Assessing what really counts in the ratings game

Is bigger better? One would question answers to that the question now that Automotive News and Ward’s Reports have released their data on the “TOP” dealership groups.

First off, there is a big gap on how the 17,000 U.S. dealers are chosen for the “TOP” dealer medal.

automotive dealerships

Automotive News uses new-vehicle sales as the determining number on who makes its cut.

Wards, on the other hand, uses gross revenues as the choice. Ergo, AutoNaton’s 221 U.S. dealerships sold 267,810 new vehicles last year for first place on the “TOP” 125. Runner-up was Penske Automotive Group’s 140 dealers with 180,764 new-vehicle sales.

AutoNation and Penske also finished one-two in used units, with 180,973 and 145,480 units, respectively.

To be sure, the gold and silver medalists on this tabulation have been the same ever since publicly-owned dealerships came into existence in the 1990s.

But new-car sales alone cannot make these dealerships, or the other publicly-owned stores on the top 10 roster, better operators.

The Ward’s tables, using total revenues as their chief metric, may be a closer barometer of how “good” the top selling dealers are.

AutoNation grossed $15.669 billion in 2012, followed by Penske’s $13.1 billion. Not “better” either.

Making near the top of the ladder were all of the other “public” groups-Sonic, third; Group1 fourth; Asbury, seventh, and Lithia, ninth.

Also close to the top were Van Tuyl, fifth; Hendrick, sixth; Staluppi, eighth, and Larry Miller, tenth. Of these, Van Tuyl still rates among the “best,” experts agree.

The top 10 embraces the largest dealers, without a sense that these leaders can be “best of the bunch” year after year.

How are group revenues a determinant of being “better,” when no compilations are made of (ROI) return on investment; net profits; personnel relations; employee satisfaction and, a controversial metric, the labor turnover rate.

The move of top-producer AutoNation to change its dealerships names to “Blankety-Blank” AutoNation points up the fact that the “public” groups have grown in quantity but not necessarily likability.

Uncontrolled growth can be a ball-breaker for employees-driven by stock-market pressures and the egos of CEOs.

Automotive News’s supplement on the top 125 dealership groups (new-car sales only) is headlined “Keep Kicking Ass,” which should be added as a metric next year.

What kicks in the butt every day do to a dealerships morale is meaningless unless labor relations stay harmonious-and net profits are shared with the staff.

Who would make the top 125 then-those with the “best” employee records-all across the board perhaps.

Which is another way of saying, “If your dealer managers have to kick butt, what’s the value of being bigger or biggest anyway?”

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2 Responses to “Assessing what really counts in the ratings game”

  1. Jim TreeceMarch 29, 2013 at 11:00 am #

    Please note that Automotive News also publishes a list of the Best (100) Dealerships To Work For, as ranked by an outside company that issues such lists for various industries. Their ranking is overwhelmingly based on employee surveys, and thus does in fact track employee morale.
    The two lists have very different metrics, and very different results. We at Automotive News in no way assume that the biggest is the best, or even that bigger is always better.
    — Jim Treece, Industry Editor, Automotive News

  2. Glenn MercerMarch 29, 2013 at 12:29 pm #

    Let me build on your units-versus-revenue point. Leaving the world of dealerships for now, I have always wondered why ALL publications (and I do mean ALL), when it comes to evaluating or rating or ranking car companies (OEMs), measure their size in units. That is, a company that makes 4 million cars is “ahead” of one that makes 3 million. And if a company in one year made 250,000 more cars than a rival, and then in the next year made 300,000 less than the rival, then it is “falling behind” or “losing the race.” But there is such a very weak linkage between units and revenues, not to mention PROFITS. What if the 4 mm unit company had an average selling price of $20,000, for revenue of $80 billion, and the 3 mm unit company sold mostly premium cars, at $40,000, for revenue of $120 billion? (Again, we are not even getting to profit yet.) I’ve always wondered about this practice of automotive journalism, to essentially — when it comes to ranking car companies — equate a Mazda and a Maybach and a Maruti: they’re all “units.” I’ve yet to see someone comparing Walmart and Sears by counting how many pairs of socks they sold….

    Anyway, that is my rant!