“The Dealership as the Neighborhood Mobility Center”

http://www.wardsauto.com/dealers/auto-dealers-should-do-these-five-transformative-things

Here’s what he says dealers need to do to ride that wave.

· Maintain sales and parts-service operations at separate locations. Showrooms belong in prominent, often high-rent spots to draw customers. But service departments should go elsewhere, including industrial parks, where real estate is less expensive.

· Employ drivers to drop off vehicles for test drives or pick them up for service.

· Lower inventory levels. “There’s no need to have high floor-plan costs.”

· Get into the vehicle-rental business. “That’s a springboard to subscription services,” he says, adding that many customers want leases shorter than today’s conventional 2- and 3-year terms.

· Enhance used-car sales, particularly with subscription services and shorter leases funneling a steady stream of vehicles into pre-owned vehicle lots. “There’s no reason a dealership’s new-car to used-car ratio shouldn’t be 1:1.”

Dealers by the nature of their business are short-term-oriented, Ferrara acknowledges. That’s why his long-term proposals don’t currently resonate with many auto retailers.

“They’ll say, ‘Business is good; we’ll wait and see,’” he tells WardsAuto. “But some dealers are working on this transition. And I’m out preaching.”

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If only manufacturers would get on board with this. Right now they use the dealers as storage dumping grounds, to the point where you can't navigate through a new car lot. And they don't let warranty service take place further away than a quarter mile or so; the new car showroom and the warranty service center must be co-located.

And so on.

I'd love to see an aggressive dealer fight back on these levels. And the used-car sales thing should spur this; that's where the money is. There's a small indie repair shop in my neighborhood, Japanese repair, that also sells used cars. They also LEASE used cars WITH maintenance included.

Interesting ideas, indeed. What gets me is that, no matter how many new cars clog the lot, there is rarely, I mean 90% of the time at least, a car on the lot that checks all or even most of the boxes on my list. So much of the inventory is plain, entry-level, nearly stripped lease fodder, or oddball combos of packages that leave out stuff you'd think anyone would want. So it's not like these huge lots of cars are doing anyone any favors, at least, not me!

Isn't that the truth. In December, my dealer's lot was full of nothing but white Jettas. OMG. It was the most horrible sight.

Around here, apparently, the only cars they sell are either black or white. Even used cars. I go poking around Autotrader, and I can't find anything other than black or white.

Up here, it's the Golf wagons, the AWD versions. Dozens and dozens of them, with maybe three GTIs and if you're really lucky one R occasionally, but that is like a once a year thing when they come out.

And everyone is doing black and white it seems. I saw this study at AutoList (via a Steve Lehto podcast) that analyzed car sales by color, among other variables. Seems certain colors sell much better than others, and it's one reason black and white and silver are so common.

I'm sure another is cost; they realize that many people don't care what color the car is, or even know/care who makes it, and they also realize they can upsell different colors to those who do by making it a moderate-cost option. More profit.

This reminds me of the Honda dealership nearby. Probably 200+ cars in the lot, 20 sales-people, and maybe 3 of them know anything about the cars. When I was shopping for a used car in the fall last year I stopped there and waited for 20 minutes for someone to be freed up to work with me, then all they did was go onto their website and put filters on (which I did at home) so I already knew which cars they were going to show me. When she showed me to an "AWD Hyundai Santa Fe", I was surprised to see there was no driveshaft going to the rear. Yet she insisted it was AWD. It was not. BUT - it had a lot of cargo room and she liked the color of the interior. Next car she wanted to show me that fit my description, she couldn't even find on the lot because there were too many cars.

Its completely useless for salesmen to be around with that many cars. They cant tell you anything useful about them. May as well just have an automated system for test driving cars since we can look at the inventory on the couch in our underwear.

Amazon should get into the used car business. One of their drivers could simply drive the car to you from their central facility, and let you test drive it.

All great ideas, but each one facing uphill battles:



-Manufacturers prefer giant dealers, so they can keep their inventories low.

-Giant dealers stay in business on sales volume, so they tend to order a lot of cars that won't sit around long. They're all white (or silver) because while not everyone wants a white car, very few people will walk away from deal (or wait for their car to arrive from the port) because the car on the lot is a neutral color. The name of the game is to sell the car within a few hours of a customer walking in the door.

-Dealers want their service centers attached to their showrooms, because that means more potential customers. Sales doesn't open until 9am, but every dealer I've worked at had at least one salesperson who showed up at 7:30 when we opened the service drive, so they could hang out in the waiting room with the customers.

-Some dealers will send cars to the customer, but most would rather have the customer come to them, because they have more control over negotiations.



You'd be amazed (or maybe not) how far back in time the retail car business is stuck. We have dealer clients who still send documents to us via fax machine. Yes, that's right, they'll download something from a website, save it, print it, and then put in the fax machine. It's as if the concept of email attachments has never even occurred to them.

Sadly, I think Shane_Anigans has it right. There are a ton of disincentives for dealerships in the current environment to do anything other than what they are doing now. While it would be great for the consumer to have the dealership be mostly a point of contact (or "Neighborhood Mobility Center, as in the thread title), where you touch base to get the car you've already spec'd out online or whatnot, most dealerships today would sooner slit their collective wrists.

These places rely on customers coming in and getting pressured/psyched into buying right now, and that means buying off the lot. How could the dealers do their usual dog and pony show without the lure of "drive it home today!" hanging in front of the customer? I mean, they might actually have to treat their product like every other consumer product and sell it on its own merits, god forbid!

Where do these consultants get these ideas? His model only works on very high dollar cars.

The Fed said:

Where do these consultants get these ideas? His model only works on very high dollar cars.

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Right now, yeah, that's probably true, because they can build in the profit they'd lose into all the other stuff like the subscription plans, concierge service, etc. I think, though, that the model has potential down the road for a broader set of price levels. I mean, there's really no reason to stick with the ancient dealer model that we have unless it works, and increasingly, it seems to not be working for a lot of people--dealers, customers, manufacturers.

I suspect most car companies would rather sell direct, and use just-in-time manufacturing from automated plants to deliver custom-specced cars to customers directly, rather than have to navigate the arcane and archaic dealer system we have (mandated by law, partly) in the USA. I'm not sure that all customers are ready for this, though, and I agree that at the moderate to low price-points, people like to "kick the tires" and have the safety net (real or apparent) of a place to go for service and support, etc. Also, for folks buying sub-$40k cars, going to the lot and having some choices even if it's only from a host of nearly identical SUVs, is a lot more validating than shopping online from the same set of nearly identical vehicles with limited options and customization. For folks buying luxury cars, I imagine it's much, much more important to get exactly what they want, and the experience of going through an online configurator with a luxury car is more fun and more empowering (even if, in the end, they just lease something).