The digital disrupters will continue to grow and take market share from conventional dealerships.

The retail automotive sales model as we know it, is not long for this world. It’s under attack on multiple fronts and the aggressors are the OEMs, Fortune 500 companies and the Digital Disrupters. To survive in the brave new world of retail automotive, car dealers must abandon their purely transactional, dealer centric sales processes and replace them with streamlined, customer-centric experiences.

 

Resistance Is Futile

Numerous studies have shown that consumers want a more transactional experience online and a faster, less fragmented, consumer friendly experience in store. The demand for change is overwhelming and since most dealers refuse to deviate from the proven, profitable, but often-confrontational model, the OEMs, Fortune 500 companies and the Digital Disruptors will drive change.

 

Digital Disruptors

OMS Direct, Carvana, Vroom and Beepi allow consumers to buy a car online and have delivered to their door with no salesperson or F&I interaction. They offer unprecedented vehicle return policies that eliminate risk and build confidence in their brand. Each of these companies developed technologies to provide an omni-channel, customer centric experience that drives sales, CSI and loyalty. Ryan Keaton, Chief Brand Officer of Carvana that is currently selling 2000 cars per month says it best, “We’re a tech company, that sells cars!”

If you look at the credentials of their executives, you’ll find people with Ivey League educations that entered the auto space because it’s a fragmented, multi-billion dollar industry where there has been virtually no innovation for over 75 years. The digital disrupters will continue to grow and take market share from conventional dealerships. Car dealers will continue to watch in disbelief claiming that these are isolated examples until a disruptor arrives in their area and erodes their profitability and market share.

 

OEMs

Manufacturers have been pressuring dealers to provide a more streamlined process for years and will continue to exert pressure until dealers are forced to act. The writing is on the wall as eleven Lexus dealerships recently launched Lexus Plus, a one person, one-price sales strategy under the direction of Lexus USA. The early results for Lexus Plus as their sales are up, while the traditional Lexus dealers are down.

 

The OEM Driven Sales Process

Manufactures will mandate a technology driven, single point of contact, one price sales process where there is no need to negotiate and no turnover to an F&I Manager. Redistributing the wealth from the F&I Managers to the Sales Professionals will allow dealerships to pay base salaries and higher commissions to their sales professionals.

 

A New Breed of Automotive Sales Professional

The technology driven processes that offer lucrative pay plans will attract people with greater level of expertise, professionalism and competency. This means that retail automotive sales will become a “go to” position and will no longer be the last bastion of the unemployable.

 

Small Teams

Sales departments will be divided into small teams that are supervised by team leaders who interact with their teams members and customers to assist with rapport building, appraisals and closing. This will allow the Sales Professionals to remain at their clients’ side during the entire transaction. The team leaders will report to supervisors that ensure every step of the process is adhered to. The supervisors will manage inventory, handle dealer trades and report to the GM. This type of structure provides a clear path for growth within the dealership, which will dramatically lower turnover.

 

Mandatory Processes

Salaries will enable dealers to increase accountability on the sales floor and ensure that the mandatory processes are adhered to. These processes include a demo drive and a dealership tour with an introduction to service and several brief stops at F&I product stations where the Sales Executives plant the seeds for F&I product sales. This will ensure that every customer receives the same high level of boutique style, customer centric service.

 

21st Century F&I

Financing, menu creation and paperwork will be scaled to handle multiple dealerships in one centralized location. The finance centres will be staffed by teams of hourly administrators that report to team leaders, under the supervision of F&I Directors who are typically former F&I Managers.

 

This will also increase the dealer groups’ ability to get tough deals financed as their scale has grown from one F&I department that serves one rooftop to one department that serves multiple rooftops. Once again a clear path for promotion within the dealership will improve employee retention.

 

The vehicle sales transaction and the financing will be handled simotainiously using a mobile device that acts as an interface between the off site F&I administrator and the Sales Professional.

The average transaction time will be forty-five minutes to a maximum of one hour and deliveries will occur as soon as the paperwork is completed.

 

The Blue Chip Takeover

Dealerships that don’t evolve will be absorbed into dealer super groups that are run by blue chip investment companies like Berkshire Hathaway. Alternately the progressive dealer groups will continue to gain market share and absorb the antiquated, under performing dealerships.

 

A win, win situation!

The consumer benefits are increased value with complete transparency, times saving and an enjoyable experience. For the dealer, higher profit, increased customer retention, lower employee turnover and HR costs.

 

My Vision Of The Future

After years of working with traditional dealerships and studying and writing about the Digital Disruptors this is my vision of the future. In this model retail automotive sales becomes a customer centric and prestigious profession and opposed to fodder for situation comedies and jokes.

 

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