Dealers focused on the day-to-day find it hard to fully grasp the big industry changes that are coming
In this period of uncertainty in automotive retail, many dealers have more questions than easy answers.
I am quite fortunate to be involved with the graduate dealership management certificate program at the Automotive Business School of Canada. I get to interact with some incredibly gifted individuals that will develop into the future leaders of our industry.
They are sharp, bright, clear thinking, well educated individuals with a deep passion for the auto retail business. It is truly a joy and an honour to be working with them.
As smart as these future leaders are, when they begin my course, they struggle to think of the longer-term. Having had years of practical in-dealership experience, even these folks have fallen into the trap of 10-day cycles and monthly target achievement thinking.
As new car dealers, we follow the lead of the brands we represent. We execute their programs, be they good or bad. After all we are franchises not independent businesses and we must follow the rules or suffer the consequences and wrath of the brand. Outsiders might think that brands and their dealers are completely aligned. In fact, in many ways they are not.
At the root of the issue is both the blessing and the curse, private capital. Dealers invest their own resources to further the business of the brand. This has allowed the brand to grow exponentially over the decades and has allowed some dealers to earn a sound return on their investment. Sounds like a win/win.
Dealer consolidation has further enhanced the brands’ position in that dealer groups have access to greater amounts of capital and have been only too willing to invest that capital to better represent the brand in local markets right across Canada.
The franchise model has proven challenging for many dealer groups in that all brands do not operate the same way. It’s a series of complicated business arrangements that collectively cause some unnatural behaviour on the part of consolidators.
In an environment of continual change, we must continually examine our role in that change. We must find the strength and support in the team. Working together will build solidarity and understanding.
If it weren’t for these arrangements, consolidators would single source or internally develop just about everything to gain market efficiencies and maximize return on investment. This is not possible in today’s business environment. This is a legacy that we are just going to have to live with.
Living with reality, what can dealers do to perfect their businesses? This is not an easy question to answer but it is a question we all must answer.
Planning requires us to look into the future, define the possible playing fields and develop strategies and tactics to effectively and successfully perform in the future. It requires us to spend time away from our day to day businesses to regularly work on our vision and how we plan to attain it.
It forces us to involve all the leaders in our businesses to capture the breadth and strength of numerous points of view, debate the pros and cons and form consensus as to a path forward.
As dealers, it requires us to listen more than we speak to stay out of the way and let our managers and key stakeholders work together to recommend the vision.
In many ways we need to make ourselves redundant. We must be involved enough to be able to be part of the conversation and assess the overall applicability and consistency with our vision as the key investor.
Some of the tough questions could be as follows:
- How would we compete if we lost 20 per cent of our new vehicle sales?
- How would we compete if we lost 20 per cent of our service customers or service intervals moved to one time per year?
- What will we need to service electric vehicles?
- Do we really know what customers want from us and how we can remain part of their mobility life?
Each and every brand is different and might very well choose their own path to future prosperity. Your dealership or group is also a brand, and what will be the path to your future prosperity?
There are hundreds of questions and rabbit holes you can go down. Doing the exercise eventually creates clarity and consensus. It might take a while but I believe it’s a road you must travel.
In an environment of continual change, we must continually examine our role in that change. We must find the strength and support in the team. Working together will build solidarity and understanding.
The view of the future will be messy and cloudy. Rather than be the deer looking into the headlights, try staring the future right in the eyes and determine various pathways to excel regardless of twists and turns down the road.
