There are great managers and great leaders. Which are you?
Over my 25 years as an observer and advisor to the automotive retail industry, the partnership between automotive vehicle brand owners (VBO) and their independent dealers has amazed me.
From my vantage point, the VBO and the dealer have more similar than opposite objectives. The main objective of VBOs is to sell new vehicles and to support their customer base with OEM parts and warranties. VBOs, as we know, do not deal directly with the vehicle buying public but rather through a number of authorized exclusive dealers geographically disbursed to yield a desired level of market share.
A dealer’s main objective is to maximize the return on investment through the proper care of customers before, during and after the sale and to provide long-term employment opportunities in the community in which it operates.
Multiple brands the norm
Initially dealers represented one vehicle brand. Only a handful of dealers invested in multiple stand alone stores and represented more than one brand or several locations of the same brand. In the past twenty years, with a sharp heightening in the last 10 years, the overwhelming trend has been towards multi-location, multi-brand auto retail ownership.
In the initial days, dealers concentrated 100 per cent of their time and efforts on single brand representation. But as they matured as entrepreneurs and as OEMs desired to attract more private capital and auto retail expertise, that entrepreneurial savvy was put to different use; managing multiple stores and multiple brands.
Today the business has evolved where dealer groups dominate the Canadian auto retailing landscape in major metropolitan areas. This growth has been fueled by two significant factors: dealer demographics and the fact that today’s auto retailers need access to significant amounts of capital.
Computers, information systems, smartphones and other handheld devices have made information exchange and real-time communication a reality. This enables entrepreneurs to obtain real-time information virtually anywhere and makes managing multiple retail locations possible.
Who is managing the shop?
The multi-franchise explosion has also created a need for strong loyal talent to manage the day-to-day operations of each auto retail investment. It is rare that the hired help is as good as the original entrepreneur in running the business. In some instances, however, the hired help actually outperforms the original entrepreneur and they themselves become strong entrepreneurs in their own right.
Partnership in automotive retail means many things and to be truly successful dealers must understand the intricacies of each relationship. Being a dealer today is a large job with significant risks and challenges. Partnerships go both ways, up and down the value chain.
As I look out over the Canadian dealer landscape I see dealers that spend more time on real estate development, brand acquisitions and financing than running their dealerships. The running of dealerships seems to have been outsourced to hired management. In our current environment of shrinking margins and increasing costs, many dealers today are taking unnecessary risks by not spending the time needed to properly operate the stores they currently own. All too often I see a group with say a 1.5% return on sales looking to expand rather than working on their stores to make them 3% players.
Leadership vs. management
Leadership is something that the business world has written about for years. Its also a very difficult trait to consistently exhibit in an ever changing automotive retail world. There is a significant difference between leadership and management. Many dealers rely on management and seem to ignore the leadership aspects of their responsibility.
Leadership involves enlisting the support and resources of others towards achieving a common goal or outcome. Leadership involves vision and the setting of principles and values.
Management on the other hand, is enabling the efficient and effective use of the enlisted support and resources to achieve the goal or outcome.
Leadership styles vary by the individual leader. There is no one correct way to lead, only a requirement that the leader will create followers.
Leadership in automotive retail has two key components. First, the dealer must be more than a good manager; the dealer must be a great leader. Secondly, the VBO must also be a great leader. VBO leadership involves innovative product design, quality manufacturing, consumer catching marketing and advertising, supportive finance programs and leadership in dealer relations.
I have always said that that VBOs and dealers have a love / hate relationship. Given the similar objectives and the interdependence of their relationship one would think that strong factory dealer relations would be a given right across the board. Historical attitudes are getting in the way.
Head office vs.
the front lines
Historically, dealers have felt that their VBOs do not understand the intricacies of operating a dealership. Since the vast majority of OEM head office and field staff employees have never worked ― in automotive retail, many dealers feel that their contribution is limited at best and largely unwanted.
VBO employees on the other hand believe that dealers owe their entire being to the VBO since without the VBO they would be nothing.
Then there are policies and philosophies, like churn and earn or stair step incentives that greatly muddy the waters and impede the ability to have a true leadership relationship on both ends of the partnership.
Let’s put those attitudes aside and move forward. The world of automotive retail is too challenging to battle within, we must focus all our energies on winning over the automotive retail consumer to our respective brands and dealerships.
Dealers of all shapes and sizes must be leaders. To be a leader you must be visible. To be a leader you do not have to be liked but you do have to be respected.
The tone in automotive retail is set at the top. For dealer principals the tone is set by the VBOs they represent. It is very hard as a dealer to be a great leader if there is tension and friction with the dealer’s relationship with their VBO. There must be synergy and sharing of common goals and objectives. The dealer must also believe that their relationship with their VBO is solid. It is this solidness that energizes each dealer to step up to the plate and perform.
Conversely for dealers to be leaders they must have earned the respect of their employees. This means being around the store, offering meaningful employment opportunities and providing the leadership and encouragement to management and employees to excel.
It has been a very tough 30 months for Canadian dealers and VBOs alike. World events and pressures have severely impacted all but a few VBOs and their dealer networks. It time for natural partnerships to take hold and for leaders at all levels to step up and lead. We will all be stronger as a result.
