Saturday, September 12, 2009

There's lots to worry an import dealer

ife can be stressful for any car dealer, especially an importer of exotic, high-end stuff. But David Geneen, the owner of Grand Touring Automobiles, is facing a trifecta of grief.

He rolls his eyes in distress when I mention the cross-border shopping frenzy for high-end cars caused by the soaring loonie.

He looks even more ill at ease when I ask about the sale of Aston Martin to a group of investors from Kuwait.

He is distraught when I suggest that Jaguar Land Rover may be sold to a conglomerate in India.

Yes, there are plenty of things to brood about.

On this particular afternoon, Geneen is watching an affluent-looking tire-kicker who is admiring an Aston Martin Vantage; the list price is $136,000 in Canada, and $113,000 (U.S.) south of the border.

Geneen glumly wonders if any of the manufacturers he represents will ever lower his costs so he can lower his prices. He doubts it.

He squirms uneasily in the expensive new showroom he just built to display Aston Martins. Ford recently sold its Aston Martin unit to a group led by David Richards — who owns a company called Prodrive that ran a racing team for Aston Martin.

Richards may be the company's new leader, but he has no financial stake in it; the owners are investors in Kuwait — Investment Dar Co. and Adeem Investment Co.

Uncertainty means anxiety for Geneen. I tell him that in the next James Bond novel, 007 dumps his Aston in favour of a Bentley. More gloom.

Now Geneen stares fretfully into the adjoining showroom with its gleaming Jaguars and Land Rovers; these are the "volume cars" at Grand Touring.

But Ford is closing the bidding for Jag and Land Rover, and new owners should be announced by the end of the year.

A leading contender is the Indian industrial group Tata, which develops low-cost cars for emerging markets. Geneen grimaces when I ask if he could find room for a $2,500 Tata on these marble floors.

David Geneen is a car nut who says he got into this business only so he could hang around beautiful British cars. Now he is surrounded by them, and worries about each one.

Vaughan: I like the cars I see in here, but I think I'd buy mine in Buffalo.

Geneen: It's a painful fact.

We're pushing the factories to help us with pricing.

However, the cars in the United States are not exactly the same as these. There is more content in some of the cars destined for Canada. There are winter packages and special bumpers and so on.

But we're certainly pushing the factories. We hope they'll bend and get the pricing in line. It's making it very difficult.

We have the Internet now, and everybody knows what cars cost in Los Angeles or New York or Buffalo or Toronto. It's hard to resist.

Maybe a reason to resist is the ownership experience.

Hopefully you're working with a dealer who is your partner in the ownership experience of your car and who will take some of the responsibility for your enjoyment. Loyal customers understand the value of having this, and they are willing to pay an upside to give us a chance.

But we are grinding out the deals and have to get closer to U.S. pricing.

What do you think of Aston Martin now that it's been sold?

I respect them because Ulrich Bez, as CEO, kept Ford at bay.

He kept Aston Martin profitable and developed incredible products. He managed to keep the brand unique and stay out of Ford's corporate grasp.

He now has a five-year contract to stay at Aston Martin, but I was disappointed to hear that he was not actually a shareholder in the new company.

It's always been a pleasure to deal with him, and he's very aware of the U.S. pricing issue.

The Rapide (a four-door Aston Martin) is about a year and a half away, and that's going to be a special automobile.

I worry because I don't know anything at all about the people who actually own the company now.

Well, the next great unknown is the future ownership of Jaguar Land Rover.

Land Rover is our best-selling brand, and business has gotten better with Jaguar.

X-Type [sales are] flat, but the S-Type has been selling as it comes to the end of its run.

A lot of Jaguar's future is riding on the new XF; I think they're got a brilliant-looking car for sure and technically very interesting.

What have you heard about the sale?

I've heard that BMW had an interest and passed on it.

Tata, which we don't know anything about, I think they're the player. I just don't know how they'll do it. I assume they'll take Jaguar and Land Rover together.

The British kind of plundered India over the years, and there's a bit of retribution here that they buy a British brand that had greatness but has lapsed in the past few years.

Can Indian owners manage this very English brand?

I worry about that.

Branding is very, very important when there are so many good automobiles out there.

For instance, there's no question that Lexus is an unbelievable automobile. Having had them traded in here 10, 12 or 15 years old, they still run. But there's no story, there's no lust for the name Lexus. It's just an attractive, reliable automobile.

Now look at Range Rover. Most of them never go off road and they drive them in places like Florida. But Jaguar conjures up a picture of opulence, and for Land Rover the picture is ruggedness. Both have British style, and it sells. I worry about that continuing.

Michael Vaughan is co-host with Jeremy Cato of Car/Business, which appears Fridays at 8 p.m. on Business News Network and Saturdays at 2 p.m. on CTV.

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