Auto firms' woes test customer loyalty
Any bankruptcy among Big Three is likely to cut into retention, making recovery even harder.
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Automobile dealers have little doubt that a bankruptcy would create enormous problems for them, because buying an automobile is a "big ticket" item that a customer pays for over many years. With a bankruptcy, there is a huge risk for even the loyal customer, says Annette Sykora, chairman of the National Automobile Dealers Association in McLean, Va.Skip to next paragraph
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"You establish that relationship, you have to continue that relationship," says Ms. Sykora, who owns Ford and Chrysler dealerships outside of Lubbock, Texas. "If the customer is abandoned and actions force the dealer out of business, it's difficult to reestablish that relationship" even if the automaker eventually returns to viability.
Don Wissel in New Jersey is a case in point. He would be hesitant to buy a GM car if the company were to go into Chapter 11 bankruptcy. "A guarantee is only as good as the company," he says. But it would depend on how it works out, he adds. "If the dealers are as nice as they are now, I might take a chance."
Wissel's choice is important because entire generations of families are known to become buyers of one company's cars. That's the case with Wissel, who still can remember his parents' 1937 Buick. Now, his two daughters drive GM vehicles.
The loyalty profile for the Big Three tends to be different from that of imported vehicles, which enjoy much higher loyalty rates, says Kelley Blue Book's Mr. Nerad. (In the latest J.D. Powers survey, the top five nonluxury loyalty rates were for foreign-made brands.) "Very often with the Big Three, there is a somewhat lower level of education [among loyal customers], a bit more of a blue-collar tinge," he says. "Also, older Americans are more loyal to the Detroit companies, and there are those of any age who are 'buy American' people," he says.
Successful dealers know how to enhance those relationships. Skyora cites a family who has been buying cars from her family's dealership for 70 years.
"I remember when the great-grandfather drove through some water and, after we worked on repairing the car, we filled up the vehicle with little kiddie life rafts. "He got a huge kick out of it," she recalls, "and even when his grandsons come in, they still think it's hilarious."
A longtime relationship
Mr. Curley, who has been in the business 21 years, has definitely learned the fine art of cultivating multigenerational customers. "With the local residents, we probably get half our business that way – where someone comes in and says, 'My dad told me to come in,' " he says. "It seems like where there is a strong family, there is a tie to us."
Curley, who likes to spend time in his waiting room talking to customers, suggests that they expect a positive resolution from the automakers' request for help from the government.
"They realize there were a lot of mistakes made in the past between management, labor, and government," he says. "But they have confidence it will work out."