How has new car business changed in the last 3 years?

Larry Yockey
Customers used the Internet as a gauge, it will never out live or out preform good, "old fashion customer service"..... No fears, love your customers and remember the employee is the #1 customer!
James Lawrence
Over the last 5 years, according to the stats coming from JPDA and Cobalt…car buyer’s first research online up to 20 independent vehicle websites to begin make their vehicle choice. Once they land on YMM they then compare up to 8 “same-make” dealerships in the region before they decide who to visit. This “visit” is even more critical today. Analysis shows the number of lot visits have declined from an average of 4.6 dealer visits in 2005 down to 1.6 dealer visits in 2012. Today’s Internet vehicle shoppers are more prepared to buy when they visit THE FIRST LOT than at any time in online vehicle sales history; so those dealers that best communicate and differentiate themselves online during the research process win! Some of these independent sites include review sites like DealerRater, Google+, Yelp, etc. In short, reviews matter and consistent professional online communication matter. Size of the dealer may or may not matter, but it is not definitive of success. This competitive environment is merging into a tactical race between effective email & other online communication and the sales & marketing eco-system a local dealer manages for the best possible customer experience and high reviews. This means your suggestion that only large dealers will benefit from more intense margin compression doesn't fly. The online prospect doesn't completely make their purchase decision on price alone because of the strong influence of reviews and the quality of email responses and sales process. Other issues remain the same like OEM brand equity and market perceptions, but the dealer who can treat their prospects well, provide a clear differentiation strategy and can communicate their value will increase sales and overall lifecycle revenues.
Wendi Venable-Nelson
I can't help but still get caught up on the 1.6 dealerships that was just stated here again as the magic number of dealer visits in the process....a number that creates a false sense of confidence. "well they either went to the .6 store BEFORE they made it in here OR...they are on their way to look for the .6 lot when they leave This number throws the whole visitors/close ratio off. My dealers are still seeing at least 500 people per month to close 100 deals.....hmmmmmmm something is drastically off... couldn't be the dealers count could it ? ;) Was at three more dealerships last week where they swear that their visitors typically go to at least 3 stores during the 7 hours of onsite shopping they conduct.....unless that number (11 hours online and 7 in person) is off too.....
James Lawrence
I see your point...and perhaps at this moment thoughtful anecdotal evidence may carry more weight. Though I believe we can use this statistical information as an indicator of the momentum of a potential adverse trend for dealerships. In which case, such information is valuable for longer term decision making in concert with vendors and consultants looking to facilitate change within these organizations' existing sales processes, to more effectively do battle in this emerging arena. In short, the more information and tools, the better for informed decisions.
Steve Harrison
Hi there, thanks for your participation. James, according to you, size does not matter most. Honestly I have my doubts, because we are talking about a commodity. A combination of price comparisson and a market for commodities usually ends in a process of concentration. Are there any figures or statisctics proving that the number of new car dealers did not decline in the last 5 years? Best Regards Steve
James Lawrence
Hi Steve, There is historical and anecdotal evidence to support the idea that size does not matter in automotive dealer franchising. There are also state-level structural regulatory constraints that push back on the consolidation a typical industry will go through as part of their lifecycle. In short, each state has a clear and present interest in maintaining the franchise system, even in the face of potential inefficiencies that facilitate industry consolidation. You know the history...There were hundreds of automakers back in the early days of the industry. During this time we started to see franchise dealership business models pop-up among the various makes as manufacturers realized that they didnt have the local knowledge needed for success. Now we are down to a few OEMs yet the franchise business model thrives. For example, Autonation is #1 dealer in the country, It has 265 franchises, 221 locations across 15 states. They generate about $15 billion in sales, yet its share of the market is still less than 6%... This suggests car sales are local. I think anecdotal evidence that size isnt as big a factor in the dealership space will come when their new strategy to rename their dealerships the same. This may reduce their marketing overhead, but I think it will also give the local competition the chance to clearly differentiate themselves and garner more local sales. Dealer points did decline from approx 18250 dealerships in 2009 to approx 17500 in 2012. The vehicle sales figures declined, yet as you can see from the autonation reference their percentage of market share hasn't budged. if the market were able to consolidate as other industries tend to do, I think you would be correct, but there are too many entrenched and powerful governmental interests and local economic forces that will not allow the consolidation I think you envision. I could be wrong. time will tell.

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