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Dealer counts on expanded service capabilities, fintech to boost used sales

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. 

Dealer groups see benefits of ‘connective tissues’ between auto, sports industries

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.

Part II: Retail innovation key in dealer strategy

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.”

Part I: Retail innovation key in dealer strategy

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. 

Fintech’s goal: A more seamless, streamlined car-purchase process

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.

COMMENTARY: Helping dealers make a good ‘impression’ in 2019

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

2019 NADA chair talks new-car affordability & getting ‘every dealer involved’ in association

When the 2019 leadership of the National Automobile Dealers Association was announced in October, incoming chairman Charlie Gilchrist said in a news release that dealers “are facing many challenges, but we will also have many opportunities as we journey throughout the year.”

Topping that list of challenges, Gilchrist said in an emailed Q&A with Auto Remarketing, is the struggle around new-vehicle affordability.

“It’s a huge issue. And we as an industry need to work on keeping these vehicles affordable for our customers. Affordability is everything for our customers, and so it will be a big part of everything we do at NADA,” Gilchrist said, as he prepares to take the helm of the association, which hosts its NADA Show 2019 convention this week in San Francisco.

Gilchrist, of Texas-based Gilchrist Automotive, was the 2018 vice chairman of NADA. Chosen be the vice chairman for next year is Rhett Ricart, of Ohio’s Ricart Automotive Group.

Asked what targets he would like NADA and the franchised dealer community to focus on in 2019, Gilchrist said: “The main thing that I want to do as chairman is to get every dealer involved in NADA.

“I want every dealer to know what NADA does for them every day, and I’m going to challenge every dealer to get involved,” he said. “And I want those dealers to challenge NADA, as well, because we’re all in this together.”

Other tasks top of mind, too

Of course, the challenges — and subsequent opportunities — don’t end with new-car affordability.

“We’re also facing a critical shortage of service technicians in the auto retail industry. We have to find the best people for every position in our dealerships, but we don’t have nearly enough service technicians now, let alone in the coming years when tens of thousands more will be retiring,” Gilchrist said in the Q&A, after his point on affordability.

“That is an enormous challenge, and we’ll be talking much more about that at the 2019 show and in the months ahead. Our workforce is our absolute best asset, but it’s aging, and we have to recruit, train and retain the best people if we want to continue providing our customers with the best experience,” he said.

“And we’re going to continue to be challenged to figure out the best way to embrace technology in the retail process, but I think that by doing so we’ll be able to speed up the retail process and earn us even more trust with our customers.”

Regarding the latter point on tech, some dealers and dealer groups have partnered with and/or invested in some of the tech-driven companies aiming to change the retail model.

For instance, 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.

In the vehicle subscription space, AutoNation announced a partnership in November with used-car subscription provider Fair to potentially provide the dealer group’s customers “an alternative to traditional ownership” and drive used-car velocity. Elsewhere, the list of dealers working with subscription service providers is quite extensive.

So, what is driving the decisions by the groups to work with these tech-driven companies aiming to change retail?

“Every dealer needs to be more creative to run more profitable businesses next year and in the years to come, because the margin compression in our new-vehicle departments is a serious issue. I don’t know the exact right way to do it, and I don’t know if anybody knows,” Gilchrist said. “I don’t know if subscriptions are the answer. But all of us are looking for avenues to keep our businesses strong and healthy, and provide the best customer experience we can at the same time.”

But like his predecessor, 2018 NADA chair Wes Lutz, Gilchrist also urges caution and thoughtfulness around some of the discussion of certain topics in mobility and vehicle tech.

Asking the right questions

In a speech to the Automotive Press Association in October, Lutz, while emphasizing his fondness for auto reporters, urged them to challenge some of the specific “narratives” around mobility and the supposed “end” of personal car ownership.

“I get it. You can’t go to an automotive or a tech conference these days without hearing about the end of personal vehicle ownership,” Lutz said in the remarks later provided by NADA and summarized in a news release.

“But I’m asking you: Question the hype, ask for proof, and find out what they’re not telling you. The future will work itself out regardless. I just want us to be informed in the meantime.”

So, Auto Remarketing posed this one to Gilchrist: What are some of the narratives that he would ask media folks like us to question?

“Absolutely. There are three main media narratives right now regarding the future of our industry that might sound right, but that in reality are built on false or unproven pretenses, and those are: that ride-hailing will replace personal vehicle ownership; that self-driving vehicles will be immeasurably safer than human drivers; and that dealers are reluctant to sell electric vehicles,” Gilchrist said.

“For example, the idea that ride-hailing will replace personal vehicle ownership has always been built on the premise that it’s a cheaper alternative to owning your own car or truck. At least that was always what we were told by proponents of ride-hailing and these companies themselves,” he said.

“But last year, the AAA Foundation for Traffic Safety released a study finding that the cost of relying on ride-hailing services as a primary mode of transportation in 20 of the biggest metro areas in the U.S. was, at minimum, more than twice as much as the cost of owning a personal vehicle. That statistic should be front and center in this conversation,” Gilchrist said.

“Similarly, the argument that self-driving vehicles will be safer than humans is built on the premise that humans aren’t good drivers. But there are 90 million miles driven in the U.S. for every motor vehicle death,” he continued.

“That’s 342 years of driving — 24 hours a day, seven days a week, 52 weeks a year — between traffic deaths. Humans are in fact phenomenal drivers,” Gilchrist said.

“So, the questions automotive reporters should be asking regulators, safety advocates and automakers right now are: What technologies are coming online in the next few years that will reduce driving fatalities, and that don’t require removing brake pedals and steering wheels, or humans, from vehicles?”

On used cars

Elsewhere in the Q&A, we touched on the pre-owned side of the market, where Gilchrist said he believes the momentum will remain.

“I think it’s going to be a more competitive business. As you see more dealers concentrating on used cars, then obviously it’s going to be a harder business for each dealer,” he said. “But we have the ability to expand and get better at it. Because it’s a huge market, and we probably don’t capture the share of that market that we should. So, I think it’s a natural place for dealers to turn to.”

Many publicly traded dealer groups are putting a big emphasis on used cars, including standalone used-car stores. Certified pre-owned sales, for instance, continue to be a strong resource for car dealers.

“I think all dealers, because of the margins in the new-vehicle departments depressing, are searching for additional revenue sources,” Gilchrist said.

“And obviously, used cars would be one of the areas to turn to,” he said. “The challenge is going to be figuring out how to increase the amount of used cars overall that are sold by franchised dealers.”

GM wins OEM loyalty award; Used-to-new conversion impacts loyalty

Last year, 53.7 percent of customers returned to market to purchase or lease another new vehicle from the same make they already owned.

Also, converting a customer from used to new can have an impact on loyalty rates.

More than 29 percent of used-vehicle owners who returned to market for a new vehicle during the 2018 model year purchased the same brand. In addition, customers returning to market with a certified pre-owned vehicle who purchased a new vehicle of the same brand did so at a rate of 38 percent.

All of that is according to an analysis by business information provider IHS Markit, which presented its IHS Markit Loyalty Awards on Tuesday during the Automotive News World Congress.

At the presentation, General Motors retained its position as the leader in automotive manufacturer loyalty, receiving the evening’s top award (Overall Loyalty to Manufacturer) with a loyalty rate of 68.3 percent.

Ford was the winner in the category of Overall Loyalty to Make, with a rate of 63 percent.  

IHS Markit honored winners in more than 30 categories. Automotive News World Congress is held alongside press and industry days for the North American International Auto Show in Detroit.

The  aforementioned 53.7-percent rate of customers purchasing or leasing a new vehicle from the same make they already owned sets a record in the IHS survey in loyalty rate, although the increase was just one tenth of a percentage point from last year. That demonstrates a flattening of loyalty rates in the industry after years of increases, according to IHS.

But IHS notes the competition is stronger than ever at the top. 

In 2014, only one brand scored a loyalty rate above 60 percent, and five percentage points separated the top three brands. During the 2018 model year, only three percentage points separated the top three brands, and now two brands score a loyalty rate above 60 percent, with the third only two tenths of a point away.

IHS Markit reviewed additional influencers impacting loyalty metrics. Make loyalty rates among those who financed through captive lenders were 57.8 percent during the 2018 model year, more than eight percentage points higher than loyalty rates of those who financed with non-captive lenders (49.4 percent loyalty). Service experience also played a role, resulting in a 4.5-percentage-point lift in loyalty among owners who service within the dealer network.

Ford achieved the highest loyalty rate of all makes during the 2018 model year, winning the Overall Loyalty to Make award for the ninth consecutive year. The award for Highest Conquest Percentage for the 2018 model year went to Jeep for the second year in a row.

IHS Markit again honored Toyota for highest Ethnic Loyalty to Make among all ethnic groups combined, as it led in loyalty among all three ethnic groups: African-American, Hispanic and Asian.   

Lincoln was a repeat winner in the Highest Loyalty to Dealer category, as more Lincoln owners returned to a Lincoln dealer for another Lincoln than any other brand during the 2018 model year.

Tesla was recognized for Most Improved Loyalty to Make for the model year and also was recognized for Most Improved Conquest Percentage during the 2018 model year.

A complete list of winners from the program is as follows:                                                                                               

DC dealers organize efforts to help furloughed federal workers

Dealerships now are joining the effort already in motion by banks, finance companies and regulators to help furloughed federal workers.

On Friday, the Washington Area New Automobile Dealers Association (WANADA) announced that franchised dealers in the greater Washington, D.C., area have begun offering a special assistance program to all federal government employees affected by the government shutdown.

Participating dealership chains include Beyer Auto, Fitzgerald Auto Mall, Alexandria Hyundai and Brown's Car Stores, which together operate more than 20 dealerships in the Washington area.

It is estimated that more than 800,000 workers nationwide are not getting paid during the shutdown.

Under the Shutdown Assistance Program For Vehicle Owners, federal employees who are currently furloughed because of the shutdown would be able to get their vehicles serviced and repaired at participating dealers, but have payment for the work deferred until after the government fully re-opens.

The association noted that customers are encouraged to speak to the individual dealership chains to work out a pre-payment agreement that works for them.

“The ongoing federal government shutdown has created a lot of challenges for federal workers and their families,” WANADA president and CEO John O’Donnell said.

“Through this program, WANADA members are happy to do their part in making this difficult time at least a little bit easier,” O’Donnell went on to say.

Black Book and The Appraisal Lane collaborate to reduce strife over trade values

It’s a potential clash that can lead to frustration for both potential buyers and dealerships — haggling over what a trade might be worth.

According to a recent survey conducted by Black Book, consumers believe a vehicle trade-in quote that’s far from expectations remains the second-most likely reason to kill a deal. Editors acknowledged the trade-in process remains largely inefficient, which is why Black Book and The Appraisal Lane have teamed up to give consumers what the company say is an enhanced trade-in experience while improving dealer efficiencies.

The Appraisal Lane launched a mobile app — accessible from dealer websites and the app store — providing consumers with cash offers for their trades, in minutes, from a live team of experts. With this new platform, consumers can start their research with Black Book’s precision-based values to get the most market-reflective price range for their used vehicle.

When ready to transact, individuals can connect in real-time with The Appraisal Lane by answering simple condition questions, uploading photos of their vehicle and getting a guaranteed offer.  The offer is redeemable at a participating dealer as money toward the purchase of a replacement vehicle, or as cash in hand.

The Appraisal Lane team utilizes Black Book valuation data in conjunction with market insights and deep appraisal knowledge across all makes and models to assess each used vehicle on its own merit and provides consumers with the best possible cash offer.

Real time communication between consumers and a live team of appraisers can give consumers the confidence and transparency that they have been missing in current online vehicle valuation processes. 

“Black Book and The Appraisal Lane share the same fundamentals of combining data science with human touch to most accurately determine a vehicle’s value,” said Jared Kalfus, executive vice president of revenue for Black Book.

“Our values, coupled with The Appraisal Lane’s live cash offers, effectively put the dealership trade-in process right in the palm of a consumer’s hand,” Kalfus continued. “Dealers that offer this experience are poised to improve customer engagement, increase business, and stand apart from the competition.”

Jeff Risner, a 30-year auto industry veteran, and co-founder and chief executive officer of The Appraisal Lane, says the launch his company’s consumer app was designed to improve a process that has been largely underserved by technology. 

“There are two universal truths in our industry,” Risner said. “Every used car is as unique as the person driving it, and a used car is only worth what someone is willing to pay for it, at any given time. These truths involve human interaction — a live appraisal and a cash offer from experts who incorporate quality vehicle values in their toolset. 

“When you use technology to connect with consumers in real-time and make them a fundamental part of the process, you provide an exceptional trade-in experience and create a much deeper level of engagement before they visit the dealership,” Risner continued.

Dealers currently use The Appraisal Lane’s industry products to manage, move, and source inventory and are now utilizing the company’s consumer app to streamline the trade-in process, improve customer satisfaction and make more retail deals. 

Launched a little more than three years ago, The Appraisal Lane community consists of more than 1,000 members and is growing.