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Wednesday
Dec212016

Sell It Faster

The mantra for the past few years in the auto business is to sell it faster. Everyone is an expert on how to sell it faster, with a myriad of advice regarding every detail of the process.

Needless to tell you that customers also want to acquire a vehicle faster...no kidding.

Lets focus on the selling part...

In Canada if you look at days to sell inventory (new/used) for the past few years, you would conclude that the mantra of selling a vehicle faster has been falling of deaf ears. Agreed...some dealers are selling faster and obvious their customers are also buying faster. But...and its a substantial but...these dealers are a minority.

What is the problem?

There is a ton of technology assisting a dealer to sell faster, and there is a ton of technology to assist a customer to buy faster. Its not the technology that is lacking, its all there readily available.

Technology is not the problem.

Could it be that the problem is that we are humans, empowered with technology, perhaps even confused by technology.

 

 

Tuesday
Dec202016

Do it Better

Its that time of year. We are busy, time has accelerated all year long. We have seen disruption in a bunch of areas. A bunch of folks got caught flat footed and then some.

Its also the time of year when we might just ask "Could I/We have done it better?". Not to be a Monday morning quarter back (analyst) but simply to learn from our experiences, and decisions.

You look at the auto business in Canada, record year, never have so many new vehicles been sold in Canada. Especially with a challenging market in Alberta. Truly impressivle...absolutely. We have to be doing a few right things...absolutely.

Ask yourself "Can you do it better?"

You can surely come up with a few points where you could have done it better...what do you think?

 

 

Monday
Dec192016

Straddling the Brick / Mortar and Digital Fence

We might as well keep on disrupting this week.

The auto business in Canada is still straddling a physical and digital fence. Somedays seem as if its improving, others as if the chasm is getting wider and deeper. One thing is certain there is a constant flow of sound bites from a myriad of stakeholders.

Customers

As the wave of digital natives increases, a bulk of their due diligence is done on a mobile device. Literally visiting a brick and mortar dealer at the last minute. With the gazillion programs and incentives constantly wondering what is a good deal. Yes...the metal must still resonate to finalise a decision.

Safe to say that customers are primarily on the digital side of the fence when acquiring a vehicle be it new or used.

Dealers

They are caught up in a world of branded glass palaces (brick and mortar) to comply with the manufacturer requirements, and a digital arena to actually deal with customers. Its a complex atmosphere with a myriad of variables.

Dealers are forever straddling the fence since they require both a brick and mortar and digital presence to actually do business. Usually they are more proficient on one side or the other of the fence.

Agreed...it all works we have record sales in Canada...never seen before...somebody is doing something right.

Manufacturers

Are in a solidly entrenched in brick and mortar and digital landscape. Its a constant dance between the atom and digital world. Its also lucrative on many fronts for manufacturers to keep the dance going.

Basics

The basics of the business have not changed in decades. You still have to create a customer, convert a vehicle to money, provide superlative service with an unparalleled customer experience (CX). The customer and dealer remain "horse traders" selling and buying which keeps the business unique in the world of retailing.

A customer requires service, a dealer still needs lifts in the service department, still needs parts and so on.

We could say that the basics remain the brick and mortar of the business. There remains a human, emotional factor in closing a deal which is a constant both on the customer and dealer side.

The basics are on the brick and mortar side of the business.

Evolution 1.0 + Technology

Perhaps you remember when parts managers would order parts over the phone, accounting was a completely manual process, a credit application was called in.

We can quickly conclude that technology has had a dramatic impact on the auto business, initially starting with the dealer and manufacturer.

We can conclude that the dealer and manufacturer got a taste of technology (computers) almost 50 years ago. By 2016 time frames 50 years is an eternity.

Evolution 2.0 + Internet

At the outset of the Internet the folks with vision were telling dealers that all the information residing in a showroom was going to disseminate to the Internet. That was 20 years ago...half an eternity by 2016 times frames.

Lets put this on the digital side of the fence.

Evolution 2.1 to 2.982 + Internet + Social Media

The past 10 years have been a "bazaar/flea market" of sound bites from a myriad of stakeholders from all sides, the customer, dealer, manufacturer. How do you make sense of all this noise, sound bites, everyone trying to monetise one thing or another.

Its a fascinating, overwhelming game that is played out constantly 24/7/365.

Much easier to divide anything and everything into "silos" to monetise them. While adding more clicks to improve the functionality of some software.

In the meantime the customer has a mobile device or tablet, is empowered with product knowledge, and is further empowered by social media and Google. Still needs metal that resonates to finalise a decision.

Lets put all of this on the digital side of the fence, preferably in a back pasture somewhere.

Evolution 3.0 + Disruption

If you have a feeling that there is a level of discomfort with the customer, and dealers...you would be correct.

In Canada the shift from ownership to mobility occurred a while back (2014/2015) the customer seeks mobility, the dealer is a mobility provider.

Remember the simple sheet of paper to arrive at a final amount, payment and close a deal? It was simple a couple of generations ago. Why is it so complex, full of variable today?

Be assured that "someone" will disrupt this complex process in the near future.

 

 

Saturday
Dec172016

1950 Plymouth Business Coupe

A rare car with a fascinating story...from Jay Leno.

 

 

 

Friday
Dec162016

Vroom Room

Good Morning,

Its Friday its the Vroom Room enjoy the cappuccino and biscotti join the conversation and tell your friends.

Its almost Christmas and this year we have snow...WoW.

Being disruptive, this past week we looked at some aspects of the auto business in Canada. We asked obvious and perhaps uncomfortable questions, while not providing an answer. Is it gratifying to disrupt (stir s#*t)...what do you think.

We have enjoyed an appreciable drop in the price of gas (remember when premium was almost $1.50 a liter), and an increase in the price of food. This round it will be an increase in the price of gas and a further escalation in the price of food.

You had to wonder who would literally throw away billions in an infantile market share competition (mine is bigger than your) for oil. We have the answers, we have the outcome, and now we have the increase in the price of oil.

Have you been watching NASCAR races for a while? You should know that The Colonel was a huge fan of Dale Earnhardt, yes...saw him race at Daytona too. It will be nice to see Junior back in the 88 car for the Daytonal 500.

In case you missed it, the Can Am racing series celebrated its 50th Anniversary this year. Agreed...you have to be of a certain age to have attended Can Am races...no kidding it started 50 years ago. Even today the thunder of an aluminum big block Chevy is magical.

This year we have snow, and it seems that we will have a white Christmas, perhaps its appropriate to dig up our Suburban Story from a few years ago. As you read various comments regarding winter driving, winter tires, and so on and on. If its really bad save yourself a bunch of trouble and stay where you are, unless its an absolute must.

At this time we get what we call "bubbly" which could be spumante, prosecco, or champagne. Being individuals we have our own preferences depending on the occasion. In our case we have a preference for Perrier Jouet. The challenge is to find Belle Epoque.

As you continue to elaborate your planning for 2017...spend a few minutes reviewing 75 Charts Every Canadian Should Watch In 2017.

Our usual old race cars, if you have a Flickr account you are probably or should be familiar with Louis Galanos who has an impressive gallery of old race cars, and races on Flickr...truly impressive. Obvious that you have to be of a certain age (Boomer) to have such a collection of photos. Today its the 1971 12 Hours of Sebring, if you have followed racing for a few decades you will see a bunch of familiar names and faces.

 

 

Thursday
Dec152016

Its a Car not a House!

Do you remember when the auto business was melting down in North America in 2008/2009, agreed it almost looks like ancient history today.

Back then an inexorable shift from leasing which had a 50% penetration in Canada to finance terms (usually longer) was initiated by all the manufacturers with a few exceptions. The thought vector was simple "let's shift the residual risk to the consumer" taking it off the books of the manufacturer controlled captive finance companies.

We all know the auto business works best on a 36 month cycle. With time the auto business in Canada embarked on a voyage of rolling over deficiencies (on trade ins) and pulling ahead from an 84 month term to a 36 month cycle.

Looking at data from JD Power Market Metrics YTD November.

..................Lease.......Finance.......Over 72 Months

2012............21%.........61%.................58%

2013............19%.........62%..................62%

2014............23%.........59%..................67%

2015,,,,,,,,,,,,26%.........57%..................74%

2016............26%.........57%..................72%

If you conclude that CMS (Citizen Main Street) who had a strong affinity for leasing a vehicle is now caught up in a circle of rolling over deficiencies...we agree with you.

Manufacturers and financial service providers are caught up in having mechanisms to "roll over" deficiencies. While prices, and incentives are inexorably increasing.

Reflect on this...CMS who usually agrees to a 5 year mortgage term on a 25 year amortization period, is on at least a 6 or 7 year term for a vehicle.

Needless to tell you that the average monthly finance payment has escalated from approximately $530 per month in 2012 to approximately $575 per month in 2016.

Terms get longer while monthly payments creep higher.

The overview of Creeping Auto Loans in Canada.

The remark from the individual in the back of the room "How long can we keep this up?"

A different view...

Click on image to enlarge

 

Wednesday
Dec142016

Inventory Levels

If you are in the auto business, or just a casual observer you are aware of inventory levels at dealers by the number of vehicles that are displayed (parked) on the premises.

Way back in the day, before technology, inventory levels were more of a gut feel, with simple ratios (up to a point). In addition to the mantra "You cannot sell from an empty shelf". Usually there was more than less inventory on the ground, be it new vehicles as well as used. 

One strategic vector for new inventory was to have specific models, or specific options that provided a competitive advantage. Those were the days of Bespoke Vehicles from the factory.

New vehicles are assembled in a "just in time" process where most if not all components are just in time, and sequenced to the assembly line. These vehicles that are assembled just in time, get stored on various dealer facilities for months prior to being sold. Reflect on this for a moment...

When components were stacked at assembly plants, and vehicles were stacked on dealer's lots it sort of all made sense.

At one time...the revenue generated by finance contracts from the captive finance company, would often cover the floor planning of the new vehicle inventory. Reflect on this too for a moment.

in 2016 with a ton of technology at the factory, at the dealer, and empowering the consumer, inventories of new and used vehicles remain stagnant, with modest improvements, if any from the good old days (gut-simple ratios).

Looking at "Days to Turn" in Canada from JD Power Market Metrics for YTD November.

Days to Turn

....................New............Used

2012..............69...............61

2013..............65...............60

2014..............62...............59

2015..............70...............60

2016..............73...............61

From the customer's perspective its irrelevant how many vehicles are on the ground at any time, and for how long. For the dealer its an expense. When new vehicle inventories surge its an additional expense.

You have to wonder with record sales, an ample supply of all sorts of technology, why the new vehicle inventory is so high in Canada this year.

What do you think?

 

Tuesday
Dec132016

Global Sales November 2016

When a chart tells the whole story...

Click on chart to enlarge

 

 

Monday
Dec122016

Special Cars

The other day we were reading a few articles about enthusiasts acquiring special cars in one fashion or another. These cars become projects, and often require various levels of work.

Then it crossed our minds that some things change while not changing at all. Yes...the times change, the technology changes, but it also does not change after decades.

Several years ago we embarked on a first car dialogue and several folks contributed. This was The Colonel's first car...click. Agreed, a 1963 Chevrolet is over 50 years old today.

When you are young for some reason time moves slower, there is an abundance of physical energy and resources, with usually a scarcity of financial resources. Technology was non existent, everything was mechanical.

As an enthusiast you absolutely had to acquire an innate understanding of cars, how they worked, how to fix them usually on a tight budget. There was no Internet, no forums to exchange information, or acquire information.

Every car was special, and its interesting to see that special cars still exist today.

What was/is a special car?

Its usually a car that requires a fair amount of TLC, or has some sort of potential after a bunch of work is invested in the car. Work more than money.

Agreed...it was special in the eyes of the beholder and perhaps the immediate friends. Everyone else might conclude that it was a miserable POS.

Interesting enough that special car thing stays with you through the years, and the more cars you own, see, drive, deal with...the more some cars are special. Its not necessarily that its a good car, or a fast car, its just a special car.

Lets look at some special cars...from the past

1963 Chevrolet Biscayne Coupe - it was special, priceless in its own way. Required a ton of constant TLC to keep it running.

1979 Camaro Z28 - still very special, still in the garage, how to have your own collectible. Back in the day a ton of work went on that car.

The other thing that makes cars special is that if you own them for long enough they become a part of the family. The Z28 has been around for 38 years.

Lets not forget that mechanical cars are special in their own way. When you need a key to unlock a door, to start a car, in 2016 its special.

Lets not forget a 1995 C220 that has been around Strada for over 11 years, a priceless car in its own way.

If you are an enthusiast most if not all the cars you own, and will own always have something special that resonates with you...they are rarely just a car.

 

 

 

Saturday
Dec102016

1968 Alfa Romeo 1300 Junior

Interesting story, and go for a ride.

How is your French?