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Dealer partnerships paramount - McEniry

Dealer focus: Some car companies do not appreciate the importance of their dealers, according to former MMAL chief Robert McEniry.

Former Mitsubishi boss calls for more understanding of dealer risk

14 Sep 2010

MANY car companies operating in the Australian market are in danger of losing sight of the fundamental need for strong business partnerships with their dealer networks, one of the country’s most respected car industry executives said last week.

Robert McEniry told delegates attending the GoAuto.com.au Keynote Q&A at the opening of last week’s Australian Automobile Dealers’ Association Convention in Queensland that the relationship between the distributor and the dealers was “absolutely paramount” to the success of any car company.

“I think too many franchisors get lost with that,” he said.

Mr McEniry was responding to a question from GoAuto publisher John Mellor that referred to “a great deal of resentment building up in the Australian dealer community that is taking on nationalistic overtones because long-standing Australian family dealer businesses are being discontinued or severely constrained, apparently at the whim of foreign nationals on a three-year tour of duty with no personal investment in the Australian market”.

 center imageLeft: John Mellor and Robert McEniry on stage at the AADA conference.

Mr McEniry’s 30-year auto career included running the highly regarded Holden dealer network as director of sales and marketing in the 1980s and more recently he guided Mitsubishi Motors Australia and its dealers through the transition from local manufacturer to full importer.

He told the AADA delegates: “Some people working within car companies do not realise what is at stake for car dealers. They forget that the dealers have put their own money into the business and that it is the dealers’ money that is at risk.

“The only risk for the people who work in the franchisor businesses (the distributors) is that they might have to go out and find another job. But they do not have their houses up for grabs and they do not have their super up for grabs.

“I think that is the bit that is missed in understanding how dealers operate and why they operate in the way that they do.

“Those who work in the (car companies) should remember that their salaries and incomes are being provided by the success of the dealers,” he added.

Mr McEniry said the dealer network was as important as the car plants that make the cars and that the same resources and initiatives taken to ensure very high-quality cars should be equally applied to the dealer network to ensure the highest quality representation for the brand.

“My view is the dealer network is like the factory in that it should get the same attention as the factory does,” he said.

He said car-makers made sure their plants had the correct investments to control the processes, put training in place and develop the processes and systems that support a total quality-assured outcome.

“The dealer network should be treated the same way, and thought about in the same sense.” Mr McEniry said there was a lot of talk about business partnerships within agreements and talk of partnerships between franchisors and franchisees, but it was “absolutely critical” that all parties understood what the partnership was.

“You need to establish a very strong working level (of cooperation) and I guess being less concerned about the sale that happened yesterday (and more concerned) about where you want to take the company in total, and that includes the network, over the next 15 or 20 years.

“What is your vision and how are we (the car company and the dealers) going to work to that?“My view is that that partnership needs to be established because this industry is changing so quickly and will continue to change quickly. Unless that relationship is there and is looking further and further ahead as to what the retail model should be, then that is where you get conflict.”

Mr McEniry said that all businesses have their ups and downs.

“You have your fights and disagreements, so you have to build the trust and integrity into that partnership so it is known by all that there will be calls made that don’t suit everyone.

“Just like what happens in households where decisions have to be made (that not everyone agrees with) and everyone has to move on.”

Mr McEniry was asked if there was an obligation to rid a network of its under-performing dealers.

“Dealers who do not perform to expectations are known within the dealer network by their colleagues. And it is only right for the businesses of those colleagues that the lesser performers or the bad apples are addressed within the total partnership to raise the standard of representation overall and secure the viability and prosperity for the other dealers in the network in total.

“The dealers know. They know who the bad ones are and in 99 per cent of the cases the dealers don’t want them working in their franchise anyway because it gives all dealers in that franchise a bad reputation.”

He said that if car distributors and dealers had a true partnership, the need for so-called hair-trigger dismissals of dealers should not occur. It simply highlighted that the parties had failed to get the culture right and had not established a strong understanding between the franchisor and the franchisee.

“There are always fallbacks under common law when things get nasty, but if it gets to the situation where there are groups of franchisees arguing about these things with the franchisor then I would say there are more fundamental problems within the franchise and that you need to peel the onion back a few more layers to see what is really at the heart of it.

“So look for the cause, not at some of the symptoms.”

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