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Entries in Dealers (7)


Retailing and Servicing Autos

The entire retail experience is fascinating, especially that we hear more and more about customer experience (CX) as being a key factor of having loyal customers.

Think about this for a moment.

A while back when vehicles were not as reliable as today, and everyone knew that all vehicles at one time or another would have some sort of a failure. Lets also factor in that all vehicles were dramatically easier to repair. 

It was the humans in the business interacting with human customers that made all the difference, generated the CX, and upheld loyalty.

Fast forward to today...

Vehicles are extremely reliable, and more complex to repair. There is all sorts of technology to make it easier while dealing with a bunch of routine tasks.

Is the customer experience better? Is the ownership experience enduring?

Reflect on this for a few seconds.

Or is it all deal, incentive, process driven with the customer some sort of afterthought?

In the meantime the customer not to be embroyled with product issues is/has adopted a mobility model with a warranty as the interface between the dealer/manufacturer.

Where is the loyalty? Is it deal driven?

You constantly read/hear that CMS (Citizen Main Street) does countless hours of due diligence prior to acquiring a new vehicle. Simple question..."if you have to work too hard to spend money is it worth the effort?"

Does the dealer make it easier or compounds the "work too hard" for CMS to acquire a vehicle. all seems to work we have record auto sales in Canada.

What happens if the current model starts disrupting with an increased emphasis on human interactions?




Thoughts on "The Spread"

Do you remember when the spread was at least 15% and all the product information resided in the showroom?

This goes back to the days when dealers were of questionable ethics (presumably), and customers were victims. Knowing the "dealer cost" was the key to empowerment for CMS (Citizen Main Street).

Fast forward to 2016 and keep an eye on 2020.

The spread is down to often less than 10 points (10%) on new vehicles.

Invoice or the "dealer cost" is irrelevant.

What the "other" paid is also irrelevant with a ton of trades upside down, accident reports, and various credit scores.

There is an increase in the variables. Who really has a grasp of all the variables? Obvious that everyone is hanging on to "something" to at best uphold their position, and sense of causality.

The advent of dynamic pricing has empowered who? Where does the money to execute aggressive dynamic pricing come from?

A simple example...

When the spread diminished from 15 to lets say 10 points, lets say that 5 points went into the dynamic pricing reserve.

If a manufacturer retains 5 points, and they go into the "dynamic pricing reserve", and no one knows from month to month where the reserve will be applied. It makes for interesting times in the auto business.

What motivated manufacturers to embrace dynamic pricing, and have a reserve? Its a conversation for another time, but think "dealer groups" as a starter.

If you conclude that the spread is still 15% + you might be correct.

If you conclude that the dealer no longer controls the entire spread, you might be correct again.

But CMS is empowered, he/she has all the product information, can compare, has dealer cost all readily at hand. Sure they do!

Does CMS know where the "dynamic pricing reserve" will be applied from month to month by all the manufacturers?

More important does CMS care?

In 2016 CMS in Canada cares about a monthly payment, and "shopping a lesser deficiency".

The spread has not changed for decades, its being repackaged by manufacturers. Reflect on this for a moment, connect your own dots, and fast forward to 2020. will get dramatically more interesting, exciting, and it might just take your breath away if you are ill prepared.




What One Consumer's Car Buying Process Reveals...

We all know that it starts online, and now more often on a mobile device, an informative walk through the buying process of one consumer.



Connecting Data 

Think of all the data/information/numbers that resides on a server or on a cloud somewhere. By now we all know there are gazillion bits and bites of data all over the place.

One thought vector in the auto business is to better connect all this data, to curate the data in a fashion that it generates improved results, is more productive.

If at first blush it seems like a daunting task...and it is. A system here, another there, this plugged into that, the other not compatible with this one. While everyone talks about their small sandbox and misses the opportunity of the big sandbox.

Then you have a pundit here, an expert there, this round table discussion, that invited guest. To make it even more interesting.

Invariably the Internet rears its head, the connected customer, Millennials, smart devices, and on and on to fill volumes, and a couple of clouds. The capture service for this, the syndication service for that, the boundaries to monetise this activity.

We are selling analytics short if we stop there. The data and methods embedded in analytical approaches offer more. They offer the ability to explore unexpected relationships that may not only solve the immediate puzzle and climb the top of a local hill, but also find unforeseen options. from MIT Sloan

If you are a customer your head is spinning one way, if you are a dealer its often spinning in a different direction. Reflect on this for a moment.





Used Cars...Really

There was or perhaps there still is a saying "If you want deeper insight into a dealer look at their used car department". Take a quick look at how any dealer runs/manages its used car department and comes to terms with the myriad of variables and software that is available in 2015.

The unique feature of the retail auto business is that dealers after 100 years are still "horse traders" and will continue to be horse traders for the foreseeable future.

The used car department is where a dealer washes out his deals.

Reflect on this for a moment, a dealer sells a vehicle, while taking another vehicle in trade as partial payment. At some point the dealer must convert the trade in (partial payment) back to money to recoup the full payment of the first vehicle.

The dealer must wash out his original deal to recoup all the money. After decades, generations, the auto business still assigns an "A" to the stock number of the first trade in, subsequently a "B" and so on. With all the technology some things never change.

Can I create a retail customer with this trade in?

Simple question that every dealer should ask for every trade in. Agreed...with the available technology, platforms, opinions, experts, the simple question becomes complex to answer.

Not only create a retail customer, but how fast.

The faster, the better, there is a partial payment tied up in this trade in.


Back in the day, reconditioning was the process of putting value back into a used vehicle to get more money for the vehicle, and have a satisfied retail customer.

Today with market prices, reconditioning walks a fine line. Is the customer seeking a competitive market price, or a correctly reconditioned vehicle with added value for a higher price.

Certified Pre Owned

In 2015 CPO is the equivalent of the correctly verified and reconditioned (putting value back) vehicles. In Canada CPO is a process that initiated a generation ago. Its not new.

If I don't want to create a retail customer with this trade in?

Certain vehicles that must be taken in trade do not fit the retail profile for a myriad of reasons. If you don't want to create a retail customer, then you must create a wholesale customer for the trade in to convert it back to money.

I tried to create a retail customer and it did not work?

Now the mind games start, even with all the technology the extent of the human mind games, by the various stakeholders is fascinating.

At this point and time its a retail fail.

Absorbing a loss...really?

To be a successful, competitive horse trader, entails being mature to take losses on vehicles. Where ever the loss originated.

Its usually where a ton of folks go into denial mode.

Stick to the plan...really?

The plan goes back generations, its the same plan, now empowered and facilitated by technology. immense really?

We all know or should know that technology compresses time. With all the technology that is available to operate and manage a used car department. Time is profoundly compressed, as well as offering a competitive advantage.



Digital Transformation in Auto Retail

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




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.