Used cars parked

Empathy, Cooperation are Key to Industry Restart

How to restart an industry? Work together as an industry!

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Re-creating Your “New” Business

No matter how many years or how many generations your business has been in existence, you are starting a new business. Changes in our economy and society related to the pandemic have reset nearly everything from employment to operational practices to consumer priorities. Your business will need to adapt in order to survive. Now is the time to reinvent your business to operate in the new environment.

What probably hasn’t changed: 

  1. The quality of your products and services.
  2. Your commitment to your customers, employees, and stakeholders.

What has changed:

  1. Everything else

Our society is interconnected, so when one element changes, it affects related elements across the society. High fuel prices led to subcompact cars. Lower fuel prices and greater vehicle efficiency brought on increased purchase of trucks and SUVs. Stay-at-home restrictions resulted in record sales of personal grooming products, jigsaw puzzles, and computer audio/video equipment, and effectively paused fashion and apparel sales.

Setting up your post-pandemic business plan (you need one) requires the same considerations as with any new start-up. The four P’s, product, price, place, and promotion, are still the foundation for your plan. Chances are, at least one of these variables will be different moving forward. Is your product still relevant? Is the demand and perceived product value changed and can you adjust price as a result? How will your product be consumed now? Do you need to modify the way you deliver your product to your customers? How many other people do you need to help you deliver? Finally, what changes should you make to your advertising and promotion in order to engage or reengage your buyers in the marketplace?

The answers to these questions and others will inform your way forward, but your need to assess and develop will continue. Markets and businesses may reopen more gradually than anyone would like. Volumes and budgets will be smaller, and consumer confidence will be tentative until employment and payroll numbers stabilize again.

If you run an existing business, you may benefit from your experience with other hard economic times and take the lessons learned from them to plan your own recovery. Regardless of prior events, this sudden national and global shift is more extreme that anything we have seen in our lifetimes, It is an opportunity to reinvent ourselves and our businesses in response. Every one of the four P’s is on the table for examination.

I would add another two P’s to that list, too. Examine your process and the productivity it generates. You may find opportunities to improve efficiency in your process, either by making changes or by better enforcing the processes you have in place. Management software by AutoMobile Technologies could be the right solution for running your automotive repair and reconditioning operations, and now as you reimagine and redefine your business, it’s the right time to enhance your command and control of the operation. Contact AMT and let us show you how we can help.

Transformation handshake digitization

7 Effective Ways To Embrace Change In Your Dealership Process

car displayed on platform above fountain

Much the same as the way car repairs have evolved over the years, so has the entire dealership process. Recent events have created or accelerated the need for changes more rapidly than anyone expected. Change can be a scary, confusing time, but it can also be incredibly exciting as you evolve to bring your dealership to the next level. Once you embrace change, then you open up to the many new opportunities that can come your way that will be beneficial to everyone involved. It’s crucial that every member of your team is ready to be part of the change and not hinder the opportunities that could come. 

So how do you embrace change in your dealership process? What are the ways you can innovate and adapt to the wants and needs of the consumer of today? From social media to better communication amongst your team, the following are 7 effective ways to embrace change in your dealership process:

  1. Make it a team effort: When you let your employees know how their contributions are essential to the changes you’re making, it will make them feel empowered. By encouraging everyone to be a part of the changes you’re making, they will feel like they have an essential role in the changes being made. You don’t run the risk of someone feeling left out or like they don’t have anything to offer. Instead, you show that the evolution of your dealership is a team effort.
  2. Lead through an example: Your employees are looking to you and your leadership team as a source of motivation and inspiration during the times of change. It’s crucial that you demonstrate a positive attitude, as this will reflect in the way they approach the new changes in your dealership process.
  3. Check-in: Nobody is expected to grasp the new changes overnight. Some of your employees might be having a harder time than others, but don’t want to verbalize it for fear of looking like a failure. Check in with your employees to see how they are doing, if they have any questions or concerns, and perhaps any suggestions. Offer additional training or any other support that might be needed throughout the process.
  4. Accentuate the positive: It’s important that your employees know the benefits of this change so that they can visualize what these changes will bring. Accentuate the positive ways your employees will be impacted. This is a sure way to get everyone excited and onboard with the process.
  5. Create one message: Social media has become an increasingly popular way for businesses to connect with their customers. Create a message that accurately represents your brand and why your dealership is set apart from everyone else.
  6. Customer Experience: As important as the overall efficiency of your dealership is, your customer is the top priority. Throughout these changes, you want to create a memorable experience for your customers that will have them referring their friends and family to your dealership. Have a clean facility that puts customers at ease. Make sure that whoever is the first POC is friendly and knowledgeable. If an employee is rude or uninformed, it will leave a bad taste for your customer and actually diminish the reputation of your dealership. Make sure it’s a positive experience they’ll never forget.
  7. Communicate: Communication is one of the most critical aspects of effectively leading a team through change. Your employees will appreciate your consideration to keep them informed through the various stages of the changes. Also, it will bring an overall smoother transition process since your employees will already be informed of what to expect next. 

There are so many different ways that you can embrace change in your dealership. Perhaps there’s something unique only to your location that you can make a prominent feature in this process. Even if you’re part of a major chain in a big city, change is all about standing out amongst your competition. Work together with your team, make the customers your #1 priority, and you’re guaranteed to be successful. 
Here’s a bonus tip: celebrate every win! Success can come in many shapes and sizes. Celebrate each milestone that comes from your dealership throughout the change. Highlight when an employee or department does something exceptionally well. Emphasize how there’s truly no “I” in “team.” You do that, and your entire dealership will embrace change with confidence and ease.

Woman in face mask

How To Sell Cars In A Post Covid “New Normal”

Depending on when you read this, we are not there yet, but it feels like we may be getting closer to “new normal” and “post covid”. In the news, the headlines about when we will reopen, and who will reopen first is starting to outpace the grim statistic headlines. Maybe it’s the rebirth of Spring, or maybe we are just about at our wits end. One thing that is very clear right now is that there is no plan. And likely for your dealership, you don’t have a reopening plan either. Opening back up isn’t going to be the same as opening for business say on a Tuesday in February. Each new day in the early days of reopening will be new and full of new challenges.

Will there be a car-buying boom post covid?

There is some speculation that at least for a year, there is going to be a fear of using public transportation. This could be a good thing for new and used car dealers everywhere, especially those in more densely populated areas. The RV industry is already predicting a turnaround in 2021 due to fears of public travel.

Will there be new laws or constraints post covid?

Swift moving Governors took action to declare states of emergency, allowing them to take the reins of the state and issue new orders like stay at home orders that were enforceable by law. Essential businesses like grocery stores and pharmacies adopted new social distancing protocols, like limiting the number of people in a store. In New York, Governor Cuomo closed all dealerships to public car sales. In order to sell a vehicle during the health crisis, it must be done online. Are your salespeople trained to sell a car 100% online if it were to become the new way of selling?

Here is how this could work:

1. Your salespeople become Internet sales specialists who provide customers with information on vehicles over the phone, via email, chat, or even video using internet services such as loom, zoom, or facetime.

2. Your internet sales experts then send videos explaining the vehicle and its special features.

3. Test drives. Currently, those are banned in New York but will eventually come back. When they do, you may have to have your customers make an appointment in advance so that you can have the vehicle sanitized ahead of time. No longer will you be able to just make a photocopy of the driver’s license. And what about having the salesperson along for the test drive? Will you need to re-evaluate the policy at your dealership?

4. F&I becomes more virtual as almost all paperwork for the purchase is done electronically.

5. Pickup and walkthrough will also require a final sanitizing and will be an additional change to your current delivery process, and labor cost.

The lack of, or reduction of, human contact will be a real barrier to what was once a very human-to-human and personal transaction.

There is some upside to a new-normal in car buying. Salespeople will need to become much more knowledgeable about the product. This is especially true of used cars as well, where salespeople tend to be less informed about what options are on a vehicle, how they function, and what makes them desirable over other models. Salespeople will need to do their research constantly on all the features of all the cars on the lot. When you have to sell a vehicle to a person who can’t physically see it, you will need to present the features in a way that is enticing to the buyer. The car becomes the salesperson.

Selling in a post-covid world will be a new business challenge, but one that all of your competition is facing. The keys to success are to get ahead of it, make a plan, and train early.

Electric connectors

Banking On An Electric Vehicle Future? You May Need To Pump The Brakes

So much uncertainty has been thrown at the world this past month. This sudden left turn naturally leads each industry to take a look and try and see what is on the horizon so that we can prepare. Some industries impact the world more than others, and changes there send ripple effects to the rest of society.

The auto industry is one of those giant industries that everyone from politicians to economists keeps an eye on. Prior to this sudden left turn, we were looking like we may soon become an all-electric car reality. But the EV market is especially vulnerable in this upheaval because major investments still need to be made in the technology, the supply chain, and the infrastructure to support it. Forward progress is easy to put on hold when you are forced to make cuts.

Analysts agree that this crisis is very likely to cause carmakers to revisit their manufacturing strategies, which could be especially bad news for electric vehicles.

Dependence on China for Batteries

The EV market’s newness and its dependence on global sourcing for batteries are two hurdles to seeing the EV to fruition, and electric vehicles have already been tough to sell in most mainstream markets.

Last fall, Ford unveiled the Mustang-inspired Mach-E electric crossover, which was well received by the public. Elon Musk’s Cybertruck led to immediate pre-orders, and the EV market has been growing slowly, thanks in large part to enthusiasts, early adopters, the Tesla, the Chevy Volt and the Toyota Prius. But EV’s only account for 2.2 percent of new vehicle sales in 2019.

Oil Price Drops Kill The Economic Argument for EV’s

Falling oil prices, combined with economic fallout, could keep those who are leaning towards purchasing a more expensive EV purchasing internal combustion vehicles for a lot longer. EV leader Tesla alone has seen its stock value cut by more than half in the past month, due to a mix of demand fears and dependence on to Chinese suppliers who are dealing blows due to mandatory shutdowns.

Price May Be The Dealbreaker

The biggest deal killer for EV’s in terms of demand will be the higher than average price tag. When gas is cheap, it undermines the cost of ownership advantage that comes with owning a more expensive vehicle that costs nothing at the pump. This is also true for Hybrids, even with the federal tax credit. At the current national average gas price of $2.25 gallon, it would take 80 years to recover the $8,000 premium from energy savings alone in an EV.

Oil prices could rise once the pandemic is over, but for now, this is reality. Under these conditions, a recession could force lots of consumers to burn through savings and shift any automotive spending to used cars or even hybrids rather than to the more expensive EVs.

Government mandate Fuel efficiency Regulations are a wild card for EV sales. Stricter emissions regulations in the European Union and China might help sales of EVs over there, the fairly modest support for electrics in the US may not be enough to overcome the challenges EV’s face from higher costs and low gas prices.

Some industry experts still believe in the long-term future of electric vehicles. The premium price electric vehicles demand won’t always continue to be expensive, and costs of EVs’ relatively immature technology will likely fall as global production increases.

One thing that may rise up out of this pandemic is an increased demand for autonomous vehicles. If that demand drives production decisions, then the EV is a natural fit for a vehicle with no steering wheel or gas pedal.

So if your dealership was betting large on the future of the Electric vehicle, this pandemic might pump the brakes for a few years. That is not to say the demand will be erased entirely, but you should plan on selling gas-powered cars in your business plans at least in the next five years.

Fortune telling future

How Will Covid-19 Impact The Automotive Market? The Industry Weighs In

Anybody who can factually answer this question is a time traveler who has come back to fill us in. As an industry, all we can do is speculate ad build plans to manage the reality that does end up coming our way. We have gathered some speculations from industry insiders in various sectors of the Automotive industry to weigh in on what the near-term future may look like for car dealers.

The Auction industry Speculations

March 13’s report from Blackbook included positive news of an increase in sales volume for the fourth week in a row. Demand was outpacing supply.

Foot traffic at dealer lots will slow down as people adhere to both the CDC and local governments’ guidance on social distancing or complete shelter in place quarantines.

Dealers will need to figure out how to sell cars with minimal physical contact. Internet sales tools may be the answer.

As for this week, auction volume is expected to continue to grow as dealers fill their lots and take advantage of the lowered interest rates and low fuel prices.

Long-Term Impact on Wholesale Values Speculation

Auction houses anticipate a significant reduction in new vehicle sales in 2020. Factors that will determine the new sales volume:

Positive scenarios

  • Low-interest rates will fuel new vehicle sales
  • More credit is available to prime consumers
  • OEMs are creating consumer relief programs
  • Increased incentives to stimulate demand/lease replacement

Negative Scenarios

  • Unemployment will increase substantially, at least temporarily.
  • Supply chain issues in Europe, Asia, and domestically will limit new vehicle inventory.
  • Consumer confidence and buying behavior will falter, resulting in fewer big-ticket item purchases.
  • There might be a substantial reduction in fleet and lease purchases as leisure travel, and business travel will be reduced in at least the second quarter of 2020.

What we can learn from other countries

THE COVID-19 PANDEMIC is disrupting economic, political, and social norms not seen in decades, and major industries, from finance to airlines, have already felt the impact. The US auto industry announced a total shutdown of all three Detroit carmaker manufacturing operations that will last at least through the end of the month.

After the virus appeared in China, auto sales there fell 80 percent. Auto Shows across the world, such as the Geneva Auto Show and the New York Auto show, are canceled.

European manufacturers began temporary factory closures last week. They were also feeling the pressures of falling demand, and severe disruptions to manufacturing from Chinese supply chains.

Prior to the outbreak, the IHS was predicting that US car sales this year will decline to 15.4 million vehicles, from 16.5 million a year ago, but there is a strong possibility that it will decline even further.

On the positive side, the automotive industry is better positioned to make it through the downturn than the airline industry. After changes made in 2008, the three domestic manufacturers have more cash on hand and have done a lot of restructuring, including buying out a lot of older white-collar employees as they try to shift toward new skill sets to support electrification, automation, and mobility.

So what does this mean for dealerships? Certainly, the days and weeks ahead will be a bumpy ride. And the best plan is to create contingency plans for all scenarios, be creative, and be ready to deal with whatever scenario plays out at your dealership.

Eco car

Are You Preparing Your Used Car Dealership For Its Electric Vehicle Future?

Today, tomorrow, five years from now, twenty years from now. 

That’s about as accurate as any projection for when we will see an all-electric fleet. At the moment, only one in 250 cars on the road is electric. Battery electric cars comprise just 2.1% of new global auto sales -about 2 million passenger vehicles. 

If you are working out any sort of long-term plan for your dealerships, electric vehicles should be part of your equation. 

Regardless of your preparedness, car companies are moving ahead with E.V. production. Huge investments in electrification have already been announced by all manufacturers. Volkswagen has committed $50 billion, Daimler placed a $23 billion order for E.V. batteries, G.M. and Ford are restructuring their business around electric cars. Like it or not, automakers are preparing for an electric future today, and so should you.

And yet, dealerships are steadfast in their resistance to this change. Who’s job is it to take a dealership that has sold gas vehicles for generations and switch it over to electric? Is it your fault that automakers are banking on an all-electric future?

The Europeans are offering to help the new car dealers, Domestics, not so much. 

The head of Volkswagen Group of America Inc., Scott Keogh, offered to cover half the costs of getting their dealership facilities ready for electric cars at NADA last month by providing fifty cents on the dollar for any electric vehicle improvements among its dealers. This incentive includes building charging stations, training technicians, and inventory changes. It was a unique value proposition because, for the first time, an automaker offered some skin in the game towards the success of their E.V. program and future.

Most automakers, including General Motors Co. and Ford Motor Co., regularly advertise that they are fully committed to an electric future. Still, they stick it to the dealers, leaving them to pay for upgrades that can amount to tens of thousands of dollars. This mismatch will ultimately stifle sales of E.V.’s in the U.S.

And where does that leave independent used car dealers?

As we move towards the all-electric future, investments will need to be made in charging stations, specialized tools, and training for repair and reconditioning staff. You may have difficulty finding reconditioning vendors who can handle the needs of Electric Vehicles. Your dealership will need to get comfortable with servicing a vehicle whose battery and design are nothing like the vehicles they are selling now. Can your techs swap out an electric vehicle battery currently? What will you need in terms of training and equipment to make this happen?

The debate right now is whether new car dealers will need to fund their own investments in the electric vehicle. But unless you are part of a new car dealership, you will be left having to make these investments yourself.

The success of Electric Vehicle sales “hinges on this partnership between manufacturers and dealers,” said Rachelle Petusky, a research manager at Cox Automotive.

Last year, Petusky co-wrote a survey of more than 300 U.S. auto dealers and their relationship to E.V.s. It found that only 9% of dealers thought their parent auto company was pressuring them to reach E.V. sales targets.

Are your salespeople ready to sell used Electric vehicles?

The Sierra Club did a survey of 900 U.S. auto dealerships. It found that less than 25% of them actually sold E.V.s, and those that did often did little to highlight or promote them. 

Additionally, salespeople were uninformed on crucial selling points such as sales rebates available and where to find charging stations.

The study found that ten percent of the dealerships selling Electric vehicles, the cars weren’t even charged and were unable to be driven. In other dealerships, the E.V.’s were shoved so far in the back of the lot that they took a long time to move the cars in order to retrieve them.

The demand is not there yet for electric vehicles. But that could change rapidly if the sales of these vehicles take off. In that case, you have one to two years to begin your preparation to handle the sales and service of used E.V.’s. Why not start preparing today for the inevitability of tomorrow?

Natural disasters

Is Your Auto Auction Operation Prepared For Disaster?

Tornadoes hit Manheim Nashville, and the Coronavirus hits the US. That sums up this week’s gloomy headlines, and both events, if they happen to you, could take your business offline for a sustained period of time. If this doesn’t have you asking what your business would do in the event of a catastrophe, you need to start making plans.

Matt Trapp, Manheim’s regional vice president for the East, confirmed in a statement that Manheim Nashville, located in Mount Juliet, was “severely affected by powerful storm conditions” that came through the area Tuesday. The auction remained closed as of Tuesday afternoon.

“While no one was injured at the site, our human resources team is now working diligently to account for the safety of every team member in the area. Our thoughts and prayers go out to those who lost their lives in the storm,” Trapp said.

“Currently, Manheim Nashville remains closed, as we assess the damage. As access to our property is restricted due to safety reasons, we encourage clients to refrain from visiting our site at this time. We will provide more updates as they become available at Manheim.com,” he said. “Manheim is committed to protecting the safety of our team members, clients, and guests.”

Nearby Music City Auto Auction of Nashville was unaffected and will continue operations, including its sale this week. With Manheim offline for a while, it will likely be a boon for smaller auction companies in the area.

When the Coronavirus first hit the world, it mainly affected China and swept through Asia and into Italy. It has taken a while, but it has now hit the US, albeit slowly. Companies are beginning to prepare for the possibility that the Coronavirus outbreak may become more widespread, and several big tech companies have started to tell employees they should work from home. Twitter, Google, Microsoft, Facebook, and Amazon have all given their employees instructions to work remotely for the time being if they can do so.

Amazon’s headquarters in Seattle is an area that has seen several deaths from the virus, and a worker there tested positive for the Coronavirus. Amazon is currently notifying others who may have had contact with that employee and has asked its Seattle employees to work from home.

Most small businesses don’t have a plan in place to deal with a public health crisis but now is the time to start building a roadmap to how your company might respond should a more widespread outbreak or a natural disaster should occur.

Financially, your Auction company should cover any loss to the building, the inventory, and maybe even loss of use. But does your insurance policy cover loss of revenue caused by a widespread health crisis? Probably not. It’s time to do a review of your insurance policies and contingency for cash flow.

Can your auto auction operate with employees working remotely? Perhaps it’s worth talking to a company that can stream your auction online. You may even consider doing a test at one of your upcoming auctions.

How is your data storage handled? How can employees access it? What channels will you use to communicate with your employees? Who is in charge of your media action plan, or do you even have one? Who will the media contact if disaster strikes your business in a high-profile way? The key is to make a plan now so that you’re ready when you need it.

Street of SUVs

SUVs Are Packing Dealer Lots With More Coming

  • Nearly half of new vehicles sold are SUVs
  • Growth continues but seems to be slowing
  • Dealers are running out of space as vehicles sit longer

Over the past few years, SUVs have been an increasingly popular choice among consumers. Just this year, the sales of SUVs and crossovers increased by 1.6% in the first half of 2019. They also make up over 47% of the new-vehicle market sales. Car manufacturers can tell this is a popular choice among consumers, which is why they are releasing more models of different sizes and price ranges. It sounds ideal in the world of vehicle sales, but there’s also another side that is adding stress to dealers across the country. 

There is a big problem with the increasing distribution of these sport-utility vehicles. Dealerships are running out of space for these vehicles, and as a result, sales are dipping. In fact, according to the Wall Street Journal, “…companies are resorting to more sales promotions to keep inventory from piling up…And yet, automakers are getting ready to roll out even more sport-utility offerings in the next few years, further packing U.S. showrooms.” 

Take a look at this graph showing growth in U.S. SUV sales from 2015 to now. While growth continues, it’s less than half of what it was last year: 

Sure, this is a good thing for customers since they’ll have a hidden selection of vehicles to choose from and better deals. There are currently 96 crossover and sport-utility models on dealership lots as of this year, which is a significant increase from 70 back in 2014. A Bank of America report recently stated, “that figure is expected to rise to 149” by the year 2023. 

As mentioned above, with the continued rollout of these vehicles, it’s taking significantly longer for dealers to sell the cars. One thing is to give consumers several different choices. But it’s an entirely different thing when they have too many to choose from that they end up leaving the dealership without a purchase. According to data collected by edmunds.com, SUVs, and crossovers are sitting on the lot longer and longer each year. In 2015, the average amount of days these new vehicles were on the lot was 51. Last year, it increased to 63 days, and as of May, the average vehicle sitting for 2019 is 71 days. That is nearly 2 and a half months. Dealerships don’t need any more cars filling these lots. They’re past vacancy and beyond capacity. 

Car manufacturers don’t seem to be too worried, as they feel this is simply the future of the car buying process. Although sale rates may be decreasing, there’s still a demand for SUVs and crossovers. Bill Fay, Senior V.P for Toyota North America, even stated, “our crystal ball has this continuing.” 

The only thing dealers really can do is keep the promotions rolling, and the sales will follow. After all, SUVs are the most popular choice for consumers purchasing a new vehicle. From the looks of it, conventional sedans are steadily decreasing while SUVs have significantly increased over the past 4 years. Check out the graph below and prepare your dealership for the continuation. It’s only going up from here on forward. 

4 Key Tips For Business Longevity

4 Key Tips For Business Longevity

  • Team
  • Community
  • Competition
  • Vision

Whether you’re own a dealership or an auto body repair shop, you want your business to be successful. Whether you’re a regional MSO or a stand-alone shop, the following are key tips that have been proven successful for long-lasting businesses. 

1) Employee Incentives

Let’s face it: work can sometimes feel like more of a routine without any variety than a place we look forward to going to every day. When your technicians know they are given a bonus for their billed hours, it encourages them to keep working hard to earn that incentive. Perhaps there’s a goal amount of collected money from your shop or a sales goal at your dealership. This would not only encourage your technicians but for the rest of your staff to work in unison to achieve that goal. 

2) Get Involved With Your Community 

Getting involved with your community shows that you actually care about people and not just making money. After all, without these same people, you wouldn’t have a business. Perhaps do a back-to-school fundraiser where proceeds go to a family in need or a charity of the customer’s choosing. The proceeds can be from repair service, car wash, or even purchasing a new car. It benefits the customer because of their vehicle need, it benefits you because you’re making money, and it helps the community as a result. 

3) Analyze The Competition 

You can’t own a business and assume that you’re the best across the board. The trick here is to find something you have that your competitors don’t. This is called competitive advantage. If you want your competitive advantage to stick, then make sure it’s something that can’t easily be replicated. An excellent way to determine why your customers choose your location over your competition is to simply ask them a brief set of questions. Understanding the source of your business is the first step in identifying opportunities. You can see what they prefer, where you’re excelling, etc. Also, include an area that gives a place for customers to write any areas where they feel your business can improve. 

4) Have A Clear Vision 

A business without a vision is like a car without gas: it can’t go anywhere. Having a clear vision for your business helps you focus on long-term goals. The trick here is those can only be met by successfully achieving your daily, weekly, monthly, etc. goals. Through attaining those goals and keeping focused on your vision, it inspires your team to achieve that vision.

Follow these four key tips, and you’re sure to have a business that is built to last. 

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