Automotive News - March 3, 2008 - 4

4 • MARCH 3, 2008 Reynolds, ADP diverge on growth strategies Ralph Kisiel rkisiel@crain.com ADP Dealer Services and Reynolds and Reynolds Co. are charting starkly different paths. ADP is going global. The public company wants to be the dealership management system vendor of choice for automakers as they build retail networks around the world. Privately held Reynolds is staying home. Owner Bob Brockman is focused on providing North American dealerships with computer software, hardware and services. He has ended outsourcing of soft- ware development. Before Brockman bought Reynolds in October 2006, former Reynolds CEO Fin O’Neill was building a presence in Europe and Asia. Not now. “Compared to previous management at Reynolds and Reynolds, I have diametrically, 180-degrees opposed views,” Brockman says. The companies laid out their growth strategies to Automotive News during the National Automobile Dealers Association convention in San Francisco. Combined, they provide about 80 percent of the dealership management sys- ADP’s Anenen: Likes global strategy Reynolds’ Brockman: Wants to focus on N.A. tems sold in North America. In the past 16 months, Brockman has sold Reynolds’ money-losing dealership management system busi- ness in Europe, ended software development in India and closed a software development office in Xian, China. “Before I arrived, Reynolds was very much on a program to offshore jobs to India — programming jobs, testing jobs,” Brockman says. “So we reversed all that and brought those jobs back, probably several hundred in 2007. It’s a core belief that you’ve got to build your own stuff and you’ve got to have accountability if you are going to have the kind of quality that’s absolutely required.” In 2003, Reynolds acquired Incadea AG, of Raubling, Germany. Brock- man sold it in early 2007. It was losing $50 million a year, he says. “It was such a God-awful money loser we had to get rid of it.” ‘Not a growth story’ Brockman predicts that Reynolds’ annual growth over the next several years will be minimal — in the low single digits. “There will be some new applications, some new hardware, but this is not a growth business. It’s not a growth story,” Brockman says. see STRATEGY, Page 52 M-B will hit the road with 50-state diesels Diana T. Kurylko dkurylko@crain.com MONTVALE, N.J. — Luxury buyers want to appear environmentally responsible but don’t want to give up performance, says Mercedes-Benz. Marketing campaigns for three new-generation Bluetec light trucks will try to convince potential buyers that the two qualities aren’t contradictory by taking diesels on a nationwide tour, says Steve Cannon, vice president of marketing for MercedesBenz USA. Mercedes also wants to play up the economics of owning a diesel. Fuel economy is about 30 percent better than with a similarly powered gasoline-driven vehicle. Cannon says Mercedes will try to show buyers that they can quickly recoup the $1,000 premium that Mercedes will likely charge for a Bluetec diesel light truck. This year — timing depends on getting enough preproduction vehicles — Mercedes will take an interactive display and diesel vehicles on the road to 12 to 15 cities. After seeing displays and listening to presentations, potential buyers will be offered test drives in the 2009 Bluetec diesel Mercedes-Benz M and GL SUVs and the R-class crossover. All three light trucks have the newgeneration ultraclean diesel that will be sold in all 50 states this fall. An ultraclean Bluetec E-class sedan goes on sale in 2009. Mercedes-Benz already sells diesels in the three light trucks as well as the E class — but those vehicles can’t be sold in California, New York and other states that have strict emissions regulations. Cannon says about 80 percent of Mercedes’ cars sold in the 1970s and 1980s were diesels, but the public still remembers the dirt and noise associated with diesels. To convince potential buyers that diesels are not only quiet but have improved low-end torque and good performance, Mercedes must get the consumers into Mercedes will offer test drives of 2009 Bluetec diesel GL SUVs in 12 to 15 cities. A 2008 GL320 CDI is shown. the cars, Cannon says. “We tested the whole notion with consumers,” he says. “People want to do their part, but they don’t want to alter their lifestyle.” Cannon says Mercedes will use the Bluetec logo — a name that admittedly doesn’t have much equity — on the back of its diesel vehicles. To increase awareness, an integrated media campaign will be launched while the road show goes on tour. A diesel Web microsite will be launched this month after the New York auto show. Print campaigns are being developed, but TV is iffy. “We are still debating whether this fits television,” says Cannon. “We have to build up equity before we start saying ‘Bluetec’ and do the topdown media blast.” But he has little doubt the road show will work — based on the success of last year’s C-class tours. Cannon says about 33,000 people test-drove the C-class sedan during last year’s event. c Pontiac puts big ad bucks into traditional media for G8 Jamie LaReau jlareau@crain.com G8 mix How Pontiac will launch its flagship G8 sedan GT version 52% of initial build Engine: 6-liter small-block V-8 Base price: $29,995, including shipping Base model 48% of initial build Engine: 3.6-liter, dual overhead cam V-6 Base price: $27,595, including shipping DETROIT — Pontiac will launch an aggressive marketing blitz for the new G8 sedan using mostly traditional media. That’s a change from the viral or Internet advertising Pontiac is using on the launch of the latest version of the Vibe hatchback. The G8 will be Pontiac’s most heavily advertised vehicle this year. Pontiac teased the car during January college football bowl games in ads that featured several Pontiac vehicles. In March, Pontiac will start running commercials that feature only the G8 during the National Collegiate Athletic Association basketball tournament, says Brian Shipman, G8 product manager. Bowsher adds. Pontiac started shipping the G8 to dealers this month. But volume will be limited because GM’s Australian subsidiary, Holden, is building the sedan. There is only one manufacturing plant at Holden, which allows for about 30,000 G8s to be exported to the United States annually. GTO replacement The G8 replaces the GTO coupe and should have wider appeal than the GTO, Shipman says. The G8 is a new design with better ride and handling. It’s also a sedan, so it will attract families. GM will distribute the G8s equally throughout each region of the country. Within the regions, high-volume dealers will get more cars, Shipman says. Shipman adds that there is some flexibility to squeeze out “a little bit” more volume if the car is a hit here. That’s what Bowsher expects: “One thing about GM is if the demand is there, they’ll find a way to make more of it.” c Pontiac will spend more on G8 advertising than on any other vehicle this year. General Motors does not disclose its marketing budgets, but a typical product launch like this might cost hundreds of millions. Shipman says traditional TV and print advertising is more costly than viral advertising, which encourages consumers to pass along marketing messages embedded in online short films, e-mail communications or special events. But he says TV and print reach a wider audience and will bring consumers into Pontiac showrooms. The G8 will target more traditional Pontiac loyalists and be skewed toward men ages 35 to 45. The G8’s main rivals are the Dodge Charger and Nissan Maxima, with the BMW 5 series and Infiniti G35 as “aspirational” targets, Shipman says. Dealers are counting on the G8 to generate showroom traffic. “We do need it,” says Mike Bowsher, owner of Carl Black Buick-Ponti- ‘Extreme statement’ “It’s not that we won’t do Internet, but being a flagship product, we want to be making an extreme statement,” Shipman says. “The G8 is worthy of having our best effort in advertising. “We will probably spend more on the G8 than we will on any single nameplate.” ac-GMC in Kennesaw, Ga. “I don’t want to sound like we’re desperate, but we do need this.” Bowsher owns three Buick-Pontiac-GMC stores — one in Florida and two just outside of Atlanta. He has taken 10 orders for the G8 among the three stores and says consumers who have seen the photo of the car are hot for it. “I wish it was here like right now,”

Automotive News - March 3, 2008

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