U.S. car dealers 'poised for a really good year'

As the nation's auto dealers gathered for their annual convention, the mood was driven by growing profits, the anticipation of new vehicles and the potential of social networks to boost sales as the bad memories of 2009 fade.

From 2008 through last year, domestic automakers trimmed their dealer networks in the wake of the industry's financial meltdown.

Four General Motors brands and Ford's Mercury brand no longer exist. But in a National Automobile Dealers Association survey last March, 57.4 percent of dealers said they expected to be more profitable in the next year, the highest percentage expecting better results since the mid-1990s.

With the news that the nation's unemployment rate fell to a three-year low of 8.3 percent in January, the optimism is more sustainable.

"The energy coming out of the Detroit auto show and heading into the dealer convention is a reflection of a stronger industry," said Rod Alberts, executive director of the Detroit Automobile Dealers Association. Last weekend, more than 20,000 dealers, auto executives and exhibitors attended the NADA convention. They came in search of information on future products and marketing plans, as well as tools to improve their businesses, especially online cars-shopping services and how to use social networks to lure buyers.

Throughput - sales per dealer - rose substantially from 2010 to 2011 and will be up again this year, said John Frith, vice president of retail channel solutions for Urban Science, a Detroit-based dealer consulting firm.

Urban Science is finalizing its annual study on dealer trends, and the latest statistics will show that sales and throughput will be up substantially for a second year, Frith said.

Bill Golling, who has two metro Detroit dealerships selling Chrysler, Jeep, Dodge, Ram and Fiat brands, is attending for the first time in 20 years.

"I want to see it firsthand," Golling said of the convention and its sprawling exhibit hall. "I want to see how we compare and what works elsewhere that might work for us."

The recession in 2008 forced a lot of dealers to embrace new online techniques that can cut marketing costs in half from the average $500 per vehicle spent on traditional advertising, said Jeffrey Coats of Autobytel, an online auto purchase adviser.

John Humphrey, general manager of J.D. Power and Associates' global automotive division, said 81 percent of people now start their car shopping online, making it critical that dealers have an Internet presence and a staff trained in ways to convert those searches to sales.

Golling is one of 2,336 Chrysler dealers in the U.S. today who survived Chrysler's brutal 2009 downsizing, during which the company terminated 789 dealers. Since early 2010, 43 former Chrysler dealers have regained their franchises, and 14 applications for reinstatement are still pending, said Chrysler spokesman Mike Palese.

Today, 85 percent of Chrysler's dealers are profi table, up from 70 percent in 2009, said spokesman Ralph Kisiel.

Ford has more than 3,300 dealers today, after losing hundreds when it phased out the Mercury brand and consolidated Lincoln dealers in the largest 130 metro markets. Half of those dealers have agreed to upgrade their showrooms.

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