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Think about this, dealers have been around for as long as cars have been around. The dealer/franchise business model has endured for decades.

Similar to AV's disrupting the established driving business model.

There are a bunch of forces that are disrupting the dealer business model, and the relationship between a manufacturer and the customer.

Will manufacturers or dealers bring about change? Highly unlikely.

Will the product drive some change? Probably...

Will the customer continue to drive change? Absolutely...




Is Technology the Elephant in the Room?

We are all empowered by technology in one fashion or another. Agreed some days its a good thing, others not so much.


In the auto business we have been talking about technology for the past 20 years, the Internet, social media, and a ton of software to do a bunch of stuff. Stack on top of it big data, and a gazillion ways to look at the data to make it even more interesting.

A few decades ago, vehicles were lethal weapons with technology they are much safer in 2016. Now factor in distracted driving which has become a lethal weapon in its own way. Fascinating paradox, make vehicles safer, while distracting the driver.

You can get a 27+ inch monitor for your PC, while most folks do their business on a mobile device with a 5 inch screen. Reflect on this for a moment...

Agreed a bunch of stuff is facilitated with technology, its easier (most of the time), faster (usually), intuitive (sometimes). Technology offers a myriad of platforms to spread "pedestrian knowledge" (stupidity).

In the dark ages of technology, dealers would refuse to provide a PC to sales consultants for fear that they would be all over the Internet, while wasting time. Customers would do their due diligence on their PC and bring a spread sheet at the dealer to feel empowered.

Today in any showroom there is at least 1 screen on every desk with a PC somewhere under the desk. Obvious there is the Internet, software for this thing, that other thing, and more software to provide product training. While the customer walks in with a mobile device.

Suggest to a dealer that they should provide a tablet to sales consultants..."are you nuts they will spend their time on Facebook". These are the same dealers that spend money going to a ton of conferences on technology where they are advised to have a Facebook page.

The customer is often staring at the back of a screen, or the screen gets turned, or there are 2 screens on a desk to make it easier. While the same customer is perusing his mobile device further empowering himself.

Is there a technology asymmetry between the sales consultant (dealer), and the customer? You could make a case that its only an issue of hardware (PC vs mobile).

Hopefully you can see the direction of our vector. Everyone is empowered, while there is an asymmetry in communicating with technology, closing a deal, and customer satisfaction.

Is technology the elephant in the room?

What do you think?



Does It Ever Change?

The other day The Colonel was being recounted by a friend the experience of acquiring a vehicle and trading in another vehicle at a luxury dealer.

Here we go, and yes it never changes even with all the technology.

Obvious that the friend does his due diligence finds the vehicle he wants to acquire online, in addition to having an informed opinion of what his current vehicle (trade in) is selling for in his market, and what a dealer would pay as a trade in.

In 2016 this is all very simple and straightforward.

He visits the dealer which is quite busy, inquires to see the vehicle he has seen online. For some reason the sales person at the dealer cannot locate the vehicle.

"In the meantime while you find the vehicle, take a look at mine and give me a value"

Now here comes the low level qualifying question "How will you be paying for this deal?"

The response "Let's make it".

As time progresses in what should be an easy thing, still cannot find the vehicle, is offered to consider another, and gets a lower than higher value for the trade in.

As you can imagine what should be an easy proposition on a sheet of paper becomes an episode of having to "touch the desk" every time a value comes into play.

Which prompts the question "Am I interfacing with a human being that can think?"

By the time the final proposition is printed out by the CRM system, the numbers are wrong, now the assistant, or floor manager also steps in, in the meantime the vehicle that was offered for sale online is not found yet.

From the dealer's perspective, everyone followed the process, the trade in was appraised, the CRM generated a quote, the numbers were adjusted, the manager stepped in. Yes...never found the actual vehicle.

From the customer's perspective, could not see the actual vehicle, got low balled on the trade, the numbers are incorrect, and I have been wasting time accomplishing nothing. By now the strong urge to walk is executed.

At another dealer same brand, the vehicle is there, the value of the trade is aligned with market values, and now the vehicle has a Carproof report with a minor incident in the rear. The incident is perhaps acceptable (a bumper is 3K these days), the Carproof report remaining on the vehicle is not.

Finally another vehicle is chosen, and the following day in a phone call the deal is closed.

At one dealer the "moment of truth" was focused on technology and processes. At the other dealer the "moment of truth" was focused on assisting the customer to finalise his decision and closing a deal.




The Challenge Of Closing A Deal

Once all the technology, Internet, social media, or a ton of software settles. An interaction between a seller/buyer must close to do a deal, to sell/buy a vehicle (move metal).

Its easy to get lost in the fog of technology, enhanced by a myriad of acronyms, and lose sight that you have to close a deal.

In Canada deals are increasingly challenging to close in the showroom, accompanied by an increased level of churning with customers/prospects. With all the churning both customers and dealers are frustrated. While in churning mode for some reason its always the exceptions that stand out. We could offer a gazillion examples.

Lets bring it closer to reality, and the showroom. How come the deals are not closing? Yes...2015 was a record year in Canada, someone must have closed deals. Sure they did, accompanied by increased churning from the previous year (2014).

Perhaps Showroom Craftsmanship is lacking on the part of the dealer. Perhaps a lack of due diligence on the part of the customer becomes an obstacle.

A simple rule of selling both the seller and buyer must be in a position to make a decision and have the financial ability to execute the decision. Simple...perhaps its too simple. Perhaps its hiding in plain sight. Keep in mind that with a trade in both parties are sellers and buyers.

Buyer (customer/dealer): Are you in a position to make a decision? Do you have the finances to execute your decision. If its worth 10 and you owe 25, perhaps you don't have the finances to execute a decision.

Seller (dealer/customer): Are you assisting the buyer to finalise a decision that meets your parameters? Do you have the capability to deal with the finances of the buyer to execute the decision?

Finances: As financing terms have extended for the past several years, the incidence of negative equity has also increased. Is it how much the trade in is worth or how to deal, and package the negative equity?

Qualifying: Think about this, perhaps its a case that everyone is empowered (Seller/Buyer) and no one is qualifying. It should be easy, fast, efficient to qualify...every one is full of information and empowered.

Trend: A reason here, another there, they all make sense, they all generated a level of churning without arriving at a decision, closing a deal. Vehicles are inexpensive, with dynamic pricing, and full of incentives. Everyone can access a ton of information and data to empower themselves, and execute a decision.

Emerging Trend: Increasingly the finances are not aligned to finalise a decision. Its taking too long to acknowledge that the finances are not aligned.

Question: How can 2 empowered parties, with access to a myriad of information, not close a deal? Simple there is an increased level of asymmetry.