VOL. 44. NO. 11 NOVEMBER 2008 DEALERNEWS.

COM

TheOEM
A Dealernews Staff Report

D I S P L AY

MARKETING

Manufacturers get yays for product, boos for dealer relations

PRODUCT QUALITY REMAINS HIGH, but OEMs still need to work on their service skills. It seems not much has changed since we published those words in the February 2007 issue to sum up the results of the OEM Report Card survey conducted in late 2006. Two years later, dealers still give the vehicle manufacturers props for product quality. But dealer relations problems havent gone away. Across all OEM brands, scores for product craftsmanship, dealer margins and price competitiveness remained relatively stable, and vehicle designers take note dealers are actually more enthusiastic this year when it comes to the visual appeal of the vehicles being offered. Across all reported brands, visual appeal was the only category that rated higher this year than two years ago.

REPORT CARD
Where OEMs still seem to be dropping the ball, according to dealers, are in the areas of advertising co-op programs (dropping 1.30 points from two years ago), and assistance with sales and service training (dropping 1.99 and 1.70 points, respectively). The dealers relationship with an OEMs regional rep was key to achieving a good score on this years submissions. Here, for example, Yamaha improved its score from the 2006 Report Card (7.17 vs. 6.59), while Arctic Cat dropped almost three points (to 3.38 from a previous 6.13). Our rep calls only one time a year at order time, said one dealer. Very good product; poor dealer support, said another dealer for another OEM. Still another dealer added that he would rate support from the factory an 8 but from his regional rep a 1.

MANAGEMENT

SALES

SERVICE

THE RESULTS ARE IN

Overall scores for the OEMs were down this year, and we werent surprised, given that the dealers havent been in the best of moods. Many are struggling with a nearly-bottomed-out economy and high unemployment in their areas, causing lackluster sales and overloaded inventories. Those who sold out their showrooms quickly when gas prices rose found that the OEMs could not restock them soon enough. Indeed, many dealers vented their frustrations over the inability of the manufacturers to turn as quickly as the retailers needed them to. Dealers seem to be pleading for assistance or exibility from their OEMs and are becoming frustrated when the manufacturers cant or wont respond to their requests. Says one dealer: On May 21 we ordered 20 scooters that were supposed to deliver in June, July and August. We havent received them, and have been told that the company doesnt know when well get them. This comment echoed across most brands.

INVENTORY PROBLEMS
Dealers chastise OEMs almost across the board for product inventory and availability disconnects. From the comments submitted with the surveys, it seems the dealers are either struggling with too much inventory thats not selling in their area and being pressured by the OEMs to take on more, or they are selling out of mainly low-displacement motorcycles and scooters and are unable to get restocked. One Euro dealer we talked to was considering temporarily closing the doors to his empty showroom in September and offering only parts and service until he could get restocked. And then there were complaints over too much love from Big Four dealers, one of whom told us, Our rep calls and stops in all the time, and tries to shove product down our throat, whether we need it or not. Echoed by an unrelated dealer, who told us that the companys sales reps should wear pinstripe suits and carry machine guns.

OEM REPORT CARD

D I S P L AY

INDUSTRYWIDE
PRODUCTS Availability Craftsmanship, t, nish Margins Price Competitiveness Visual Appeal 5.90 7.30 6.22 6.43 8.08 7.48 8.26 6.59 6.93 7.73 2008 SCORE 2006 SCORE

SERVICE

MARKETING

DEALER SUPPORT PROGRAMS Advertising Co-Op Programs Consumer Financing Programs Flooring Programs Merchandise Programs OEM Rep Support Programs Parts & Accessories Programs Promotional Programs Service Department Programs Training Programs 4.83 5.47 5.15 4.83 5.64 5.06 5.07 4.28 4.28 6.53 7.21 6.14 6.28 6.35 6.42 6.35 5.98 6.27

MANAGEMENT

SALES

OVERALL RELATIONSHIP Communications Consistency Credibility HELMET HOUSE AVERAGE SCORE

Scale: 1 (poor) to 10 (excellent)

5.69 5.59 5.90 5.63

6.41 6.53 6.91 6.73

About the OEM Report Card

The OEM Report Card survey is conducted every two years by the editors at Dealernews. Dealernews surveyed U.S.-based franchised new-vehicle dealerships in August and September 2008, asking them to grade their OEM partners on 17 criteria, ranging from product craftsmanship and availability to ooring programs, merchandising support and overall communications and consistency. Dealers were asked to rate their OEMs using a simple 10-point scale, with one point being the lowest and 10 being the highest; scores were then tabulated and averaged. The criteria were not weighted on relative importance, nor were the criteria compared between individual OEMs, due to sampling sizes. Criteria were divided into three categories: Products, Dealer Support, and the overall OEM/Dealer Relationship. Dealers with multiple vehicle lines were permitted to submit a report card form for each brand they represent. Dealers responded based on Dealernews promise to ensure their anonymity; however, dealers were required to identify themselves on the individual surveys solely for Dealernews verication purposes and to prevent duplication of submissions. For this report, Dealernews presents individual OEMs with their own report card, showing how each one performed overall, according to its dealers, on each criterion. We include only those OEMs for which we believe we have a representative sampling size. We then present the scores in comparison with the scores these OEMs earned two years ago. Not all OEMs and responses are included in this published report. Interestingly, more brands were represented by dealers this year; however, there were fewer dealers submitting surveys per brand than in 2006. This is not a scientic study; Dealernews considers it a biennial pulse reading of the dealer community.

ARCTIC CAT
PRODUCTS Availability Craftsmanship, t, nish Margins Price Competitiveness Visual Appeal Advertising Co-Op Programs Consumer Financing Programs Flooring Programs Merchandise Programs OEM Rep Support Programs Parts & Accessories Programs Promotional Programs Service Department Programs Training Programs Communications Consistency Credibility 6.42 6.27 3.69 5.46 6.50 4.58 4.69 3.96 5.12 3.38 5.19 4.50 3.96 3.81 3.19 4.23 3.85 7.09 7.81 6.25 6.31 8.06 6.68 7.28 6.00 6.38 6.13 6.13 6.25 5.78 6.72 6.69 7.00 6.90 AVERAGE SCORE No. of Dealers Reporting COMMENTS: Dealers believe that product quality is solid, but that the Minnesota-based OEM has pushed too much inventory onto the dealers. Dealers across the country gave Arctic Cat low marks for communications and support issues that seem to be tied to a perceived lack of attention paid to them by their regional reps. My rep calls only once a year at order time. Very good marketing, but poor support and poor relations with dealers. My rep has not seen my store for 11 months. 4.64 26 6.67 32 2008 SCORE 2006 SCORE 2008 SCORE 2006 SCORE

DEALER SUPPORT PROGRAMS

OVERALL RELATIONSHIP

BRP/CAN-AM
PRODUCTS Availability Craftsmanship, t, nish Margins Price Competitiveness Visual Appeal Advertising Co-Op Programs Consumer Financing Programs Flooring Programs Merchandise Programs OEM Rep Support Programs Parts & Accessories Programs Promotional Programs Service Department Programs Training Programs Communications Consistency Credibility 6.69 7.66 5.00 4.41 8.07 5.76 5.41 4.07 4.66 5.52 5.48 5.93 4.29 4.97 5.72 4.97 5.10 7.11 7.96 5.64 6.50 7.90 6.52 7.13 6.00 6.52 6.60 6.50 6.83 6.17 6.50 6.71 6.88 7.28 AVERAGE SCORE No. of Dealers Reporting COMMENTS: BRP gets high marks for product craftsmanship, especially related to the Can-Am Spyder. However, dealers fault the OEM for high interest rates on ooring, and their perception that the OEMs sales staff and dealer development staff dont communicate effectively. 5.51 29 6.75 48 2008 SCORE 2006 SCORE 2008 SCORE 2006 SCORE

DEALER SUPPORT PROGRAMS

OVERALL RELATIONSHIP

OEM REPORT CARD

D I S P L AY

HONDA
PRODUCTS Availability Craftsmanship, t, nish Margins Price Competitiveness Visual Appeal Advertising Co-Op Programs Consumer Financing Programs Flooring Programs Merchandise Programs OEM Rep Support Programs Parts & Accessories Programs Promotional Programs Service Department Programs Training Programs Communications Consistency Credibility 6.57 8.59 5.41 6.34 7.46 6.09 7.81 6.47 6.08 6.39 5.60 6.39 4.92 6.41 6.00 6.46 5.98 8.08 8.72 6.44 6.50 7.57 7.03 7.25 6.27 6.61 6.47 6.67 6.78 6.12 6.12 6.26 6.45 7.00 AVERAGE SCORE No. of Dealers Reporting COMMENTS: Despite depressed sales in the overall market, most Honda dealers remain loyal to the OEM, keeping scores relatively stable between 2006 and 2008 when it comes to visual appeal of the product, price competitiveness with other brands, and rep support programs. It even scored higher this year for training programs and consumer nancing options. Some dealers bashed the brand for lack of product innovation: The rep support is good, but the product is stale, says one. The brand needs to get outside the box, asserts another. Multiline dealers assert that Honda favors the Powerhouse dealers by providing them with more product. As one dealer sums it up: Corporate doesnt seem to care about the small family businesses. They reinforce the bigger dealers, making it tough [for us] to compete. 6.41 54 6.84 52 2008 SCORE 2006 SCORE 2008 SCORE 2006 SCORE

MARKETING

DEALER SUPPORT PROGRAMS

SALES

SERVICE

OVERALL RELATIONSHIP

MANAGEMENT

KAWASAKI
PRODUCTS Availability Craftsmanship, t, nish Margins Price Competitiveness Visual Appeal Advertising Co-Op Programs Consumer Financing Programs Flooring Programs Merchandise Programs OEM Rep Support Programs Parts & Accessories Programs Promotional Programs Service Department Programs Training Programs Communications Consistency Credibility 6.29 8.16 6.49 7.86 8.27 7.00 6.28 6.18 6.98 6.53 7.38 6.86 5.70 6.06 7.18 7.63 7.76 6.71 7.96 6.44 6.82 7.29 5.93 6.96 6.34 5.89 5.60 6.24 5.77 5.44 5.78 5.98 6.20 6.56 AVERAGE SCORE No. of Dealers Reporting COMMENTS: Kawasaki is one of the few OEMs to receive a higher overall average score this year vs. two years ago. Several dealers commented that the company is good to do business with, is innovative, and supports the small family business. Kawasaki makes it easy to sell products, says one multiline dealer. Support program scores varied by region. They need to be more competitive in marketing regionally, says another dealer. Dealers are left to promote their individual stores. [There are] no dollars for group advertising or special events. A shame, as Kawasaki currently has the best lineup across the board on Japanese product. 6.98 52 6.35 46 2008 SCORE 2006 SCORE 2008 SCORE 2006 SCORE

DEALER SUPPORT PROGRAMS

OVERALL RELATIONSHIP

POLARIS
PRODUCTS Availability Craftsmanship, t, nish Margins Price Competitiveness Visual Appeal Advertising Co-Op Programs Consumer Financing Programs Flooring Programs Merchandise Programs OEM Rep Support Programs Parts & Accessories Programs Promotional Programs Service Department Programs Training Programs Communications Consistency Credibility 7.74 6.88 4.48 6.12 7.60 5.62 6.86 5.55 6.52 6.71 6.64 6.83 5.14 6.10 6.95 6.31 6.24 6.79 6.42 5.65 6.10 6.85 5.63 6.18 4.95 5.53 5.32 5.53 5.21 4.16 5.21 5.25 5.15 5.00 AVERAGE SCORE No. of Dealers Reporting COMMENTS: Polaris dealers for the most part are feeling pretty good, no doubt boosted by sales of the OEMs popular Ranger side-byside. We grew our Ranger business by over 50 percent this year, says one dealer. But then theres the rub, as the dealer continues: And our reward is that Polaris opens a new Ranger dealer 12 minutes from our door. Indeed several reporting dealers complained that the OEM is pushing product too hard: The OEM has ooded the market with inventory, hurting the dealers bottom line, says another store. Its us against them. 6.37 42 5.58 20 2008 SCORE 2006 SCORE 2008 SCORE 2006 SCORE

DEALER SUPPORT PROGRAMS

OVERALL RELATIONSHIP

SUZUKI
PRODUCTS Availability Craftsmanship, t, nish Margins Price Competitiveness Visual Appeal Advertising Co-Op Programs Consumer Financing Programs Flooring Programs Merchandise Programs OEM Rep Support Programs Parts & Accessories Programs Promotional Programs Service Department Programs Training Programs Communications Consistency Credibility 4.42 8.03 5.89 7.00 8.08 6.45 4.92 5.00 5.71 5.47 5.53 5.42 5.29 5.97 5.89 6.08 6.19 7.94 8.46 6.87 7.43 7.60 6.92 7.56 6.06 6.50 6.53 6.48 6.44 6.41 6.37 6.30 6.81 7.02 AVERAGE SCORE No. of Dealers Reporting COMMENTS: Dealers commend Suzuki vehicles when it comes to innovation and sizzle factor. But the OEM suffers lower marks for dealer support and, in particular, product availability. The company has been less supportive to us as a dealer, says one. We have to constantly argue for support. It costs us money to keep [Suzuki] as a supplier. A long-time Suzuki dealer says that hes been very happy with his district sales representative, but product availability is a joke. And from this rst-year dealer, who says hes impressed with the company overall, but not impressed by poor shipping schedule and availability. 5.96 39 6.92 55 2008 SCORE 2006 SCORE 2008 SCORE 2006 SCORE

DEALER SUPPORT PROGRAMS

OVERALL RELATIONSHIP

OEM REPORT CARD

D I S P L AY

YAMAHA
PRODUCTS Availability Craftsmanship, t, nish Margins Price Competitiveness Visual Appeal Advertising Co-Op Programs Consumer Financing Programs Flooring Programs Merchandise Programs OEM Rep Support Programs Parts & Accessories Programs Promotional Programs Service Department Programs Training Programs Communications Consistency Credibility 6.38 9.98 6.29 7.03 8.76 6.86 6.43 5.17 6.92 7.17 7.03 6.69 6.77 7.41 7.79 7.83 8.14 7.15 8.81 6.92 7.22 7.59 7.24 7.82 6.29 6.97 6.59 6.87 6.80 6.62 6.65 6.79 7.22 7.57 AVERAGE SCORE No. of Dealers Reporting COMMENTS: Even though there were only about half the Yamaha dealer respondents as there were two years ago, those that submitted completed surveys seem to be happy, overall, with the OEM. Product craftsmanship and visual appeal, in particular, garnered high marks from dealers. Yamaha also bettered its dealer scores in rep support, parts and accessories programs, and training initiatives, and improved in all three areas when it comes to overall relationship with its dealers. Several dealers, however, chided Yamaha for poor-quality, overpriced promotional support materials and increased freight charges. 7.16 67 7.12 123 2008 SCORE 2006 SCORE 2008 SCORE 2006 SCORE

MARKETING

DEALER SUPPORT PROGRAMS

SALES

SERVICE

OVERALL RELATIONSHIP

MANAGEMENT

U.S. MAP
Responses by region

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Excerpted from Dealernews, November 2008

Printed in U.S.A.