The OEM Report Card

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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 haven't 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.

THE RESULTS ARE IN

Overall scores for the OEMs were down this year, and we weren't surprised, given that the dealers haven't 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 flexibility from their OEMs and are becoming frustrated when the manufacturers can't or won't 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 haven't received them, and have been told that the company doesn't know when we'll get them." This comment echoed across most brands.

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 dealer's relationship with an OEM's regional rep was key to achieving a good score on this year's 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."

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 that's 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 company's sales reps should "wear pinstripe suits and carry machine guns."

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 flooring 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' verification 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 scientific study; Dealernews considers it a biennial "pulse reading" of the dealer community.