CDK's purchase of Auto/Mate may create a major disruption in the dealer management system (DMS) industry. Here is our take. DOWNLOAD
Sonic Automotive is boldly and publicly moving toward a brand-wide strategy delivering 45-minute transactions without negotiation, simplified back-end options, a single-person sales experience, and with virtually no paper work. It’s a bold plan. Will it work? Will it win? Will it dominate? As today’s Automotive News article points out, some financial experts are cautious. Many of the comments to that article are downright mean toward Sonic.
The fact that Sonic Automotive has comfortably been so forthcoming with information about a strategy just getting ready to go into the pilot stage says volumes about how slow they think their competition will be to change. The fact is automotive retail has historically been slow to adjust to changing consumer habits and desires. Yes, our industry is changing faster than it ever has, but not as fast as consumers would like. As an example, CarMax has been a success story for a very long time, yet their position is unique in most of the markets they serve.
Sonic Automotive wants their brand to stand for a type of shopping experience many shoppers will find beneficial and most dealerships will find difficult to emulate, even those who try hard to do so. Frankly, it appears to be a well thought out plan that involves changes to every part of the marketing mix, from product and pricing to promotions and store operations. If well executed, it should work. Unfortunately, it will take several years to know for sure.
Will some shoppers still shop for the right deal on the right car and end up at whatever store that search takes them to? Some will. Will some shoppers give preference and a premium to a consistent retail process? They sure will. Will other shoppers be all about qualifying for finance, even if it’s not the ideal vehicle, deal, or retail process? Yes, some will. The market will remain segmented.
The transformation of Sonic Automotive will not quickly change the entire industry. But it could allow the company to become a dominant and growing player serving an expanding segment of shoppers. Their effort cannot be encapsulated into an argument about one-price stores, sales process, or the advantages and disadvantages associated with a more rapid transaction process. More than anything, it should stimulate an array of discussions about the benefits of delivering a unified marketing mix aimed at a particular segment of shoppers.
Regardless of which segment of shoppers a store or group of stores aims at, those with the greatest degree of success will be those who thought through a holistic plan. Large dealer groups have the advantages of scale. Smaller groups and individual stores have the advantage of speed. Neither of those will be sufficient when stacked up to organizations who execute well on the optimal marketing mix for the segment(s) they most desire to serve.