Pollak Offers Dealers Advice on Surviving Compressed Used Profit Margins

“Although the industry is struggling to accept this margin compression, it’s clear that it is the reality of all efficient markets. Specifically, this reality begins with the recognition that profit margins will be much smaller than they were in the previously inefficient market. This new reality sets up two important questions. First, will there be a race to the bottom where no one makes any money? Second, if not, who are the winners and losers in such an environment?”

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General Motors Co., the largest U.S. automaker, will sell its Chevrolet Volt for a starting price of $41,000 and lease terms similar to those on Nissan Motor Co.’s Leaf electric car.

The Volt will be leased for $350 a month with a $2,500 down payment, Detroit-based GM said today in a statement. Lessees for the Leaf pay $1 less a month and are required to put down $1,999.

The Volt will sell for a premium over the all-electric Leaf, which is scheduled to go on sale in November for $32,780. The Volt’s lease price and longer driving range on a single charge and tank of gasoline will make it a better choice for most drivers, Joel Ewanick, GM’s vice president of U.S. marketing, said today.

“They’re looking for transportation that will give them no anxiety,” Ewanick said on a conference call. “We’re positioning this as a car first and electric second.”

The Volt’s price includes the $720 freight charge. Tony DiSalle, director of product marketing for the Volt, said GM can offer a lower lease rate than Nissan’s Leaf because the company will have a better resale value than its rival car.

The Volt can travel 340 miles on a tank of fuel, with the first 40 in electric drive before a gasoline engine starts to recharge the battery. The Leaf uses no fuel and can travel about 100 miles on a charge.

In just a few minutes the 2011 Ford Explorer will be unveiled to the world. The reveal is coming six months prior to the car appearing on lots nationwide, and taking a much different form than any of the car reveals that came before it.

That’s because, for the first time ever, Ford is bucking with tradition and turning to the web — with Facebook as the platform — to exhibit its latest vehicle.

Ford has been using the Ford Explorer Facebook Page to drum up excitement in anticipation of the all-day event. The automaker has already far surpassed its goal of 30,000 fans prior to the reveal, which means the the company will be giving away an Explorer to one random fan. Now, all that remains is a web-wide media blitz, the likes of which is designed to make a big enough splash to reach more than 50 million people.

We spoke with Scott Kelly and Scott Monty, the digital marketing minds behind the campaign, for the full story.

According to Kelly and Monty, the 2011 Ford Explorer has been 100% reinvented. As such, the team felt the reveal process needed to be completely redesigned to match the car’s enhanced form and style.

The automaker took the lessons it learned around the Ford Fiesta movement and decided to make the launch an online play with Facebook as the primary platform. They also decided to make interactive online media buys to drive people to the Ford Explorer Page in order to supplement the social media side of the campaign.

Ford’s Facebook-heavy scheme marks the first time a major car company will forgo an auto show for a new car reveal. Instead, Ford will bring the auto show to Facebook, where everyone can simultaneously experience the unveiling. In fact, Ford has a series of videos and events planned throughout the day to not only replicate the auto show experience, but will also introduce consumers to executives and allow for conversations around the new vehicle to occur.

At 12:01 a.m. ET Ford put up the “Reveal” tab on its Facebook Page with a pre-reveal video featuring celebrity spokesperson Mike Row and CEO Alan Mulally. At 7:40 a.m. ET, Ford will release a video that finally displays the 2011 Explorer in auto-show-style on Facebook. The rest of day will include a detailed tour of the new car, a gallery of photos, more Mike Rowe, a live wall Q&A with Mulally and Facebook chats with featured Ford employees.

The Paid and Earned Media Blitz
While Facebook will serve as the core of the web campaign, the digital marketing team has made a number of strategic ad buys to drive people to the Facebook Page and get them engaged in the day’s activities.

“We will reach more than 50 million people on Monday on sites like AOL, Yahoo, Washington Post, Facebook and hundreds of other websites,” Kelly said.

The advertisements in question are anything but ordinary. Ford has used Facebook’s Open Graph to implement “Like” buttons into the ads themselves. This means that should Ford succeed in garnering “likes” from ad viewers, the company will essentially gain a Facebook Fan for life. Ad viewers can also click to learn more about the new car on Facebook or FordVehicles.com, where Facebook has been heavily integrated into the site design.

If Ford can reach Facebook users and web denizens with its creative, the company hopes to keep them engaged with the day’s activities as described above. It’s a one-two punch of paid and earned media that the company believes will help make the 2011 Facebook Explorer a part of online and offline conversations.

“We want to be blanketed with coverage of the new Ford Explorer. We don’t want anyone to miss the reveal,” said Kelly when describing Ford’s ultimate goal around the campaign.

Success Through Social Media?
Both Kelly and Monty seem very confident in the company’s alternative auto show strategy. The two point to Ford’s continued social media savvy, even suggesting that Ford’s second-quarter net income of $2.6 billion is proof that the company is on the right track.

In some ways, Ford’s Facebook strategy is risky. For one, it’s never been done before. There’s also potential for this to be a big flop, especially given that we’re still six months out from when consumers can actually purchase the hyped-up vehicle. To that end, Kelly and Monty hope for the six-month lead time to spawn online conversations that will propel interest in the new vehicle and translate in to sales.