlook is getting worse, not better, creates a situation that if it’s not outright panic, it’s certainly a controlled panic.

Q. How do dealers get away with this kind of treatment?

A. The only way you can get away with it is in a controlled distribution of the product. The Ford store cannot sell you Chevrolet. If you buy a car, you buy it from a dealer.

But this is going to change. The market is no longer going to be controlled. I think you’re going to see a national chain move into the market. There is no reason why a public company can’t come in and buy the cars from the dealers and resell them. If you’re interested in a Toyota, a Hyundai, a Buick and a Ford you have to go to 4 different stores and deal with four different salespeople. If you could go to one place and see all those cars sitting there, you don’t have to worry about any of those problems.

Being successful will require a change in the way cars are sold. For somebody who will deliver to the consumer what he wants, the opportunity is tremendous. The biggest fortunes in the car business have yet to be made. I try to get people to be very optimistic about the changes coming to the industry because they are promising.

Q. Are the cars of the future also changing?

A. Yes. In a few years, China will be a big exporter of cars. That’s going to change the industry a great deal. It will be a few years, but it’s going to happen.

Q. What about the next year or so? Aren’t there lots of new cars entering a market that might be shrinking?

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A. You have a lot of cars that aren’t going to meet sales projections. Mazda is forecasting about 40,000 to 50,000 sales a year for its sporty Miata. I think it’s an unreasonable expectation for that type of car. It’s an excellent car. It’s just that there’s not that big a market, and there’s competition.

Q. What will happen in the luxury market when the Toyota Lexus and Nissan Infiniti luxury lines begin selling?

A. It’s pretty crowded already. I have higher expectations for the Infiniti than for the Lexus. I think the Infiniti is breaking some new ground. It’s a different kind of a luxury car. It looks different, and I think it will be perceived in its own class. Lexus is trying a little too closely to follow the Mercedes-Benz.

Q. What’s the future for the newer companies like Hyundai?

A. Talk to Hyundai dealers right now. Their gross profits are way, way off. Last July, with Hyundai sales it was like hitting a light switch. They really really dropped. It’s interesting that the same pattern occurred in Canada. They had 2 years of just unbelievable sales, then they dropped off. Word of mouth about the product might have something to do with it. People are saying that maybe the car doesn’t have the horsepower they would like, and so sales drop.

Q. And Daihatsu?

A. Their problem originally was that they didn’t have an automatic. It’s a high-quality car, but women are a large part of their market, and women want an automatic.

Q. How are the American companies competing?

A. They’re all having troubles getting cars sold. They’re solid companies, and I think they’re going to do well in the middle end of the market. I don’t think they’re going to be able to do well in the low end, and I don’t think they’re going to be able to do real well in the high end.

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