Almost a decade ago, the automotive retail industry was experiencing change at a pace that will live in the history books. Coming off some of the strongest growth the industry had ever seen, everything came to a halt when the stock market stalled, impacting the United States economy in ways that had not been seen in decades.
Looking at where the industry is today, confidence is back and stronger than ever. Banks are lending money and consumers are buying vehicles. As such, dealers are investing in their facilities and manufacturers are breaking the mold with new models, while also bringing back some popular vehicles from back in the day.
In addition to the stronger economy and the confidence that comes with it, technology and innovations are also changing the landscape of the industry. These changes are impacting the way we operate day to day, the way we sell and service the customer and the way we develop our next generation of dealers.
Another area that is being impacted is in the long-standing relationship between the manufacturer and dealer, as showcased with the growing popularity of Tesla.
With all this taking place, the automotive retail business feels as if it is again being shaken like a bottle of carbonated liquid, with pressure building, we are all wondering when the top is going to pop. History has proven that we must take what has happened into account, and use it to look forward into the future while integrating the unique current-day complexities which include:
- Self-driving cars
- Manufacturer market share
- Manufacturer and dealer relationships
- Online competition
- Multiple generations in the workplace
- Rapid pace of retirement of current generation dealers (many with no succession in place)
- Major market acquisitions
- Changing consumer behaviors – aging US population with baby boomer and different buying behaviors of millennials and generation z (boomlets)
The list goes on and on related to the unique dynamics we are experiencing in today’s automotive retail industry, which depending upon your perspective can be a challenge or an opportunity.
Many say that the car business could be for the first time ever, on the road to no-where. Others say that we are headed to a new and exciting destination that is going to bring the industry where it’s never been. The reality is, we just do not know what to expect. We are experiencing a phenomenon in one of the oldest industries of American business because generations before have not been exposed to current day events. An analogy might be looking at history from when the industry went from non-motorized vessels to actual motorized vehicles. Could there have been the same fear and optimism back then?
One of the ways we can combat the threat of “fading away” is to intentionally create a culture of innovation. Creating an innovative high-performance culture can seem like a difficult concept for dealers to embrace. The reason for this is that when we talk about “changing culture” the first thing we hear is that it will cost too much money and take too much time. However, the secret to making it happen cost-effectively and timely is to be intentional. Intentionally balance, focus and use discipline. Intentionally learn from the past while embracing new ways of leading. Move from competing to collaborating. And here is the crucial factor. Make certain that people in the dealership know how to make decisions based on your organizational values, rather than on business strategies because strategies will change over time, whereas values are set.
Another way to lessen the fear of heading down the road to nowhere, understand the resource and management implications facing the industry. People, time and money are key influencers of the dealership’s performance; therefore, it is critical to have the right people, doing the right jobs, performing the right way, the right number of times. Regardless of the impacts facing the industry, strategically problem-solving resource and management implications for your dealership today, will establish a solid foundation of success for the future.
History has proved that these two fundamental areas can help sustain your dealership through the ebbs and flows of the changing market dynamics. However, looking backward helps us sustain in the present, therefore we need to be looking to the future as well. If not looking forward, we limit our ability to be agile and flexible in the face of change.
With the industry being shaken up like a protein bottle after a gym workout it is never been more critical to look forward. The unique complexities that are impacting the industry are like those we have not experienced before. That said, as you look forward and get excited about the new and interesting destination in which the industry is headed, there are some things to consider ensuring a safe, fun and enjoyable journey.
Service is going to become an increasingly important part of the customer relationship. This means from the point of sale through to service and upsell. Remember that the customer relationship is with the dealership, not one individual or department within the dealership. Consider what you need to do to not only sell the car but service it through the life-span of ownership. This way, you have recurring service business if the owner chooses to hold on to the car for its life, or you have the relationship to upsell into the new vehicle when they are ready to part with the old one.
Diversify your offerings. Be more than just a “dealer” and looking to the model above when thinking about service, consider ways you can make your dealership more attractive to non-customers, or a new set of customers. One example of this is looking at AutoNation.
Pay more attention to what is taking place at your local level, as well as industry-wide. Your local geography will show you what areas of diversification may make the most sense for you. For example, if you are in an area that has a reputation for a lot of recreational activity, consider how your dealership can accommodate the needs of those people.
Finally, with all the disruptive change taking place and the industry experiencing things never seen, remember the importance of surrounding yourself with strong advisors. Have a group around you that understands sales and marketing, finance and investment, human behavior and are versed in how change impacts value, growth, and sustainability of the industry.
As we look to what the dealership of tomorrow might be, we must have knowledge and perspective of where the industry has been. Even though the landscape may be starting to look a little different than what we are used to, there are many lessons to be learned from this industry steeped in history. Be sure to check out Glenn Mercer’s NADA commission report, “The Dealership of Tomorrow” for more detail on how to ensure your building your dealership for the future.
Author: Kendall Rawls
Kendall Rawls knows and understands the challenges that impact the success of a family owned business. Her unique perspective comes not only from her educational background; but, more importantly, from her experience as a second-generation family member employee of The Rawls Group. Email: Krawls@dealer-communications.com.