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Customer Experience

Informative and thought provoking video from Maritz CX




Digital Transformation in Auto Retail

Thought provoking presentation from Capgemini ...especially for auto dealers.




Cloud Transportation

What does cloud computing have to do with cars?

From an historical perspective not much, except for technology in the center of the dash, which recently was hacked.

What does cloud computing have to do with "transportation"...yes Zipcar, Uber to name a few. Cars (vehicles) are transportation, and mobility.

In Canada we increasingly have what we at Strada have called a "mobility model" at $500 a month not an ownership model.

If you are in the auto business...reflect on this for a moment...transportation, mobility, cloud, technology, leasing, renting, the role of the dealer, the future customer.

Then take a look at What the Auto Industry Can Learn from Cloud captured our attention, its thought provoking.

From a dealer's perspective consider the following, new vehicles, used vehicles, and a new fangled "cloud transportation" department.

"What vehicle do you own?"....."Own...what is that? I have a cloud transportation agreement with manufacturer XYZ through my local dealer" as an example.

Uber is a provider of cloud transportation, take a look at how Uber provides vehicles to its drivers through XChange Leasing.

We could keep on going, but surely your imagination is fired up by now...




Closing Deals in the Showroom

You would think that with all the technology, and information that is available closing a deal in a showroom would be simpler, easier, faster.

With the onset of the Internet, product information freely disseminated, 20 years ago you would have concluded that with time closing a deal would be easier, and faster. In 2015 its not the case...

As well with all the talk of social media, conventions, seminars, and a myriad of different offerings by a myriad of different folks closing a deal should be simpler, and easier. Everyone has a perspective, a theory, and an infallible way to close deals.

In Canada, in 2015 its not the case...go figure.

You have to conclude that "something" is not aligned between the individuals in the showroom. While looking ahead you almost have to conclude that with everyone well informed actually closing a deal will get increasingly challenging.

Which reinforces that dealers remain "horse traders" with the dealer trying to sell, and the customer also trying to sell (his trade in). While both are enabled by expedite the selling and buying interaction.

The one constant is "human nature" which has not really changed in a couple of Millenniums...we are all empowered by technology, while still remaining humans.

If customers presumably visit less than 2 dealers, the current close ratios indicate that they visit more than 2 dealers, accompanied by increased churning / spinning / near misses.

Lets not forget clarity, transparency...if its so clear and transparent "How come deals are not closing?"

Looking ahead to 2020, you have to conclude that in 2015 "something" is misaligned, folks are using the inappropriate levers, it might get worse before it gets better.

Its clear that "something" is not aligned in the showroom interface / interaction.

Its clear that showroom craftsmanship is increasingly a lost art.

How will deals be closed next year, and in 2020?

What do you think?




Auto Business

The Philosophy of History implies that one has to look back in history, to look ahead. In a nutshell that is the main theme that we remember from taking a university course a few decades back.

Looking back at the auto industry in North America, and in some instances living through the years.

The Auto Industry Powered North America:

From the mid 20th Century (after WWII) the auto industry was a formidable economic power in North America. The product compared to today was archaic, unreliable, maintenance intensive.

But the money was incredible, anyone involved with the auto business made good money. This all developed a few generations ago, its a distant memory, and in many instance forgotten.

Detroit was the Silicon Valley of its day.

We could keep on going, but you surely grasp that during the golden years of Detroit in North America, all stakeholders in the auto industry/business derived appreciable economic rewards...including the assembly line worker of the day.

The Auto Industry is Global:

The industry went global when folks were probably wondering what global was all about. Today the global aspect often implies cost savings in seeking a lower wage area of the planet to perform assembly work. Agreed...robots could not care where they operate.

You can speculate, who is the skilled worker the robot or the human in an assembly plant?

Auto Pact:

The Canada-US pact was the precursor of several free trade agreements. Easy ship for $100 to the US and bring in $100 to Canada to balance the books. Back in the day the auto pact powered up a substantial auto assembly infrastructure in Canada; with most vehicles going to the US to balance the books.

Free Trade and NAFTA exert dramatically different forces on the flow of vehicles and cost savings.

Bean Counters:

Put it this way, it was so easy to make money, that counting the money superceded the product in an industry where the product to this day is the most important component.

Detroit went on a mission to design, engineer, assemble a barely acceptable product while focused on counting the money.

Fit and finish was the most obvious issue of the day.

We could have a lenghty discussion but you surely understand that the auto business is not the counting money business.

Increased Competition:

Think of this Detroit ruled North America. How did the Japanese get a foothold in North America? Reflect on this for a moment.

What we understand today as German luxury was barely a blip on the radar.

Detroit left themselves wide open, the others...we will not do the same thing.


Remember the days of the one owner independent auto dealer that was beholden to the manufacturer? In many instances the dealer was a local entrepreneur.

Fast forward to today, dealer groups, multi billion dollar companies doing business with several manuafcturers. What seemed impossible a couple of generations reality today.




Apple and Cars

All the recent talk and speculation of perhaps Apple getting into the auto business and perhaps even building and selling electric cars by 2020.

Makes you wonder why would Apple or Google, or another tech company actually want to get into the auto business. Yes...if Tesla did it, anyone else with sufficient funding can do it...and it fires up the speculation.

If you are in the tech business and making money selling products that are dramatically less combersome that cars. Why would you want to get into the auto business, and actually build cars?

Is there a vacuum of not enough car builders in the auto business? What do you think?

Is there a vacuum in the current clumsy center screen area of any vehicle? What do you think?

From our perspective, the vacuum/void is in the centre screen of all vehicles. The functionality of the centre screen is all over the map, accompanied by the various disconnected capabilities. One vehicle its this way, another its that way, its all over the place.

Factor in that most everyone has a smart device that functions on 2 software platforms. We are talking about millions that are intimately familiar with 2 software platforms. Yes...Apple owns iOS, one of those platforms.

Some centre screens from certain manufacturers are starting to look like someone stuck an iPad on the dash.

If you have had an opportunity to have the centre screen of a Tesla Model S demonstrated to you, obvious the size is impressive, once you get over the size, the functionality is exceptional, its intuitive, its disruptive, its like no other center screen.

Imagine for a moment synching your iPhone with your iPad, you can do that today. Now go a step further and synch the centre screen of your vehicle with your iPad, iPhone, iWatch. How cool would that be?

The entire discussion of connected vehicles the actual connection is outside the realm of all current auto manufacturers. Its the ongoing bits and pieces here and there, one offers a feature, another a different feature, and so on. Think about this for a moment.

In the hyper competitive arena of smart devices, and the connection moving towards vehicles. Connecting vehicles presents an immense opportunity for anyone that can offer a pre engineered package to any manufacturer.

To offer a pre engineered centre screen package you need folks that have an understanding of autos, the auto industry, and the various elements that are currently controlled by a center screen. Where some elements still relate to the vehicles climate control comes to mind, and other elements will be related to connecting the vehicle to other devices. Perhaps even having "autonomous" in the centre screen.

The consumer has an iPhone that is synched to an iPad, that is synched to the iScreen in the vehicle. The iScreen connection functionalities can be explained by any Genius in an Apple store.

Reflect on this for a moment.

Reflect on the reality that many components/assemblies of a modern vehicle are engineered, designed, assembled by a supplier. If you have a supply chain that provides iPads....

To cover further possibilities, look at additional functionalities that can be controlled by a centre screen.




Some Questions and Answers

Lets get going with a few questions, and answers that have developed through the years.

What would happen if Wal Mart went in the car business?:

A few decades ago it was a fascinating question. As to what would happen if Wal Mart became a dealer. Today's dealer groups are the answer to the question. Think about it, huge groups with numerous franchises, public and private funds. Exerting influence on manufacturers.

Vehicles will reach a level of parity:

Remember when some manufacturers had better products, quality than others? Today with increasingly less platforms, accompanied by an increase in common components. There is a strong level of product parity amongst all manufacturers. You know the saying "They are all good vehicles". Think about this for a moment.

Vehicles will become a commodity:

In the mid 1980's the thought vector that with a level of parity, vehicles would increasingly become a commodity. At the time it was unthinkable, "they will never become a commodity". Today CMS (Citizen Main Street) wants a vehicle with a warranty, and a service package. Think about this...

What happened to the mechanical car?:

The mechanical car that was service intensive, often unreliable, and rebuildable, is on a vector of rapid extinction. Carburetors, distributors, ignition points, hydraulic power steering with a steering box, hydraulic valve bodies in automatic name a few. That stuff is from yesterday, and non existent on today's vehicles.

What happened to the manual assembly line?:

Its gone, same as the carburetor. Robots perform a majority of the precision tasks on a modern assembly line. While manual labor the little that is required can be done in a secondary country with dramatically lower labor rates. The auto industry that for a couple of generations empowered blue collar middle class workers, is now empowering robots, and lower wages. Remember "Japanese assembly lines can run with the lights out"

Why are vehicles with leading edge mechanical components expensive?:

The moment any manufacturer steps away from common, mass produced mechanical components the price escalates dramatically. Think high performance, high horsepower, ceramic brakes, carbon name a few. High performance is more expensive than a few generations ago.

Why is the cost of technology inexorably rising?:

Simple there is increasingly more technology in a vehicle. CMS demands more technology, the cost savings from mechanical components are applied towards the increased content/costs of technology. Its a delicate balancing act.




Influencing the Future

As we look ahead and frame the future we can all influence and make a dent.

A thought provoking collection of quotes from Steve Job.

What does it have to do with cars? Nothing, and everything...




The Product

One constant of the auto business is the impact of the product.

Its a product driven industry, and after all is said and done, and every pundit has shared a thought and an opinion, it remains a product driven business.

Yes...we remain of the opinion that all the product is pretty darn good.

Although the product is inexorably migrating and progressing from a purely mechanical vehicle (decades ago) to one full of technology.

The product is safer, meets stringent fuel economy ratings, is increasingly connected, and resonates with the potential and future customers.

Its fascinating, its thought provoking to see the level of technology that is applied not only to the finished product that is offered on the market. The technology in designing, engineering, assembling, presenting the product.

With every manufacturer rationalising the number of platforms they use, accompanied by a smaller number of suppliers on a global scale. The extent of product parity increases among manufacturers. Back to they are all pretty darn good.



The Backstory

Yes...there is a backstory.

Thirty years ago (1985) before the widespread use of computers, word processors, Internet, social media, way back then The Colonel crafted a vision of the auto business for 1995.

In 1985 it was a different auto industry, and auto business, with cars that were mostly mechanical with only a few black boxes.

It was also a time when you could sense the advancing impact of technology on the product, and the business.

A few relevant points from way back in the day:

  • The boom in luxury vehicles was emerging.
  • Detroit was losing ground.
  • The Japanese built a better car.
  • The Koreans were emerging.
  • Manufacturer/dealer relations were friendly/adversarial.
  • Used cars were going to increasingly be a factor.
  • CMS (Citizen Main Street) was demanding a better/safer product.
  • Technology (computers) would increasingly touch most facets of the business.
  • The global footprint of the industry would increase. 
  • Its people designing, engineering, assembling, selling, servicing the product.

We could keep on going, but you surely grasp the essence of what was going on 30 years ago, and what the perspective would be in 1995 (20 years ago).

What is fascinating, the Internet started emerging 20 years ago, social media became widespread at least 6 years ago. Its still talked about is if it happened yesterday.

Twenty years ago we knew that the information residing in the showroom had embarked on a path of being disintermediated.

Often the technological progress of the product, masked the stodginess of the actual business.

With the PC's that were available in 1985, accompanied by the bulkiness and limited coverage of cell phones. Although we all knew the basics of Moore's Law; it was challenging to foresee that at some point everyone would be going around with a PC (smart device) in his pocket.

The first generation of "digital natives" (millennials) are now working in the auto industry, and increasingly buying and leasing vehicles.