Dodge Motorsports Teleconference Transcript Ralph Gilles and Roger Penske August 10, 2010 Q: Over the last week, the Chrysler Group announced that July vehicles sales were up 5 percent -- which marked the fourth consecutive month of year over...
Dodge Motorsports Teleconference Transcript
Ralph Gilles and Roger Penske
August 10, 2010
Q: Over the last week, the Chrysler Group announced that July vehicles sales were up 5 percent -- which marked the fourth consecutive month of year over year sales increases and the company has achieved a positive operating profit of $183 million in the second quarter. We know the challenging times aren't going away, but are these are some real positive signs?
RALPH GILLES (President and CEO of Dodge):
A: We're really happy. We're halfway through this year; this was our make-or-break year. We're running right on track with what we thought that we'd do and our showroom is just now starting to show some new product with the new Grand Cherokee. These numbers don't even reflect that positive boost and my brand (Dodge) is doing really well. The Dodge Journey has had its best month and the Challenger had its best month ever. So we're seeing people get back into the showrooms, but a lot of it is our re-marketing. We're really finding ways to reach new customers and get their confidence back."
Q: Roger, Detroit and Southeastern Michigan is home for you and you have seen the importance of how the automotive industry has been a foundation to this community. As a former owner of the Michigan Speedway, can you talk about the importance of NASCAR racing in Michigan and what it means to the auto industry in general?
ROGER PENSKE (Chairman, Penske Corporation)
A: "Really, when you think about it, the one thing that NASCAR has been able to do, and one of my goals many years ago, was to have the biggest sporting event in the state of Michigan. NASCAR brings two events to Michigan, June and August, which in the old days we had 16,000 seats and today over 100,000 and over 160,000 attending these races. To me, it's all about the spectators that we're drawing not only from the Michigan area but from Canada. But of course the most important thing is that it's the home track to Dodge, Ford and Chevrolet. You like to win that race and go home with that trophy because it really shows who's in the game this time of the season. With the good news on Dodge and Chrysler's numbers, it's very important as we see automakers from the domestic side make great traction here the last seven months. It's good for racing and our customers to see a little bit better environment. NASCAR is just so strong. People talk about that it's off a little bit, but I can tell you we'll have more (fans) than the Super Bowl every weekend at the tracks that we run at. I think business is pretty good."
Q: Ralph, the last time we saw the Nationwide Series new car on the track, the Dodge Challenger swept the front row in qualifying at Daytona. It makes its second appearance on track this weekend....race fans and consumers have really flocked to this nameplate?
GILLES: "We've also, with Roger's help, reached out to our partners that are racing with us and found ways to use our product in their commercials. When Discount Tire does a commercial, you'll see a Dodge in the commercial and the same thing with Miller Lite. So we're really finding new ways to market the cars and have NASCAR work for us beyond racing on the weekend, and it's really working. Obviously, we have the new Nationwide car. It was an absolute hit. It went well with our new TV campaign that we had going on at the same time. Everything is starting to work as a system. When we bring motorsports under our wing, we really have it work for us versus just an exercise."
Q: Any interest in expanding the Dodge Cup teams?
A: Roger and I are actually in discussion with what to do with our racing team going forward. I'm sticking with Roger and I hope that he's sticking with me (laughs). We're trying to do a lot of business moving forward and we're excited about this year's performance. It's a lot better than what we both expected. Kurt (Busch) is kicking butt. Going forward though, I'm very intrigued on what Nationwide brings because unlike the other OEM's, I've had two performance cars (Charger and Challenger) to market. I look at shining more light on Nationwide and maybe balancing that out. We're seeing some great talent come to Nationwide. The promoters are doing a nice job with it. The fan base is growing stronger and stronger. I see the weekend as two combined events that we can use to our advantage. I would say not necessarily expand, but really till the soil of what's already there."
Q: Your opinion of Kurt Busch this year?
PENSKE: "As far as Kurt goes, we signed him up five years ago and he has really developed. As a driver, he's always been a great driver. He was a champion (in 2004), but as I think of his MO today...when you look at Watkins Glen racing against (Juan Pablo) Montoya and the road racers who are so good and to see the car run as well as it did, it's a credit to him. He certainly has matured. He understands that it's a team effort and he's looking forward (as the other two guys are) to continue to give us some more support. We're committed to Dodge this year and next year and in the future. Kurt has been re-signed and we're always looking for more performance, and we're looking to get into the Chase. Right now, we just want to get (Kurt) in the Chase and not have to wait until Richmond. Overall, I'm very pleased with the job that he's done. I think as we go forward in the future, with the support that Dodge is giving us, it will bode well for us."
Q: What do you think of Kentucky Speedway getting a NASCAR Sprint Cup Series race date?
PENSKE: "What's happened is that Bruton (Smith) has made investments in Kentucky and New Hampshire and has multiple dates at some of the tracks. I think taking a date and moving it to Kentucky certainly is key. I think he's committed to it and what he's done at Charlotte, Atlanta and Las Vegas etc., has been terrific. I look at it as another place to run and market for us. He's a good promoter."
Q: What do you think of Auto Club Speedway losing a Cup date?
PENSKE: "The California situation is that you're competing with so many things in California. I think when you load up Phoenix, Las Vegas and California at the same time, you may lose some of that fan base. To me, that was a decision that the Frances, and their speedway company ISC, took. That's a decision that I can't make. I have no input on that at all. Obviously, when we built the track, we had two (race) dates. I think that it's a great market. Maybe because of the tough times that we're having economically, it makes more sense that we have one big event and go forward in the future. We don't make the schedule, we just race there. Different tracks are going to be good. They've changed some of the dates. I think there will be changes and they will be good from the standpoint of the competitors."
Q: Are you concerned heading into the Chase that drivers looking for payback may spoil Kurt's chances and create a situation where he won't have a fair chance of winning races and the championship?
PENSKE: No. Look, my communication with him is that we leave it at the track, leave it at the event and let's move on. I know that there's always some dialogue that goes on. To me, these guys have to race each other not only this year but next year. I would be very disappointed if a driver took us out and I would not expect our driver to do that either. NASCAR has laid down the rules. We had the situation with Brad and Carl. We were disappointed with what happened at Pocono, but I don't think that there is any reason that Jimmie (Johnson) was trying to wreck him (Kurt). I think the fact that there was a car next to him, the way that the air goes, he (Johnson) may have gotten into the side of the bumper, not straight on, and turned him. Those little things you talk about afterwards. Overall we need to keep cool heads. As a car owner I certainly try to convey that to my guys and I would expect Hendrick and Roush and Gibbs, Ganassi and Childress would say the same thing. If it's deliberate, I think that NASCAR is ready to take action."
Q: Where is the line in making the Chase to gimmicky and/or good changes?
PENSKE: "The Chase has worked. One of the things that I've said to Brian (France) and NASCAR is the top-12 drivers should get top-12 points. Even though you finish 35th, you would still get top-12 points and keep a lot more guys in it. Maybe people won't like that. To me, that's certainly a way to tighten it up and have five guys racing for it at the end. I think the idea of having the 10 points for each win is a good one. Overall, there are some thoughts of eliminating four drivers at the beginning. You could have an accident, a blown engine. I don't think that we need to have eliminations. You might have the guy like Harvick that lead the season and all of a sudden he loses a motor, gets into an accident and he's out of the Chase. I don't think that's the way to pay a guy who's done so well for the season. I'd like to see the points, no matter where you finish, if you finish first you get the first-place points, if you finish 35th you get the 12th points against the 12 guys who are racing each other."
GILLES: "I agree with Roger 100 percent. Like last year, the cream tends to rise to the top and you have some really good talent and the fans are really paying attention. It seems like a few Super Bowl's in a row. I think that it would be wrong to eliminate some of the favorite drivers out there, so I agree with Mr. Penske."
PENSKE: "And that hurts the sponsors too. A lot of this, if we can perform and end up being with the notoriety that you get when you're in that top 12, I think that it helps the manufactures and also sustain our sponsors."
Q: What is the status of sponsorship for the 77 next year? Sam's future with Penske?
PENSKE: "We've said publically that we want to run Sam next year (in NASCAR); he's not going back to open-wheel racing. He's going to be in NASCAR racing. It's a matter of us getting the sponsorship stuff together. As you know, budgets are tight. We've got a number of opportunities out there that we're working on. That's a decision that we'll make as we get toward the end of the season and we'll make it transparent to everyone."
Q: Can you speak to the development of Justin Allgaier? When do you plan on giving him a shot at a Cup car? Is there any opportunity in giving Parker Kligerman more seat time?
PENSKE: "One of the things that's difficult today in both the Nationwide and the Cup side is testing. It's awful hard to bring a young man up, whether it's Parker or Sam, not having the ability to test at the tracks that we race on. I think that there has been a lot of discussion that a team, they may be vouchers that a team has, can test at tracks that either you race at a couple days before or after. I think that will make a big difference, because then we can get some of these young guys into a race. Just to pop a guy into the Cup side overnight, without having any experience in those cars or testing at that track, is tough. As well as Brad's running in the Nationwide (Series), he's still getting his feet wet on the Cup side. And he'll admit it himself that he needs to get the right setup and that's the same thing with Justin. Parker did a great job for us in ARCA. There's a chance that he might run a couple more races this year with us as we try and develop this Car of Tomorrow....Nationwide. We want to try and get more time in it before we get to next season. There's still some opportunity there."
Q: Can you tell us how this weekend's Nationwide race fits in with marketing of the Challenger?
GILLES: "When I reviewed the race at Daytona, I noticed a lot of the bumper shots and it was amazing to me to see the front end of the Challenger just fill that (TV) screen. We got a lot of great feedback from our fans through our website...our Dodge.com website...about how much they loved it. Even the competitors, the Chevy guys were saying, 'Man, that Challenger looked great on TV'. That's always been the struggle for me, when I watch NASCAR the lineage isn't quite as direct as I'd like it to be and I think the Nationwide Challenger brings that home. The fans at the end of the day are kings. When they respond like that, we pay attention big time. To see the car at MIS, our home track, I can't wait. We'll measure it. We'll listen. We'll have a lot of our own people there from headquarters to walk the stands, pit road and listen to people. We'll chat with the average Joe and see what their reaction is. It doesn't take a rocket scientist to see that they like it. I think that everyone is paying attention and next year will be different when we run that body the whole year. It's exciting to see the success so far. I'm not sure how much it had to do with it yet, but there is a lot of buzz about the Challenger all over even though the car is two years old now."
PENSKE: "The dealers are really excited about the Challenger running in NASCAR because it's something that (Dodge) sells. These are high gross margin vehicles that they love to sell. When you start to look at Camaro and Mustang and Challenger, these are icons in the business."
GILLES: "Not to mention that these cars index super high with our customers. It's exactly what turns them on. It all fits very well."
Q: What are your thoughts on Atlanta losing a race? Do you think that fans in the Southeast will show any backlash towards NASCAR?
PENSKE: "I think that it's strictly business. If you look at the weather patterns that we've had, you go back a number of years and look at that first (Atlanta) race and it's a tough race. To me, just the general economy, I think when you think of filing the place up, are we better running in different markets? That way we get to see different fans and that's important to NASCAR and our sponsors. Bruton and his team have decided that one race is better there and they have a feeling that they bought Kentucky for a lot less than they paid for New Hampshire, so the economics of having a race at Kentucky could be quite good for them and for their company. I don't see it as a negative at all. As you start to see some of these tracks being purchased and having multiple ownership, they may move some dates around. I think Auto Club will be a similar situation. We need a big race in California, but do we need two in the same market?
Q: Do you see the sponsorship side of NASCAR getting any better? Where do you stand with Verizon for next year?
PENSKE: "From a sponsorship standpoint, all of us are battling out there to try and get sponsors. Everybody's marketing budgets have been cut. A lot of people are going online to place their dollars. I think that we've been very fortunate to get the support we're getting from Dodge and Miller and with Shell/Pennzoil next year, and we have Discount Tire. We've had Verizon and that's still an open item with us for Nationwide next year. It just depends on where everything goes. Obviously, with the conflict with Sprint, it's also difficult for them to not be on the main race on Sunday.
"We're all investing. The product investment that Dodge and Chrysler has made overall and the other manufacturers have made is significant. They haven't stopped, which people don't understand. What we need to do is continue to see the traffic in our showrooms. There's no question that July was a good month. This August is going to be a month versus "Cash for Clunkers" so it going to be a big month to beat what we did a year ago. We have to be careful that we don't think that we've gone downhill if we don't meet the "Cash for Clunkers" that we had last year. I think we're seeing a little bit better market if you ask the business council. I think that they see a gradual increase (in sales). Interest rates are still low which is important to all of us. This whole thing is on consumer confidence and we seem to see automotive sales (increase) as consumer confidence gets better."
-source: dodge motorsports