Just caught up with an old Automotive News Jan 16th. Group One CEO Earl Esterberg article titled Hesterberg to Carmakers: Be Mindful of Margins. Found that to be amusing since Earl was 2nd in command at Nissan back in the mid to late 80's when Nissan was all screwed up. I remember they took us to Disney World to learn the Disney way. We then had a business meeting about one of the new models coming out. At that time dealers were allowed to ask questions. I remember like it was yeaterday. I stood took the microphone and ask Earl, No begged Earl. Mr Hestergerg please dont cut our margins. I said dealers know how to market and retail the cars, you just build them and leave a fair margin. Again like yesterday Earl stood up and said that Nissan had done there research and found that the customers wanted lower retail prices and that would sell more cars. Well you know the rest of the story Earl and Nissan didnt listen and cut our margins and sure enough it was a complete failure. Now perhaps Earl has had an epiphany, imagine that. He now wants the caremakers to be mindful of margins. Well Earl I agree. And if the factory would ever learn, that customers are always going to want a little off to feel like they got a good deal. And if the salesperson did his job and got MSRP he made a good commission and the dealer made money. And if the Saleperson and the Dealer make money they stay and sell more. The Dealer has the profits needed to pay decent salaries and invest in there dealerships. So Earl what many many years later its still the same. But this time your on the other side. HOW DOES IT FEEL? When the factory makes cars with 250-300.00 profit at MSRP how does anyone win???
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