"Where is the Retail Automobile Business Headed?"
By Bob Dilmore
That is the question uppermost in the minds of dealers as well as everybody who does business with dealers, from manufacturers to pennant peddlers. If you read and believe in Joel Barker's philosophy, and I do, you realize we are in the first stages of a new paradigm - the "A" stage. Barker describes it very well. People who are outsiders to our business will bring whole new methods and functions to our business, and when they do, everyone goes back to zero. That certainly describes the past three to four years as we have seen profound changes in almost every area of our industry. And, indeed, we appear to all be back at zero.
Barker further describes the new paradigm pioneers as being vulnerable to failure in the midst of this "sea change." He says many will succumb to arrows in their back, and, as he predicts, we are seeing that characteristic of the "A" stage now. So, who is going to "get it right " and become successful through the test of time, in high as well as low business economic cycles?
I have said all along, we haven't seen the biggest player yet. Barker states that in most full paradigm changes that occurs during the "B" stage of the paradigm curve.
So far, we know several things that don't work: Factory owned storeseven partially factory owned stores don't work.
There are a zillion reasons this is true, the main one being manufacturers should stick to what they do best, build great cars and trucks and stay out of the retail business which they don't know. (Does history teach them nothing?)
Brand marketing ain't what it's cracked up to be, especially if what you're selling is "ho hum." Brand marketing works only if you have a truly great product. All the advertising and hoopla in the world will not create a great brand. "It's the product, stupid!" It is product that increases or decreases market share.
Mega used vehicle centers cannot turn large inventories fast enough to avoid serious cost deterioration. Those who are new to our business tackled the toughest element of it. They were going to show all of us how it should be done. Their lack of knowledge and skills did them in.
You can't buy successful dealerships, pay too much for them (with somebody else's money), and expect that they will continue to be successful and even improve without changing their paradigm.
The one-price philosophy only works where there is no intrabrand competition. In fact, "one price" has never really been the issue. The customer who doesn't like the hassle of buying a vehicle is looking for a different process. He still wants the best deal. It's the process that needs to be changed, not the pricing.
You and I could add a lot more to the list, but let's focus on what the "B" stage of the paradigm shift might look like.
Public ownership is here to stay, and it will prosper and grow when management utilizes the right functions, and focuses on what is important to the customer.
The customer wants a quick and easy way to buy a vehicle with as little hassle as is possible in the shortest period of time. One-stop shopping is high on the list of people who are always short of time (that includes almost all of us). The customer would like to see all of the vehicles being considered as quickly as they can, and make a fast decision with all of the elements of the sale concluded promptly. This may lead to a greatly increasing use of the Internet, at least as a customer research source.
Manufacturers are still pushing for exclusivity, but this "flies in the face" of what customers want, and the slightest dip in the economy will quickly highlight the brands which cannot stand alone in a downturning economic cycle.
Look for a great deal of the shopping by customers to be done on the Internet.
Look for a multitude of brands at one convenient location, perhaps in exclusive boutique settings but sharing consumer service, parts, collision repair, and used vehicle display lots, common accounting and smaller work forces.
Current dealership facilities - especially those designed for an exclusive franchise - may be obsolete in the progressive changes of the new paradigm. Dealers may be well advised to concentrate on a web site rather than a dealership site. Dealer's facilities may evolve into delivery and service sites.
Now that the barriers are broken for dealerships to go public, look for dealers well experienced in the business, but savvy to today's customer wishes, to lead the way. There are several waiting in the wings.
I predict that the most successful publicly-held automotive retailers in Stage B of the new paradigm will put their own teams in place in the stores they acquire, and the stores will immediately be branded with that nationally known name. The stores will have common cultures and standard operating systems so that the customer will have the same great experience in any one of these stores. The company will be highly skilled in experience marketing to the point the customer will enjoy the buying and service experience. Wouldn't that be different?
The door is wide open for the really big player in the new millennium. Small players will go the way of the corner grocery store. So what will it be for you? Decision time is near. Great opportunities wait for those who are ready to pursue them.
Bob Dilmore is Chairman and CEO of Management Performance Group. bdilmore@dealeronline.com
