There are about 3 million of them: Customers who either lost their dealer because of closings in 2009 or whose current car brand is going out of business. And it's pitting carmakers and car dealers against one another as they fight for who'll win that business.
Urban Science, a consultant firm in Detroit, says 1,467 dealers closed in 2009. The bulk were General Motors or Chrysler dealerships. They were forced out of business when the carmakers filed for bankruptcy and could close weak dealers.
Auto sales are expected to rise slightly in 2010, up to around 11 million, compared with fewer than 10 million sold in 2009. But dealers are still expected to close at a faster rate than usual, because GM isn't done closing outlets.
GM is killing the Pontiac, Saab and Saturn brands. Its Hummer brand will likely be sold to a Chinese company. That leaves Pontiac, Saab and Saturn customers needing a new place to service their cars.
If GM can't hang on to these customers, it risks losing sales to other brands.
"GM desperately needs those sales and that market share," says Michelle Krebs, senior analyst and editor at consumer website Edmunds.com's AutoObserver publication.
Wooing orphan customers with offers
In an effort to prevent this, GM has sent mail to millions of customers, offering free oil changes and other bonuses to keep people shopping at GM dealers. They've also offered rebates up to $2,000 to customers willing to buy another GM brand.
"The challenge for us is to grab those customers by the hand and make sure they know where to go," said Susan Docherty, GM's vice president of U.S. sales, in a recent conference call.
The automaker has been sharing customer lists from closing stores with remaining dealers and urging them to reach out to customers.
But dealers will need to use that information correctly, says Katherine Kress, vice president of customer marketing at Urban Science. Bombarding customers with new car offers just months after they bought a car will be a waste of postage, because those buyers likely won't be back in the market for a couple of years.
"The more information the automaker can provide the dealer, the better the brand will be at keeping those customers," Kress says.
Other dealers — those who no longer sell GM brands but might have other competitive brands still operating — are desperate for those customers, too. The bulk of dealer profits comes from service work, not new car sales, so it's crucial for dealers to keep those customers coming back.
Just another hurdle for dealers
Providing good service also is key to making the next new car sale, Krebs says. "It's not very glamorous, but it's the bread and butter of a car dealership," she says.
The battle for service business and new customers is another hurdle dealers will have to jump in 2010 to stay in business, but many dealers are prepared for that, says Randy Berlin, global practice director for Urban Science.
"Dealers are resilient business people. ... They've got revenue channels besides new vehicle sales that allow them to maintain their businesses," he says. "They've made it through the worst of it, but they need to maintain their owner base and service business."
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