Dealerships

FORT LAUDERDALE - 

Services available to AutoNation customers with Automatic include crash alert, roadside assistance and real-time location monitoring and sharing. Now, customers who purchase a pre-owned vehicle from one of five AutoNation USA stores will be able to receive a free automatic plug-in adapter and introductory subscription, AutoNation and SiriusXM company Automatic Labs announced on Wednesday.

Automatic Labs, which describes itself as a company that “brings the power of connectivity to almost any car on the road,” notes that with its app and adapter, most 1996-model-year or later vehicles can become connected, allowing drivers to get access to safety and convenience features from Automatic and service alerts and recall notifications from AutoNation.

AutoNation notes that it is the largest dealer group to begin offering Automatic, a service bundle that its AutoNation USA stores will provide to consumers with their pre-owned vehicle purchases. The five participating AutoNation USA stores are in Houston, Phoenix, Corpus Christi, Texas; Katy, Texas; and Henderson, Nev.

With the Automatic Dealer Program, AutoNation USA stores can offer consenting customers purchasing a pre-owned vehicle a free trial subscription that includes three years of Automatic’s crash alert and connected maintenance services, as well as six free months of premium services, such as roadside assistance.

More detail on services available to AutoNation customers with Automatic:

— Crash Alert: Automatic detects when a serious collision occurs. Responders can then contact the driver, send emergency services, and contact a driver’s emergency contacts.
— Roadside assistance: A driver will receive towing and roadside services when help is needed.
— Real-time vehicle location monitoring and sharing: This feature shows the location of a parked car, and the driver will also be able to be connected with family while out on the road.
— Vehicle health and performance monitoring: The user will gain knowledge on vehicle performance and see the possible issues that are taking place when the check engine light goes on.
— Recall notifications and service reminders: This feature will also allow booking of service appointments with AutoNation with a few simple clicks.
— Integration with smart home devices: The user can perform tasks such as opening a garage door, adjusting a thermostat, and turning on house lights.

"Car buyers are becoming increasingly aware of the convenience and safety features that a connected vehicle offers, and the Automatic adapter allows us to deliver that connectivity to our customers in vehicles on AutoNation USA store lots,” Marc Cannon, executive vice president and chief marketing officer at AutoNation, said in a news release. 

NORFOLK, Va. - 

For dealers who would like to continually analyze consumer buying patterns and behavior to determine when the consumer is in-market to buy a car or service his or her vehicle, they can now use the services of their intelligence assistant, “Otto.”  

Otto is part of Dominion Dealer Solutions’ new MarketActivator technology, which Dominion describes as a “data-mining, marketing machine” that uses data science to drive prime opportunities for sales and service. The company says that results in a more profitable relationship between the dealership and end consumer.  

The product is meant to help dealers, who lose 88 percent of customers over four years of ownership, Dominion noted, using data from IBISWorld. Dominion added that most service transactions take place with third-party independents and not the franchised dealer.

“If dealers can be more proactive in determining when customers are ready to transact, we estimate that much of the sales and service business that they are losing will return,” Jill Whitehead, senior vice president of operations for Dominion Dealer Solutions, said in a news release.

“Otto,” the intelligence assistant in MarketActivator, triggers a marketing power sequence for each consumer based on his or her unique profile and shopping behavior. Otto sends personalized sales and service offers across multiple channels — such as Facebook, email, direct mail and outbound call — and those offers direct customers to their personalized URL.

The system sends internal alerts when qualified customers arrive in the service drive. Dominon adds that Otto is always mining for what Dominion calls “lost souls.” The system automatically communicates tailored offers to bring customers into the store.

When a customer posts a negative review or his or her online behavior indicates that he or she is interested in upgrading to a new or used vehicle, Otto ensures that sales and service teams are appropriately alerted.

The reverse inventory sales match feature within MarketActivator identifies a vehicle of interest and directly markets those vehicles to existing and conquest customers.

Dominion reported the case of Brian Singh, general manager of Parkway Family Kia and Mazda, who said his business experienced an increase in sales soon after implementing its processes and more targeted messaging through MarketActivator. He added that the business sold its first car from the service lane within seven days of using the technology.

Whitehead said almost half of the customers in a dealer’s database have moved or no longer own their vehicle. MarketActivator, she added, ensures that every message is targeted and will reach the consumer that owns that vehicle.

“We take the output of each customer’s engagement with the complete customer lifecycle communication and use it in our AI system to better prescribe the next message and channel to the customer,” she said.

The technology has been piloted and installed with multiple early adopters and will officially launch in conjunction with NADA Show 2019 in San Francisco.
 

ATLANTA - 

Dealers continue to look for more efficient ways to do business, and Manheim at NADA Show 2019 will continue to address that need with the unveiling of a new addition to the Manheim Express app. The app features 360-degree imaging technology—along with moveable images that enable dealers to assess condition and other features—that helps dealers buy and sell vehicles whenever it makes sense for them.

Manheim is calling the new addition an “in-app buyer experience” and says the product will help dealers quickly and confidently purchase fresh, local inventory. The company says the new features improve the process of searching for, saving and buying vehicles. The in-app buyer experience will be available in the Manheim Express app in late January.

The product builds on the Manheim Express mobile app launched last year to improve dealers’ experience in listing and selling inventory. The company says the “experience” appeals to dealers who have demanded more ability to acquire inventory through digital channels. Last year, more than 2 million vehicles were sold through Manheim to digital buyers.
  
The new in-app buyer experience is specifically designed for dealers focused on purchasing inventory. Dealers can review inspection information and bid on and purchase vehicles right from the app, with vehicle damage and condition issues surfaced at the top of the listing for improved viewing and consideration. Manheim says dealers can also more easily sort and filter search results, as well as tag favorites. Key benefits and features include:

— Access to a selection of local competitively-priced inventory, enabling buyers to purchase vehicles from dealers in their area that they may already know and do business with. 

— Vehicle listings that use Manheim Express’ 360-degree imaging and detailed condition information, which the company says gives dealers the tools they need to accurately assess a vehicle’s condition. 

— Inventory at all price-ranges and types, which the company says helps buyers to find the right vehicles for their customers. 

The buyer experience is part of a more-than-$100 million investment Manheim is making in its digital marketplace through 2019, including tools and integrated services that it says helps dealers reduce waste, turn inventory faster and drive profitability. Digital buyers account for almost half of all vehicles sold through Manheim auctions, and the company says Manheim Express inventory gets more than 139,000 unique buyers every month.
 
“Our dealer and commercial clients are clearly embracing the digital marketplace to drive new efficiencies in their respective businesses,” Derek Hansen, vice president, Offsite Solutions at Manheim, said in a news release. “Manheim will continue to look for ways to expand and add new digital capabilities to fuel this demand and meet the needs of our clients.”
 

CARY, N.C.  - 

We are getting closer to becoming a one-price society. Why? Because people want things automated.

Rick Ricart believes that, but the president of  Ricart Automotive Group in Columbus, Ohio, also feels that if buyers want automated and fast transactions, then those buyers give up negotiation.

“That’s what the trade-off is,” said Ricart, whose grandfather started the company in 1953. 

When they understand how dealers price their vehicles, customers feel comfortable committing, buying and “Docusigning” the initial paperwork, he added. “Then we as a dealer simply call them and congratulate them and ask them if they would rather us bring the vehicle to their home or place of business and deliver it there, or would they like to come to the dealership and celebrate taking delivery. It will be approximately 45 minutes. We get 100-percent response that they would like to come to the dealership, knowing it will only take 45 minutes,” Ricart said.

Program shortens time at dealership

That 45-minute service is part of a new program called Express Checkout, which lets shoppers find the vehicle they want, plan payments, line up financing and buy the vehicle online.

Ricart Automotive served as a pilot business for AutoFi’s Express Checkout program, and Ricart helped further develop the product for AutoFi, which is an online auto financing platform.

Express Checkout is now available for all makes and models, new and used, that Ricart Automotive sells. 

The program has shortened the time customers spend in the dealership from an average of three-and-a-half hours to only 45 minutes, and more than 200 customers used the platform from approximately September through November to purchase a vehicle from Ricart.

The 100-percent response from customers saying they would like to come to the dealership dispels what Ricart says is an industry myth that people want their vehicles delivered to them. Customers are actually comfortable going to the brick-and-mortar.

“I think people want to see the dealership that’s going to stand behind the vehicle that they’re buying,” Ricart said. “They want to make sure they’re not just having something delivered that originated from a fake business or someone’s back yard that are claiming they’re a car dealer.”

He heard industry reports throughout his years in business regarding customers’ No. 1 complaint about the process of buying a car: It takes too long. Choosing the vehicle they want and test driving it is time-consuming in itself, but then a bank or lending institution usually gets involved, and the dealer must put together all the necessary paperwork for the customer to review and sign. Implementing all of those steps into an automated format was the next “innovation step,” Ricart said.

He heard about AutoFi and learned that its founders started the company because they were unhappy with their own car buying experience. After meeting AutoFi chief executive and co-founder Kevin Singerman and chief technology officer and co-founder Mandar Gokhale, Ricart agreed to have his business serve as a pilot dealership for the Express Checkout program. “The end result these guys built is a fully automated online transaction tool,” Ricart said.

He explained that for all used vehicles and new Fords on the Ricart Automotive website a button is labeled, “Start Express Checkout.”

When customers click that button, the system prompts them to provide identifying information and see what their actual payment amount would be. The system sends the customer’s credit information to lending institutions. Ricart noted that subprime banks are also joining the program.

“It’s a big benefit for a lot of consumers who maybe have challenged credit and don’t want to waste the time to drive to a showroom and have the embarrassment of being told no,” Ricart said. The customers can sit at home, pick the car they want and see if they qualify for it. If they don’t qualify, a Ricart representative will contact them and let them know what their options are.

“It just saves the consumer a lot of time,” Ricart said. “They can wait until they’re comfortable on their own couch at home, fill out the information, and … do the shopping portion that way. We have a lot of consumers that like to get to see that exact payment, and they won’t commit or start docusigning the paperwork online. They then choose to come to the dealership, and they want to test drive the vehicle or maybe look at something else. They’re perfectly welcome to do that. But the majority of the best responses have been those that go through the entire process, those that understand that the Internet price on a vehicle is truly the selling price today.”

The Wal-Mart model: Multiple options

Ricart remembers the Great Recession of 2008-2009 causing the closure of many automotive dealerships. He believes the industry’s failure to embrace the Internet was a main reason for the problems.

“Those dealers weren’t prepared for change,” he said. “They weren’t prepared for a new way of doing business. We have to be great at our business today, but we have to continue to keep an eye on the future and be willing to adapt quickly and listen to what our consumers are telling us.

“With those thoughts in mind, Express Checkout made the most sense for something that if I was going to commit my time to say, ‘let me make sure this product is what I think is best for our consumers, our dealership, our lenders, our state government, our compliance officer, and it satisfies all those parties and the guest has an incredible experience.’ That’s exactly what we’re looking for.”

He feels dealers should look at the Wal-Mart store chain business model in the move toward innovation. He notes that customers of Wal-Mart stores can conduct business directly at the retail location. They can buy online and pick up merchandise at the retail location, or they can buy online and arrange for the merchandise to be delivered to their home or business.

That concept of multiple options is where the automotive industry is headed, and franchised car dealers should work to stay on the forefront of that trend, Ricart said.

Express Checkout is the “biggest innovation message I feel we’ve had in eight years,” since the company got involved with Motor Trend Certified program in 2010, Ricart said. The Express Checkout message is that you can do as much or as little from home as you want, he noted.

“You don’t have to come in here and go through the whole process of ‘please just tell me my payment.’ You can find out the exact payment, accurate, approved by a bank, to a penny from wherever you are, and a consumer has the option of making the buying decision on their own, without the pressure and persuasion of the sales person, and I think that’s a wonderful tool that many consumers are looking forward to for their next vehicle purchase.”

EDITOR'S NOTE: This is the second in a two-part feature on Rick Ricart and Ricart Automotive Group. Part I can be found here.

The third paragraph of the second section has been updated to reflect that the Express Checkout is now available across all new and used makes and models that Ricart Automotive sells. 

SCOTTSDALE, Ariz.  - 

In 2016, when Ricart Automotive sold 8,000-plus used vehicles, Rick Ricart figured: “We really don’t need to sell more used cars; we need to do a better job with the number we’re selling” and gross profits.

But when the dealership group sold virtually the same number of used vehicles in 2017, Ricart concluded that those sales numbers, though good, weren’t good enough.

So on July 1, the company embarked on a massive restructuring program.

Among other things, Ricart is beefing up his service and reconditioning capacity and in September, rolled out Express Checkout, a new online auto buying and financing tool created by AutoFi, a financial technology company. Express Checkout enables buyers of some new- and used-vehicles to complete most of their vehicle purchase including financing online without visiting the dealership.

As a result of the overhaul, the group’s used-vehicle sales retreated somewhat to 7,496 units in 2018, Ricart said.

But now, Ricart Automotive has a new 2019 used-vehicle sales goal: 8,500 to 9,000 units, with at least 1,000 of those units being sold in a single month that has five weekends.

“If you’re not wanting to grow and improve, it doesn’t work,” said Ricart, 39, during an interview at Used Car Week in November. “If you improve and increase, it helps the culture, it keeps people motivated. Sales is an emotional business — it’s no more than the transfer of emotion from one person to another.

“When you have an automotive sales staff that is excited and encouraged, they can see the dream of more opportunity. The culture takes on a whole new level of energy, and that positive energy is what drives everything in this industry.”

All in the family

Ricart Automotive was started by Ricart’s grandfather, Paul Ricart Sr., in July 1953.

Ricart began his career in retail automotive as a lot attendant at his family’s business when he was 15.  He started selling new Chevys full-time at age 21 in 2002 before rising though the dealership management ranks.

The third-generation dealer was the group’s vice president and director of sales and marketing  prior to becoming its president in September. That’s when Ricart’s uncle, Rhett Ricart, was elected the 2019 vice-chairman of the National Automobile Dealers Association.

Ricart Automotive operates Ford, Nissan Hyundai, Kia, Mazda, Mitsubishi and Genesis new-car franchises.

The company also operates its stand-alone Ricart Used Car Factory, which specializes in Motor Trend Certified used vehicles. It also sells a “handful” of used vehicles under factory CPO programs when it’s “advantageous” to do so, Ricart said.

Ricart Automotive embraced the Motor Trend Certified program because it has a “strong” industry name and quality message, Ricart said. It also enables the group to use one certified inspection process most of the time and to consolidate its reconditioning operations, he added.

“Seven manufacturers and running all those CPO programs in different buildings, it slows down the process,” he said. “So we consolidated all of the operations.”

Speaking of reconditioning, expanding its technician staff is among the ways the dealership group plans to expand its used-vehicle sales.

Developing, recruiting technicians

As part of  the restructuring, the company promoted a leading shop foreman to the newly created position director of technician development.

The director of technician development spends about half of his time training and developing the group’s current technicians; the rest of his time is devoted to seeking and recruiting new technicians.

“We work closely with the trade schools and the college programs,” Ricart said. “He goes to those institutions, introduces himself and makes it known what the benefits are of becoming an auto technician.”

So in addition to having a reconditioning shop for used vehicles, seven new-car franchises mean that Ricart Automotive has seven new-car service departments, Ricart said.

The company also has a medium and heavy-truck department, a fleet service department and a hot rod performance shop.

That gives technicians room to move around within the company and try something different, Ricart said.

Reenergizing technicians

Workplace variety helps keep some technicians energized and lessens the likelihood they can be lured by other dealers who are heavily advertising for technicians and courting them with aggressive offers, he adds.

“When you sit down with technicians and ask them why they are considering leaving, sometimes an environmental change and a different building or position reenergizes them,” he said.

“We at Ricart are not in desperation mode; we’re in expansion mode, and we know that service and fixed ops is what is going to drive expansion and growth.”

Ricart is also counting on Express Checkout to help the group reach its used-vehicle sales goal this year, he said.

Ricart piloted the program for about 18 months with AutoFi and Ford before implementing it last fall. Express Checkout is available on the new and used Ford, Hyundai, Nissan and Mitsubishi vehicles sold at Ricart Automotive, Ricart said.

He has partnered with CDK Global, his dealership software provider and AutoFi to build a complete customer experience process “that takes customers from online to off line with a congruent experience.”

 

EDITOR'S NOTE: This is the first in a two-part feature on Rick Ricart and Ricart Automotive Group. Part II can be found here. 

 

Thousands of viewers in person and watching on television saw an exciting NCAA football game as the Tulane Green Wave defeated the Louisiana-Lafayette Ragin’ Cajuns, 41-24, in the AutoNation Cure Bowl at Camping World Stadium in Orlando this past Dec. 15.

But for automotive retailer AutoNation, the game served as great publicity. Sports fans saw the AutoNation name associated with the event and charitable giving. The Cure Bowl is part of AutoNation’s Drive Pink campaign, which raises money for the Breast Cancer Research Foundation.

“We have used sports to push our brand and to do community service as goodwill in the markets where we live and work,” said Marc Cannon, chief marketing officer and executive vice president for AutoNation.

Larry H. Miller Dealerships is another example of how the automotive industry and sports organizations are benefiting from partnerships with each other. About six years after starting his dealership group, Larry H. Miller acquired one-half of the Utah Jazz NBA basketball team in 1985. He later became sole owner of the Jazz, and his family has owned the franchise since he died in 2009.

Miller “saw that there were connective tissues between a competitive sports franchise and car dealerships,” said Paul Nygaard, senior vice president of marketing for Larry H. Miller Dealerships. How do they connect? “In the desire to achieve things, the desire to satisfy customers … those things are all competitive. There were things he viewed that were important to have in both,” he said.

‘Competitive nature’ creates drive

Miller saw connective tissues between sports and auto dealerships early in his career, when he was hired to work in the parts department for an auto dealership in Denver, and he also pitched for the dealership’s softball team.

He went on to a stint as a professional softball pitcher, and he eventually acquired various auto dealerships that formed the Larry H. Miller Automotive Group.

“The competitive nature that sports brought out is what kept driving him to acquire and grow businesses,” Nygaard said.

Miller also loved basketball, and his ownership of the Jazz has been beneficial to his dealerships. During basketball season, it’s a sports news story almost every night.

“People will very commonly refer to the ‘Larry H. Miller Utah Jazz.’ You get this great name connection,” Nygaard said. Involvement in sports helps the Miller dealership team live up to its “mission, vision and values.” Its mission statement is “to enrich lives.”

“It’s kind of a simple statement, but … someone buying a car is improving their life, someone going to a Jazz game, they’re enjoying themselves,” Nygaard said. As part of its “vision” to be the best place in town to work and to do business, the company gives Jazz tickets to those who purchase cars from Larry H. Miller Dealerships.

And as part of its “values” of hard work, stewardship, service and integrity, Jazz players and dealership employees donate their time to charity. At a recent event, players Georges Niang and Royce O’Neale of the Jazz joined dealership employees in helping to serve turkey meals at a Utah shelter.

Miller’s sports involvement doesn’t stop there. The company is a title sponsor of the Larry H. Miller Tour of Utah professional cycling event. The seven-day race travels throughout Utah, accompanied by caravan vehicles from the dealerships that display the company name.

“It … has a benefit to the communities that it rolls through and helps provide a great deal of recognition and awareness for us,” Nygaard said.

The Miller family also owns the Salt Lake Bees Triple A baseball team and the Salt Lake City Stars NBA development league team, and it is a corporate sponsor of the University of Utah athletic program and others.

‘You can make a mark for yourself’

In terms of finding areas in which it could get quality exposure, AutoNation has found sports and arts as vialble options, “where you can make a mark for yourself, and you can reach a vast audience, and in many cases or most cases, exactly the buyer you’re looking for,” Cannon said.

The company launched its Drive Pink initiative, with help from auto racer Ryan Hunter-Reay, whose mother died of cancer. That led to the AutoNation Cure Bowl. Then the company partnered with race car driver Jack Harvey, who expressed a strong interest in cancer causes and participated in another AutoNation advertising campaign.

“Before we know, we’ve got the … AutoNation Sirius car, which is a beautiful pink Indy car,” Cannon said. “This is sort of how it all started to develop. It was about the brand, it was about Drive Pink, and you look for people who had passion and understanding and a connection to what we were doing with cancer.”

AutoNation’s affiliation with sports has helped people in need, and Cannon likes to talk about how sports helps push the AutoNation brand.

“When you’ve got a brand, it also changes your advertising portfolio. Now you can advertise bigger, lighter and smarter because you’ve got a brand that has its name on 70 percent of your stores,” Cannon said. “So with that, we looked at high-visibility sports events to advertise on. Whether it’s the Indy 500, the NBA playoffs or the college football playoffs, those types of activities give us an opportunity to draw large audiences, and they’re people who are obviously great customers.”

The late AutoNation founder Wayne Huizenga owned the Florida Marlins (now known as the Miami Marlins) baseball team and the NFL’s Miami Dolphins. “But that’s not how we got into sports. We got into sports because we’re good branders and we see the marketing capabilities,” Cannon said.

That will continue as AutoNation participates in various sports sponsorship programs, including a vehicle giveaway program involving the Marlins.

“We gave away a car every weekend, and then at the end of the year, the last six cars we gave to six people who were either battling cancer or are parents that are helping somebody battle cancer in their house,” Cannon said. “It was an incredible experience.”

 

EDITOR'S NOTE: This is part of Auto Remarketing's “DRIVING FORCE: The Business Intersection of Sports & Automotive” series, which will discuss the car industry's involvement in sports business — be it through marketing partnerships, ownership stakes, working as sister companies under the same corporate umbrella or other business ventures. Stay tuned for the print edition of this series in the Feb. 1 edition of the Auto Remarketing magazine.

CHARLOTTE, N.C. - 

There are lots of opportunities for innovation in the used-car space for dealers.

In fact, some may say it is a hotbed for new ideas. 

“I think a lot of the most exciting trends in automotive buying are going to be led by used-car retail,” Aaron Krane, the chief executive of Drive Motors, which develops online car-buying solutions for dealer groups and banks, said in a phone interview.

“So, I think the used-car space is actually oftentimes the vanguard for (innovation), whether it’s online buying or any of the other new experiments in that space.”

 One example is the work dealers are doing with Drive Motors, which gives dealers a way to turn existing websites and stores into digital buying platforms.

 “But that’s only one, let’s say, vector of innovation that used dealerships are exploring. That’s the one that we happen to offer, but there are others as well,” Krane said, going on to mention things like on-demand test-drives and retargeting.

Over at the EchoPark Automotive line of used-car standalone stores (the focal point for Part I of this story) one potential area for continued innovation is online sales.

Jeff Dyke, who is president of EchoPark and parent company Sonic Automotive, said in a November interview that EchoPark prefers for 90 percent of the deal to be complete before the customer gets to the store. They have not yet launched tools that would let the consumer do the entire transaction online (as of that interview),  but at the time of that interview in late November, Dyke was set to show that technology to the executive team.

One of the pluses to the technology that EchoPark and Sonic have is that they utilize their own appraisal system, whereas most companies that sell cars online use an outside system, Dyke said.

With EchoPark’s process, customers would be provided a car-cash app through the app store, where they would take a photo of their vehicle, just as an EchoPark associate would at the store.

“They can fill out the same condition report, and it will go straight from the customer to our RTC, and our RTC will respond back to the customer,” Dyke said. “And so they’ll get that information, and then they can complete their own transaction online, set up their own financing, do everything right there online. We’ll sell them the products online, the whole nine yards,” and then the consumer can pick up at store, he said.

As for delivery, there “probably” will be a day where that happens, but it makes things more complex, and they’re not quite there yet, Dyke said.

“I’ve got five priorities in my new role as president of this company, and one of them is to be able to sell online — but to do it really good, and to have the same experience, the same culture in your Web visit as you do in your brick-and-mortar visit,” Dyke said.

Sonic’s peers certainly have noticed the importance of this space.

AutoNation was the lead investor in an $146 million funding round for online car retailer Vroom, which officially announced the Series G round in December. AutoNation had announced its piece of the investment in late October, saying it obtained roughly a 7-percent ownership stake in Vroom after a $50 million strategic investment in the online car retailer.

With its $54 million investment, Lithia led the $140 million round of Series D financing in online marketplace Shift that was announced in September. Lithia and Shift also formed a strategic partnership, and Lithia president and chief executive Bryan DeBoer joined Shift’s board of directors. In October, Lithia said it had acquired more equity interest in the online marketplace.

Krane, the Drive Motors chief executive, said he believes this will be the year that, “online car buying reaches and passes the tipping point.”

“2019 is the year where every dealership realizes they need online car-buying, just like every dealership realized a decade ago they needed a website with inventory,” Krane said. “We see this on every level, from the manufacturer through the large publicly traded dealer groups on down to the smaller one- and two-store dealer groups. Quite frankly, 2019 is just the year that I think the entire market embraces online buying, and of course, they’re going to embrace it in various ways.”

Some groups might utilize third-party platforms, some might utilize subscriptions, while others might bring online buying to their existing experiences, which Krane believes will be most common.

“Much like we’ve seen in every other vertical, there will become an arms race or a land grab or whatever you want to call it,” he said. “And the early movers are going to benefit, much more than the mid-to-late movers. 2019 is probably the last window to be an early mover in online buying for dealerships.”

CHARLOTTE, N.C. - 

A walk through the customer-facing side of the EchoPark Automotive store in Charlotte, N.C., has the feel of a cafe, not a car dealership.

The employee work area, separated from the consumer-facing front, has the trappings of a young, tech-leaning startup.

But the innovation of this store and its fellow EchoPark locations go well beyond appearance.

These standalone used-car stores, launched by the publicly traded Sonic Automotive dealer group, take a new approach to auto retail — perhaps representing, on a larger scale, the shifting sands of how dealerships operate.

This innovative way of thinking was evident in a late November interview at the Charlotte store with Jeff Dyke, president of EchoPark and Sonic, and Sanjay Prakash, the location’s general manager.

Everything from inventory pricing to employee management at EchoPark is a bit different than what you might find at a traditional car dealership.

Buy smart, and in bulk

Take, for instance, how these stores find inventory.

“We source everywhere, but we try to buy in bulk,” Dyke said. “And the best way to sort of think about how we buy is, you go to a meat market.

“And at the meat market, there’s chicken and steak and hamburger and sausage and you name it,” he said. “We look for what’s on sale today.

“We don’t necessarily buy to a, ‘Hey, here’s what the customer wants’; We buy to a price-point, so that we can create a really low price-point that brings the consumers into the store,” Dyke said. “And that’s everything — you’ve got to get the right price on a car.

“And once you hit that, it really drives the volume. And why others have a hard time replicating that is the expense. The process: You have to be able to buy the car, ship the car, recon the car, detail the car, take the pictures of the car, get it on the front line and get it out fast,” he said. “And if you have any disruptions to that, like a big holiday sale, where you sell a ton of cars, it throws everything off.”

Establishing a rhythm in buying is key in inventory management for EchoPark. So is consistency. Buying to a number. And not over-buying.

“You’re going to sell more cars on a Saturday than you do on a Thursday, but we know those rhythms, so we buy in conjunction with that,” Dyke said. “And we try not to over-buy; we do have projections for what we think we’re going to sell the next week, and we try to buy to that number. And then the next week, buy to that number.

“Everything is done by week, so that we keep a consistent flow of inventory. And that’s critical. Inventory management is imperative in order to be able to be profitable in a store like this.”

Pricing right

So, too, is pricing of that inventory, which Dyke said is based on algorithms built internally and on data points from what is happening in the market.

An example of that is the electronic hangtags on the vehicles. When the company’s internal pricing system changes the prices, that change is automatically reflected on the hangtag.

The EchoPark managers don’t have to worry about buying inventory or pricing cars.

“They might give opinions on a car here or there, but overall, their job is to manage the associates and to manage the guest experience,” Dyke said. “And we have an inventory team and a pricing mechanism that handles everything else.”

The fact that the majority of the technology at these stores was developed internally means that making changes is typically easy, inexpensive and efficient, Dyke said.

“It’s amazing how intertwined everything else is, too, and how much math and science is involved,” said Prakash, the manager of the Charlotte location. “You think of inventory, purchasing and pricing, and then how it’s attached to recon and then attached to sales, it’s all intertwined. They all move in unison.”

Lessons learned

Innovation, as it turns out, can be an evolving process. Since launching EchoPark Automotive in 2014, Dyke said there have been a number of lessons learned about how these standalone used-car stores should operate.

For instance, days’ supply should in the low- to mid-20s at the stores, as opposed to the 29- to 32-day range for Sonic’s new-car business.  Also, pricing right from Day 1 is paramount. Don’t overbuild.

 “We tried to put this exact process in our new-car stores. But to take that culture and to convert it into this culture with the same people? Mistake. We learned that. You can’t do that,” Dyke said. “We’ve taken the technology out of the new-car stores and put it in here; that’s worked very well. But certainly, hiring from day one and testing and making sure that you’re bringing the right people into the organization and lots of training before you open — it’s been an earmark for us from day one, but it’s just gotten a lot better as we’ve moved forward,” Dyke said.

“The people piece, the inventory piece. Don’t overbuild the facility,” he said, pointing out that a facility can be nice without being massive.

“And we don’t have to have tons of people. Our technology allows us to sell two-and-a-half times what a traditional salesperson would sell in a regular store” where an associate might sell eight to 10 vehicles a month, he said.

“It’s not about how many people you add; it’s about how efficient you can be,” Dyke said.

Store openings?

As far as store additions, the company aims to open one more location in March, putting its EchoPark store count to nine, and then they will likely “take a breather” for the rest of 2019 to focus on execution, Dyke said.

“What we want is for the nine stores to be profitable, and when we add a store … we stay profitable, and then you just build on that,” Dyke said.

Starting next year, Sonic plans to start adding two to five stores annually, “depending on what our capabilities are and the performance of the organization,” he said.

They want to grow, but do so profitably.

“Speed to market is really important, but when you have a formula like this, and you know that you can open up a store and it’s going to sell 300 cars and it’s a very, very good chance that it could break even in its first month, I’m not worried about the rest of the world anymore,” Dyke said.

“I’m worried about how much can our people take on, and how much complexity do we put in front of them, how simple we can make it and the ease of opening stores,” Dyke said.

“We know how to scale,” Dyke said. “I did it at AutoNation, I’ve done it at Sonic Automotive. Scalability is one of our strengths. And our biggest strength is inventory and pricing. We really understand the inventory. All of our systems are all built internally. So, if you can scale, you can hire and train, and you can manage inventory; it puts you in a situation that gives you a pretty good competitive advantage.”

Establishing culture

Another competitive advantage that EchoPark prides itself on is its workplace culture.  Instead of spending 30 percent of his time working with employees and 70 percent on other tasks, Prakash said he spends 90 percent of his time coaching, teaching and working with the team at the EchoPark Charlotte store.

In fact, in a recent survey where team members could give feedback anonymously, they were asked what three words they would use to describe the culture at the store.  The top response in the heat map of words was “family.”

“That’s really good to see as a GM and a leader of the team to see that we’re living the values. And to Jeff’s point, it’s about reducing complexity. I’m allowed to focus on a lot of the activities that generate that,” Prakash said. “I don’t have to interact with a lot of guests, if I provide them with this, just like Jeff provides it for me, they’re going to automatically be engaged every day.

“We’ve got mechanisms to keep us focused on the most important activities of the day, which is developing operating rhythms, making sure we’re working with the people, making sure our building’s tight and right all the time and our message to the community is good,” he said. “That’s all we focus on. We don’t have a lot of other side science projects that take our eye off the ball.”

 

For more, see Part II of this story. 

SCOTTSDALE, Ariz.  - 

Consumers want a car-purchase process that is seamless, streamlined and limits their in-dealership transaction time to an hour or less.

That means allowing consumers to compare interest rates, electronically sign credit applications and other documents and shop for finance and insurance products all on a dealership’s website before stepping foot into the dealership.

OK, so the industry isn’t completely there yet — but some financial technology is.

That was the general consensus of financial industry experts, technology providers and other big thinkers, who gathered for Used Car Week in Scottsdale, Ariz., Nov. 12-16.

“We’ve defined the problem quite well; consumers want the information; they want a fast transaction; they want to have it all arranged before they get into the dealership, but I don’t think we’ve totally solved for that,” said Andrew Stuart, president and CEO at TD Auto Finance, during a sideline interview at the conference.

In its search for solutions, TD Auto Finance has been in talks with a number of financial technology startups and struck a deal to become a preferred lender with AutoGravity, a digital vehicle-shopping and financing platform, Stuart said.

“As lenders we’re going to have to make a number of small bets with some of these fintechs that are trying to solve for what consumers want,” he said.

“There are a lot of companies nibbling around the edges trying to figure it out. With enough attention and focus it will get solved.”

Seeking solutions

Also seeking solutions is Cox Automotive.

Take consumer credit applications, for example.

Andy Mayers, Cox Automotive lender solutions strategist, said credit application information is typically gathered from consumers and then entered into dealership computers by dealership F&I managers.

But credit applications submitted on dealers’ websites by consumers using Cox Automotive’s Accelerate digital retailing platform saves time, even if it would have taken an employee just five minutes to enter the information, he contends.

“If you sell 100 cars a month, that’s 500 minutes you just saved by having a consumer enter that data,” Mayers said, during an interview.

“It’s incremental. For an F&I manager, for a dealer, time is money. The more they’re doing administrative things, the less time they are selling.”

Mayers also said dealers are open to giving consumers more information about F&I products online, but worry that F&I sales, a major profit source for dealers, will suffer and consumers will miss out on valuable products.

“If you talk to dealers, some are afraid that consumers will opt out of buying things, such as service contracts and (guaranteed asset protection) products,” Mayers said. “Service contracts can be a valuable tool for a consumer to cover their expenses for costly maintenance.”

To bridge the consumer’s online and in-dealership experience, Cox Automotive’s Dealertrack created uniFI, a dealer-facing software platform that integrates with Accelerate, Mayers said.

As an open platform, uniFI can facilitate the entire car-buying journey of credit, contracts and aftermarket sales, he said.

Though much of the vehicle purchase process, such as trade-in appraisal, test drives and vehicle registration and titling paperwork, are typically conducted at a dealership, “technology is getting there,” when it comes to allowing consumers to do it themselves online, Mayers added.

F&I on dealers’ website

Tammy Linkfield, senior vice president, central region, at Ally Financial, said consumers shop, research and gather information about vehicle purchases online, but “at the end of the day they come back to the traditional automotive dealer.”

“We continue to work with dealers and helping them to have a spot for F&I on their websites and things of that nature to improve that experience,” said Linkfield during the panel discussion: “Auto Fin Executive Roundtable: The Next Steps for the Industry.”

Also on that panel was Jim Money, president of Automotive Finance Corp., who said taking advantage of things such as artificial intelligence and mobile apps “take the mundane out of the process” and help streamline the wholesale vehicle buying and selling for dealers.

“Mobile technology is extremely important,” he said. “It allows the dealer to buy and sell (used vehicles) and pay down and gather information on their accounts.

“Dealers are looking for ways to source their inventory. There are traditional brick-and-mortar (auctions), but virtual lanes are becoming much more important.”

Fintech’s impact is 'dramatic'

Fintech was a hot topic among auto finance executives during a panel discussion that honored them as leading Women in Auto Finance.

Katherine Adkins, Toyota Financial Services group vice president, general counsel and secretary, said fintech is dramatically changing auto finance.

She said companies that don’t adapt and grow risk being among the “Kodaks of the world,” referencing the once-dominate camera company’s near-death experience resulting from its failure to switch its photographic technology from film and paper to digital.

Adkins also cautioned that financial technology is way ahead of regulation, which could eventually present problems.

“The rules aren’t written yet and the business wants to go there. So how do you facilitate them going there without setting up a situation where you end up hurting yourselves?” she said.

More technology, more legal and compliance issues

Panelist Sharon Mancero, senior vice president, Wells Fargo Preferred Capital, predicts that technology will be at the forefront of career opportunities available in auto finance, but agreed that more technology will create more legal and compliance issues.

“The more we lead with technology, the more we go ‘ooh, nobody ever thought about; what do we do with all this data?’ she said.

“It’s all consumer data. There are privacy and regulatory issues. Where do you store it? How do you use it? When not to use it? Legal and regulatory is a big area that we need to continue to pay a lot of attention to.”

Georgine Muntz, board of directors member, defi SOLUTIONS, a provider of loan origination software, said the industry is being challenged by a lack of agility and outdated technology.

She said when an online used-car retailer such as Carvana — which allows consumers to find, finance and arrange delivery of a used vehicle online without stepping into a dealership — can be created and go public “faster than a traditional lender can change out a core system, you have to think there is a problem.”

The industry must become nimble and take advantage of the new technologies for payments and electronic documents, said Muntz, who was also a Women in Auto Finance panelist.

“These are the things we have to take a hard look at and find ways through legal and compliance to allow for these changes to happen,” she added.

 

CARY, N.C.  - 

As a master impressionist and a man of many characters from his “Saturday Night Live” days and beyond, Dana Carvey, one of the keynote speakers at NADA Show 2019, has had to wear many hats, so to speak.

So too does the franchised car dealer.

Just as Carvey’s repertoire has ranged from characters like “Garth Algar” and “The Church Lady” to impressions of Ross Perot, Johnny Carson and everyone in between, dealerships must navigate a slew of fields from finance, service and repair, reputation management, online retail, social media and, of course, the selling of new and used vehicles.

While perhaps Carvey may have a few impressions and characters in store for his speech at the show, NADA also has workshops and sessions lined up at its annual convention, set for Jan 24-27 in San Francisco, to help dealers work through the many roles they play.

Part of that will be through a new feature at NADA Show 2019: a preview of the NADA Professional Series, the association’s new dealership management training program.

The preview will be conducted through inventory management sessions in four different areas of a dealership:

■ NADA Professional Series: Office Managers

Protecting Your Dealership’s Biggest Assets

■ NADA Professional Series: Sales Managers

Managing Millions in Vehicle Inventory

■ NADA Professional Series: Service Managers

Maximizing Your Daily Disappearing Inventory

■ NADA Professional Series: Parts Managers

Stopping Parts Obsolescence Before It Starts

“Attendees will see first-hand why dealership managers are looking to this program to supercharge their careers,” NADA said on its convention website.

“These special workshop sessions will demonstrate how NADA educates the next level of dealership department managers and equips them with the tools they need to advance both their careers and their respective dealerships in the ever-changing automotive industry,” the association said. “NADA Academy Instructor Georgia Munson will provide an in-depth look at this program, where dealership managers will learn to improve departmental profitability and gain the confidence to secure leadership roles in the departments they choose.”

Education at NADA Show 2019

Overall, the NADA Show’s educational endeavors are divided into four areas, according to the event’s website:

• Workshops on pressing topics in the industry

• A Super Session designed to be “network-oriented.” This year’s will include leaders from Twitter, Google, Facebook and UnityWorks Media, who will discuss “Disrupting Your Market with Google, Facebook and Twitter.” 

• An Exchange series of peer-to-peer roundtable sessions

• A Distinguished Speaker Series

With this being a publication that leans towards the pre-owned side of the market, here are a few of the used-car sessions at NADA Show 2019:

Workshops:

• Leadership Skills and Used-Car Strategies for Champions with Tommy Gibbs of Tommy Gibbs & Associates

• Make Pre-owned Great Again with Randy Barone of Pearl Technology Holdings

• More info: https://show.nada.org/2019/Workshop-Schedule/

Exchange Sessions:

• Increase Used-Vehicle Sales

• Used-Car Strategies, from Acquisition to Increased Turn Rates

• More info: https://show.nada.org/2019/Exchange

Distinguished & keynote speakers

Meanwhile, the Distinguished Speaker Series will include:

• Carey Lohrenz, the first female F-14 fighter pilot in the Navy

• Alan Haig of Haig Partners and Dale Pollak of vAuto/Cox Automotive

• Mark King, executive emeritus at Adidas

• Rick Rigsby of Rick Rigsby Communications

• Bill Rancic, entrepreneur, first winner of “The Apprentice” on NBC, author

In addition to Carvey, keynote speakers include:

•  Kat Cole of FOCUS Brands North America

• Air Force Maj. Dan Rooney

• 2018 NADA Chairman Wesley Lutz

• 2019 NADA Chairman Charles Gilchrist