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Wednesday
May252016

The Epiphany of Humans and Autos 

At Strada we believe that humans make a remarkable contribution, and difference in the auto business.

 

When looking ahead, the obvious landscape is one where technology rules the day, and humans are some sort of an appendage.

Its technology here, there, processes, and the entire business and world evolves on a screen. There are complexities, variables, immense amounts of data all over the place.

There have been folks selling cars, and folks buying cars for almost a century. If you look at what is going on today, and the fashion tomorrow seems to be developing on the horizon. You have to wonder how these folks a few generations ago did it.

If you don't have this technology, that software, a presence on that platform as a dealer you are missing out. If you don't do your due diligence on your mobile device, know the cost, read reviews of vehicles and dealers, as a buyer you are missing out too.

At some point it begs the question "Who has time for all this stuff?". Especially with time being increasingly compressed, and attention spans that are shorter and shorter.

How did these folks from a couple of generations ago do it? How did a customer that had no access a ton of product information buy a vehicle? How did a dealer manage a parts department or a used car department without technology?

The stereotype of the guy in the plaid suit selling a used car was rampant. Think about it...compared to today the reliability of the product was scary...let alone the individual selling an unreliable product.

Factor in a blind loyalty for a manufacturer, or brand...Wow...most folks did not even come close to a competitors product.

We could keep on going...the question lingers how did these folks do it?

A simple scenario...from back in the day when electronic calculators did not exist, let alone a DMS, and product information resided in the showroom.

Many dealers retailed 60-70 new vehicles a month, 30 used vehicles, had a 15 stall service department, and a body shop, lets not forget the 30 car showroom, and close to 150 new vehicles and 60 used vehicles in inventory.

Customers with extremely limited product knowledge would walk in all day long and acquire vehicles both new and used.

Going back a couple generations the auto business in North America was comparable to Silicon Valley of today. While dealing with mechanical cars, and absolutely no technology. Back then it was normal for some folks to trade cars every year for the latest model...today folks trade "smart devices" for the latest model...not so much cars.

Humans made all the difference...worth repeating humans made the difference.

With all the discussions of Millennials, do you think its the technology, or the humans that will endure in making a difference?

 

 

 

Monday
May162016

Windows of Opportunity

In the auto business there have always been "windows of opportunity" in one fashion or another. Obvious that by the time a window of opportunity becomes "pedestrian knowledge" its already on the wrong side of the curve.

What is a window of opportunity? A window of opportunity is a short time period during which an otherwise unattainable opportunity exists. After the window of opportunity closes, the opportunity ceases to exist.

As you can appreciate empowered by technology, "windows" open and close with increased rapidity. Yes...some folks "get hung up to dry".

The value of the Canadian dollar has presented several windows of opporunity during the past decade. Let's consider 2016 and looking ahead for the short term.

Yes...we all know that the CDN dollar has tanked, visited the bottom of the dumpster for the past several months.

The tanking has created a unique window of opportunity for the auto business in Canada.

Customers

For CMS (Citizen Main street) the lower value is unique in generating robust used vehicle (trade in) values for numerous makes, and models. Stronger values have a direct impact on the level of negative equity. Need we say much more?

Dealers

Its presented a unique opportunity to pay aggressive amounts for trade ins, to close deals. As well as managing used vehicle inventories. Could it be that its a factor in record Canadian new vehicle sales this year?

Manufacturers

Have ramped up the inventories of new vehicles, applying pressure on dealers to move iron. While deploying selective "dynamic pricing".

Auctions

Are enjoying a golden time selling a myriad of vehicles to "American" buyers.

Its all good for everybody...

But...and there is always a but...by now its coming to an end.

If an additional 100,000+ used vehicle were exported from Canada to the US in the grand scheme of things it might be a drop in the bucket, especially for the US market. But it also made it easier to close deals in Canada, and manage inventories.

The bigger BUT...

The scarcity of used vehicles in the US is a thing of the past, they are not so scarce anymore. While its anticipated that values will continue on a downward slope from now till the end of the year.

From our perspective this "window of opportunity" is closing.

Is there a lesson...absolutely...don't get caught too far on the wrong side of a closing "window of opportunity".