Auto Dealer Monthly, August 2016

ON THE POINT 10 AUTO DEALER TODAY AUGUST 2016 cated certified sales teams with uniform dress codes Dealers must offer roadside assistance offsite delivery and presumably spend big money on showroom modifications De Nysschen claims the incentives will be greater but I imagine the little Tier 5 dealers will get screwed again Of course I might be wrong and its all going to be great for everybody If I was a volume metro dealer selling Cadillacs Id be all over this program Wouldnt you The fact is that Cadillac is greatly overdealered which forces the manufacturer to overproduce inventory which suppresses prices and resale But just about every Cadillac dealer has invested and stuck in there when GM was on the ropes at least once I would prefer to see GM buy these dealers out at a fair price than act out the charade of launching a virtual reality program and calling it a success DEALER APOCALYPSE NOW Last month I wrote a prediction that sales were going to slow down You Cant Handle the Truth July 2016 Page 8 I quoted some industry analysts who said the manufacturers collectively were currently getting ready to launch more than 100 virtual showrooms this year I called this the early stages of the Dealer Apocalypse In response Ive received a ton of feedback from readers including a number of industry insiders and outsiders Heres the truth which apparently you can handle Nobody and I mean nobody has been successful with totally transactional virtual showrooms AutoNation invested millions and millions and theyre probably closer than anybody Close but no cigar that is GMs aforementioned technobombs dropped in moments of extreme executive delusion have been duplicated at other factories including Toyota Talk about delusional They still claim Scion was a success Sonic has experimented with every new age happy sappy sales and marketing process failure as their stock continues to tank Maybe Im wrong about that They might actually be successful Opinions vary and you know mine Remember the 45 minute sale from handshake to taillights Hows that working out Check the profits Youre embarrassing yourselves You want the truth The truth is that consumers arent playing by the scripts Here we have manufacturers and corporations trying to force them into a box they dont want to be in Oh you can manufacture any amount of bogus research and even convince yourself its valid Then reality slaps you on the ass and calls you Sally Most of the bogus mantras include some reference to the customers best interests I am so sick of manufacturers sanctimoniously lecturing dealers on what your customers want and need If the customer experience was so damn important your manufacturers wouldnt have continued to install deadly airbags 10 years after they knew the defects existed An airbag shooting red hot shrapnel in your face is a customer experience Ill grant you that But its not the experience any dealer would have chosen RISE OF THE INDEPENDENTS If you recall Ive also written repeatedly about the inventory glut were experiencing right now that is contributing to suppression of profitability Fleet buybacks and lease returns are killing an already oversaturated retail market The headline read Non BMW Dealers Can Buy Off Lease Vehicles From BMW Financial This is the beginning of a real market paradigm shift that will rock the world when the franchised dealers wake up to whats happening to them I do business with many independent dealers on the high end of the spectrum Were not talking about buy here pay here dirt lots selling 5000 cars anymore The modern independent dealers are operating in every aspect the same way franchised dealers always have They have a huge marketing and Internet presence and sophisticated BDCs Without naming the players Ill tell you I have independent dealer clients selling highlines in volume netting more than 1 million a month Now BMW and other manufacturers are opening up financing auction credit and probably floorplan assistance to absorb their lease and fleet returns So will car buyers be able to finance these pre owned cars through manufacturer financing once reserved for franchised dealers As I have repeatedly written all of The author believes access to new lease and finance options from Ally and BMW Financial could help independent dealers specializing in late model luxury vehicles steal market share from their franchised competitors ISTOCKPHOTO COM MICHAEL JUNG