To beat them at their own game, we need to play on their field.
I drive a big SUV. I’ve always liked big cars, and those who know me will tell you – for better or worse – that a big internal-combustion tank on four wheels jives with my personality. I’m a Marine, I’m unconventional, I’ve been described as one-of-a-kind, and I make my opinions known (reach out and I’ll share some). So, I like and drive big cars.
I’m also in the market for a new one and, for the first time, am considering one of the new fully electric model trucks or SUVs. The biggest I can get, of course.
Coming from someone who has led a state association of franchised auto dealers for 30-plus years, that may come as a surprise to those in the EV world. But it shouldn’t. Consumers like me drive what we like no matter what’s under the hood (which in the case of some EVs is nothing at all). And the franchised auto dealers who make up our membership will sell anything the consumer needs and wants.
For years, “disrupters” to the auto industry have challenged the traditional franchise system, through direct or online-only sales. I am of the belief those disrupters are here to stay. But rather than fighting upstart companies with flashy business models in the General Assembly halls, and ultimately in the media, lets us once again demonstrate the franchised dealers’ abilities to innovate, adopt new technologies, and meet customer needs—whether that’s for a traditional internal combustion engine vehicle or a car that’s entirely electric.
It’s not about creating a level playing field, it’s about playing their game better than they do.
In other words, let’s continue to operate our business in ways that have allowed franchised auto dealers to serve customers and achieve success for more than a century, while at the same time evolving to give our customers what they want in their dealership experience. And we must give the perception that we are at the front of these changes.
We continue to believe the franchise system protects consumers, and the rules in our state and any other should apply to all sellers — regardless of how the vehicles they peddle are propelled. Traditional dealers can, and do, sell EVs, even if electric cars still occupy a very small part of the market due to manufacturer supply and consumer demand. Automakers worldwide pledge new and expanding EV lineups in years to come, and we’ll stand ready to inform consumers of the benefits of any type of car they wish to buy. Yes, there are some perceived benefits EVs have over more traditional vehicles — and vice versa.
A good example of how we can create the perception of dealers as leaders is by embracing the EV movement and getting out ahead of it. Direct sales models threaten to withhold from electric consumers the many benefits internal combustion buyers enjoy while shopping franchised dealers. Namely? Price competition, which is something they don’t get when the manufacturer sells the product directly.
The franchise system works for manufacturers, because it’s the most efficient way for them to focus investor resources on design and production, leaving the expense and risk of distribution and retailing to others. The direct sale model eliminates dealers, which some incorrectly perceive as the “middle man,” but which actually drives up costs. For consumers to reap the full benefits of the EV marketplace, manufacturers should, and many will, opt to distribute those vehicles through a franchised dealer system.
So how do we, as new car and truck dealers, prove our worth? It’s not enough anymore to say we are an important part of the local community. It’s true, but we must continue to innovate and evolve (“Evolution not a Revolution,” as industry friend Glenn Mercer says in our latest High Octane podcast). Online buying through a disrupter company or your stores is no different and, I would argue, is better through dealerships, where consumers also have the option of shopping models in person, touching, smelling, and test driving (COVID notwithstanding).
That only scratches the surface on the countless benefits dealers provide customers. Let’s blend our acceptance of new technology with all the services that have allowed our businesses to thrive. Through technology, we have upended our 100-year-old model nearly overnight and continue to refine it. There’s no going back.
Another thing that matters: Experience. It’s getting better, but the face-to-face car buying process still leaves something to be desired. In January — when COVID-19 was but a headline — Cox Automotive issued a survey, whereby 2 in 3 consumers (2,000 surveyed) said experience is more important than price in the purchase decision. In fact, they said they’d pay more for a great experience or switch brands because of it.
Though they need to understand benefits of the franchise model’s value, consumers don’t know the difference in a direct sales vs. a franchise store. To them, it’s a store with vehicles. I had a new member of our team recently tell me that before he joined our organization, he was unaware of the franchise system. As a consumer, he still doesn’t care.
“If I am in the market for a car, I want to go to a brick-and-mortar store and touch, feel, smell, and test drive it. Smell sells,” he told me. Stores matter regardless of the legal and regulatory underpinnings of how they are operated.
It is not a time to stand idly by. Dealers can, and are, changing and evolving at an accelerated pace. It’s a silver lining to the otherwise tragic coronavirus pandemic, which has forced dealers’ hands to unleash the very tools they’ve seen from the innovators — home delivery, enhanced digital retailing, virtual tours, and more. Innovation is what you’ve done for the last century. With it, you’re making the hard sell much easier.
EV is about innovation, a new way of thinking about transportation, and exploring new waters. Even if EVs are not a perfect solution to environmental protection — factories still create pollution, and there are significant questions regarding battery disposal — the expansion and continued exploration of EVs do represent a new way of thinking about the problem of our environment and a clean future with quality vehicles. EVs are mesmerizing to consumers – including big sport utility lovers like me.
Now if we could just convince manufacturers to make big sport-utility EVs.
In This Issue
Here are some of the great stories you’ll find in this issue of our monthly newsletter:
- Virginia details COVID-19 workplace safety requirements.
- Tommy Lukish is next up in our series featuring VADA and Integrum Advisors teams. Get to know Tommy!
- In compliance, we review discrimination and harassment policies, the Consumer Financial Protection Bureau, and how direct manufacturer payments impact your employees' minimum wage.
- Learn why you need eye wash stations to adhere to VADA GSIA guidelines.