Pasch / Gage Just Faster

Re-imagining Automotive Retail
1. Auflage 2019
ISBN: 978-1-5439-5921-5
Verlag: BookBaby
Format: EPUB
Kopierschutz: PC/MAC/eReader/Tablet/DL/kein Kopierschutz

E-Book, Englisch, 311 Seiten

Just Faster takes a deep look at the transformation of automotive retail sales.

Autoren/Hrsg.

Pasch, Brian

Gage, Thomas

Leseproben

Can we agree that the automotive industry has not experienced many disruptive events over the last two decades that would cause a corresponding reactive and disruptive change in the way retail sales are conducted? Looking back, there have been perhaps just two disruptive events in recent years to consider. First there was the catastrophic collapse of the retail market in 2007. The drop in SAAR impacted industry-wide profitability and dried up the availability of lease vehicles for years to come. It also forced the closure of point locations as OEMs tried to make the franchise network more efficient. The response within our industry was the beginning of an inflated use of incentives to drive sales, a push to greater efficiency, and increased competition between stores for a scarce consumer. As an industry, we really did not significantly change the way vehicles were sold. The second disruptive event was very brief and, looking back, it would no longer be viewed as a disruptive event. In 2015, Berkshire Hathaway acquired the Van Tuyl Automotive Group. Suddenly, there was a PR campaign addressing why “the” financial titan of our time would be entering the automotive industry. As reported in “Automotive News” in 2015: “This is the beginning of a journey that will have no end,” Berkshire Hathaway Inc. CEO Warren Buffett said today in a statement. “Cecil and Larry [Van Tuyl] have given us the ideal platform with which to build an auto dealership business that will be thriving and growing 50 and 100 years from now. The fun has just started.” The concern at the time was that this was the tipping point to a radical change in automotive retail. Thomas and I were present at J.D. Power Automotive Forum in New York when Buffet was being interviewed about the acquisition. The buzz was around substantial consolidation and a dramatic change in the way cars would be sold. It did not happen. Warren Buffett let the group run its business independently and was supposedly more attracted to the stability of the franchise business model and the profits gained in the F&I portion of the business. But we did think about the impact of outsiders entering the car business for a while. There was also the Google Cars attempt at online classifieds in the San Francisco market, and Tesla’s nationwide battle to bypass the franchise model with direct-to-consumer sales. These events have just been noise in the dealers’ ears. What we have seen in the last two decades instead of disruption is incremental change. This is because the fundamental way in which most vehicles are transacted has not changed. We can't overlook the impact the internet, dealer websites, third-party classifieds, and availability of online information has had on automotive retail. As information, photos, stats, specs, pricing, etc., became more prevalent online the power shifted from dealers to buyers. However, heavy lifting for automotive retail is still primarily happening in the dealership which is driving the need for a more seamless handoff between online activities and store visits called Digital Retailing. One could argue that the shift from Traditional Media to Digital Media was significant, but here again, the change did not disrupt the business model let alone, save the industry money. However, new forces are driving change to upend the traditional sales model. Vendors are calling it Digital Retailing, but whatever this change is called, we are in the early stages of this transformational movement in automotive retail. Digital Retailing looks like it has enough momentum to sustain lasting change, once dealers figure out how to apply the changes in their internal sales processes. Moving the steps for a vehicle transaction online-at-home or online-in-showroom will increase customer satisfaction for consumers who are tired of the existing sales model, which is a cat and mouse game at best and a confusing waste of time at the worst. Who is Driving Change? It’s not the OEM. However, most manufacturers see that in order to increase market share and brand loyalty, they must make the retail experience Faster and less stressful. It’s not the dealers. Many are reluctant to break down the walls of their business to allow transparent shopping, financing, and purchasing. It’s not even the consumer. While they may be unhappy with the vehicle transaction status quo, they don’t know enough about the processes to fix or suggest a new automotive retail sales experience. Starbucks, Uber, and Amazon are driving the change that is occurring in automotive retail. These companies have reinvented their business models to give consumers what they want from the device that is always in their hand. Consumers, for the most part, have experienced ideal retail transactions in other areas of the marketplace. Dealers that solve their pain points associated with automotive retail transactions will gain market share and loyalty just as other innovative brands have done. Let’s look at how these retail leaders are changing the demands and expectations of consumers. Do you order your Starbucks coffee from their mobile app? Ten years ago, who would have thought that millions of consumers would order their morning coffee on their mobile phones. While consumers love Starbucks coffee, they did not like waiting in line, especially when they are running late on their way to work. Starbucks made it faster and simpler. Thomas and I have active travel schedules, which include short trips to speak at conferences, hold workshops, or visit with clients. In the past, it was very common to rent a car and drop it off when we headed back out of town. We liked the convenience but hated some of the experience. Waiting in line to resolve a rental issue or taking a bus from the rental center to the airport is the worst part of the rental experience, outside of dealing with the insurance from an accident. When you’re late to the airport, the rental car return becomes stressful, but there was no real solution until Uber. Today, I rarely rent a car. I use Uber to get from the airport to the hotel and back. I can take clients out to dinner, have a glass of wine, and Uber can safely and affordably get us back to the hotel. I also avoid the $40-$75 per night parking fees that hotels charge. Uber made it Faster and more affordable to get around cities. I like shopping in stores, but my schedule often prevents me from getting to the store before things run out at home. While I like shopping, I do not like finding or paying for parking while fighting the crowds on busy shopping days. I also hate making a trip for a small item that I know I need - only to find out that the store is out of stock. Amazon offers me a Faster way to purchase household items, clothes, electronics, and even Pellegrino Water, all with free Prime shipping. The annual fee is insignificant compared to my savings in time, gas, parking fees, and even parking tickets. Amazon removes the disappointment that occurs when you drive over to a store and find that they don’t have the item you need. With Amazon, I get what I need every time, on time, with no hassles. What else did Amazon do? They raised the bar for every major big box in retail. They all need to offer at-home delivery. They all need to have transparency in price and ease of the transaction. Actually, not all adopted to the new business model. We know what happened to Sears. The point here is that “someone” will do the same in Automotive Retail, and this “someone” will raise the bar for everyone else. This is how and why our industry will step into Digital Retailing. Curiously, it also appears we will be better off as an industry based on the financial experience of dealerships we interviewed. Innovations in retail are driving consumer expectations for automotive retail. Consumers want to obtain transportation on their terms, yet the dealer community has been reluctant to even meet them halfway. The speed of change in automotive retail will be directly tied to the willingness of dealers to examine their current sales processes from the perspective of today’s digital savvy, e-commerce comfortable consumer. The Current Retail Process is Broken Let’s look at what a traditional automotive shopping experience looks like from the viewpoint of two individuals, Mary and Beth. We will pretend that we are filming a movie with cameras on each woman as she moves toward purchase. The main difference between these two women is that Mary needs to buy a car, and Beth wants to buy a car. Scene 1: Research [RE] Mary and Beth are using online tools to determine their next move, with Mary primarily looking at vehicles based on affordability, and Beth focused on finding a car with a very low operating cost. Regardless of their needs and desires, both of our consumers reach a point that they have exhausted online resources and then reach out to the dealership. Mary submits a credit app which gets pushed into the dealership’s CRM system. Not a single person reviews her credit app. The CRM platform automatically sends an email encouraging her to make an appointment to learn more about her vehicle of interest with the promise that all of her questions will be answered. Beth calls the dealer to confirm availability on an EV and wants to understand if EV vehicles are eligible for tax incentives. Her call was picked up by the Business Development Center (BDC), which was incapable of...