Sitting on inventory is a costly and highly inefficient way of running a business. If you’re sitting on Ford Fairmonts, Plymouth Dusters, or a handful of LeBarons I can understand why you can’t turn inventory over. But if you’re a real car dealer that is proactive in moving units as fast as possible, or are intrigued at the thought of monetizing a vehicle before it changes titles, you need to read on.  Aside from Lotlinx to target sitting inventory (literally), there is another emerging solution that makes a dealer $ on "sitting" inventory.

HyreCar is a publicly traded company that has figured out an ingenious way to turn sitting inventory, both new and used, into a revenue stream that runs fast. They took a hard look at the concept of rideshare and came up with a very creative way to insert car dealerships into the money making formula.  It’s really quite simple, instead of letting used or slow moving new inventory sit, why not rent the fully insured assets to local drivers who need a vehicle for Lyft or Uber gigs, but either have no vehicle, or don’t want to put excessive mileage on their current vehicle(s).

Once the rental hits say 2k miles, the dealer pulls it off of the road, labels it a demo (still a new car designation, but at a more buyer-friendly price), and puts the driver into another vehicle. At any point in the process, the rideshare driver can make arrangements to buy the car he or she is using at a discount after putting on the 2,000+ miles. It’s a great way to make money for both the driver and the dealer that could, as a result, develop a customer for life. It’s also a great way for someone who needs money and a car, but has a credit challenge, to make their life better and more productive. The driver can choose the length of their rental from a day, to a week, to a year. The program requires no additional hiring of personnel and can be easily managed by the fleet manager who would be trained to use the HyreCar management software.  

If you are having issues with aging inventory, and it’s tying up your cash flow, I highly suggest you have a conversation with a representative from HyerCar, a truly unique outlier in automotive that brings results that can keep you running in the black.

As much as we talk about autonomous cars, electric cars, and the future of the automotive industry in regards to future cityscapes, one thing we may have overlooked in our crystal ball is the non-inclusion of privately-owned motorized vehicles in certain cities, or city centers altogether.  The benefits to the municipalities and folks who may one day live in towns that adopt such drastic anti-auto measures, may be far more substantial than one would ever expect.  Pontevedra, Spain is one existing example of such an experiment, and it works just fine for all that live there. (DealershipNews.com)

Full Guardian Article (https://bit.ly/2Ozr3jV ): People don’t shout in Pontevedra – or they shout less. With all but the most essential traffic banished, there are no revving engines or honking horns, no metallic snarl of motorbikes or the roar of people trying make themselves heard above the din – none of the usual soundtrack of a Spanish city.

What you hear in the street instead are the tweeting of birds in the camellias, the tinkle of coffee spoons and the sound of human voices. Teachers herd crocodiles of small children across town without the constant fear that one of them will stray into traffic.

“Listen,” says the mayor, opening the windows of his office. From the street below rises the sound of human voices. “Before I became mayor 14,000 cars passed along this street every day. More cars passed through the city in a day than there are people living here.”

Miguel Auxo Fernández Lores has been mayor of the Galician city since 1999. His philosophy is simple: owning a car doesn’t give you the right to occupy the public space.

“How can it be that the elderly or children aren’t able to use the street because of cars?” asks César Mosquera, the city’s head of infrastructures. “How can it be that private property – the car – occupies the public space?”

Lores became mayor after 12 years in opposition, and within a month had pedestrianized all 300,000 sq. meters of the medieval center, paving the streets with granite flagstones. “The historical center was dead,” he says. “There were a lot of drugs, it was full of cars – it was a marginal zone. It was a city in decline, polluted, and there were a lot of traffic accidents. It was stagnant. Most people who had a chance to leave did so. At first, we thought of improving traffic conditions but couldn’t come up with a workable plan. Instead we decided to take back the public space for the residents and to do this we decided to get rid of cars.”

They stopped cars crossing the city and got rid of street parking, as people looking for a place to park is what causes the most congestion. They closed all surface car parks in the city center and opened underground ones and others on the periphery, with 1,686 free places. They got rid of traffic lights in favour of roundabouts, extended the car-free zone from the old city to the 18th-century area, and used traffic calming in the outer zones to bring the speed limit down to 30km/h.

The benefits are numerous. On the same streets where 30 people died in traffic accidents from 1996 to 2006, only three died in the subsequent 10 years, and none since 2009. CO2 emissions are down 70%, nearly three-quarters of what were car journeys are now made on foot or by bicycle, and, while other towns in the region are shrinking, central Pontevedra has gained 12,000 new inhabitants. Also, withholding planning permission for big shopping centers has meant that small businesses – which elsewhere have been unable to withstand Spain’s prolonged economic crisis – have managed to stay.

Lores, a member of the leftwing Galician Nationalist Bloc, is a rarity in the solidly conservative northwestern region. Pontevedra, population 80,000, is the birthplace of Mariano Rajoy, the former Spanish prime minister and leader of the rightwing People’s party. However, the mayor says Rajoy has never shown any interest in an urban scheme that has earned his native city numerous awards. Naturally, it hasn’t all gone off without a hitch. People don’t like being told they can’t drive wherever they want, but Lores says that while people claim it as a right, in fact what they want are privileges.

“If someone wants to get married in the car-free zone, the bride and groom can come in a car, but everyone else walks,” he says. “Same with funerals.”

The main grumble is that the scheme has led to congestion on the periphery of the zone and that there aren’t enough parking spaces.

 “The city is the perfect size for pedestrianization,” says local architect Rogelio Carballo Soler. “You can cross the entire city in 25 minutes. There are things you could criticize, but there’s nothing that would make you reject this model.”

Later, at a children’s birthday party, a group of parents discuss the pros and cons of the car-free city. “The problem is first thing in the morning in the few streets where cars are permitted there are traffic jams,” says Ramiro Armesto. “There’s no public transport from the peripheral car parks into the center. On the other hand, I’ve lived in Valencia and Toledo but I’ve never lived in a city as easy to live in as this one.”

Raquel García says: “I’ve lived in Madrid and many other places and for me this is paradise. Even if it’s raining, I walk everywhere. And the same shopkeepers who complain are the ones who have survived in spite of the crisis. It’s also a great place to have kids.”

“What’s needed is more areas where you can park for five minutes so that you can take the kids to school when it’s raining,” says Víctor Prieto. “Here, if it’s raining – and it rains a lot – people get in their car to buy bread. They do it less now. I hardly use my car at all now.”

The works were all financed locally and received no aid from regional or central government.

“In effect, these are everyday public works that have been carried out in the context of a global project, but they cost the same or even less,” says Lores. “We’ve haven’t undertaken grand projects. We’ve done what was within our grasp.”  #GuardianWalking

Is there a town near you here in the USA or Canada that this model would work in?  It wouldn’t have to be an entire city, rather as in this example, it could be in a central gathering area of any decided size, accessible by shuttle services adjacent to a huge parking lot(s). The boon to local businesses, cafes, and sight-seeing destinations by drastically changing the ambience, and eliminating the unnatural clang, clatter, and congestion caused by cars would be welcome to many looking for a return to a more organic urban way of life. (DealershipNews.com)

I'm by no means a Wall Street Wiz. The stock market is booming right now, but it’s never been a viable option for me because I’ve never had any real interest in it. With that said, I did notice something that may actually be somewhat of a hedge against riskier investments no one has ever thought of...or maybe not. I’m not saying it’s a “sure” thing, but it may be a “thing” worth thinking about.

Since I just wrote a blog on the ironic profitability of car dealers located in areas that are struck by floods and natural disasters, I figured I’d do some deeper diving to see how such increases in post-deluge sales affects share prices a quarter after the claims are paid out, and flooded cars have been replaced by new vehicles (since used inventory is depleted by flood damage as well).

What I found was that over the last 365 days, Ford and Chrysler shares were selling at their highest in January and February of this year, a few months after Hurricanes Irma and Harvey. Fiat Chrysler increased over $8 a share while Ford, a notoriously cheap company to invest in, sold for almost $4 more than it does now.  Honda also sold for more than $6 per share in the same time frame.

Toyota, currently trading at or near $119 today, traded at $140 in January earlier this year. If you had thrown $1,000 at Toyota before or during hurricane season, you would have banked 20K. Now, there may be absolutely no correlation between a destructive hurricane season and banking on auto stocks, but the data is at least really, really, compelling.  

GM, which had been doing fairly well in October of 2017 stayed hot through January after dipping a tad in late December. The takeaway here is that GM stock prices stayed stable in that Q1 post disaster period. As of this minute, share prices for GM are down $11 from that January peak. If any of us had put a K down on GM while the winds were blowing and the waters were raging this time last year, we’d have pocketed a 6X ROI 4 months later!  As it stands now, if you held onto that stock until today, you’d be down $400!

With that said, there appears to be a very nasty hurricane off the east coast named Florence trying to float her way into the history books. Will Flo live up to the hype spotlight-starved meteorologists and failing cable networks have been building up (thankfully, they usually don’t)?  Who knows. Will tidal surges and flood waters wreak enough havoc to sink enough vehicles whose owners have comprehensive insurance/flood coverage to make a difference in automotive stock prices in January and February? I for one think it may be worth a c-note or so. Certainly beats the odds of my beloved Browns winning the Super Bowl.

Automotive sages and soothsayers predicted a major fall off of car sales in 2018, mostly due to economic indicators, interest rate hikes, off-lease supply glut, so on and so forth.  What they failed to consider as they formulated their forlorn forecasts was what big momma may have in the offing.

Historically, there’s nothing like Mother Nature to surge sales as well as flood waters. Remember Hurricane Katrina, up until now, the costliest disaster in US history? She wiped out nearly a half a million vehicles and consequently, automotive sales peaked at all-time record volume in 2005 which is no surprise considering the need to replace the water-ravaged wrecks. As fodder for another story, 10,000 of those totals ended up in Bulgaria, being sold as low-priced dream cars turned nightmares when the corrosive nature of the saltwater eventually totaled those vehicles for a second time.

Now we have Hurricane Florence, predicted to be the new Queen of collateral damage whose windy wrath is soon to be felt in dense population centers in both North and South Carolina.  If it continues it’s arc up the coast, it has the potential to inflict destruction in Virginia, Maryland, Pennsylvania, and New York, possibly into Massachusetts as well.

2017 saw record auto sales for the simple reason that Hurricane Harvey wreaked havoc, largely in Texas to the tune of 125 billion dollars, tying Katrina as one of the two deadliest hurricanes ever.  It’s not ironic that 2005 and 2017 were two of the best years for car sales.

As one would expect, the best performing brands in Q3 of 2017 were representative of the three manufacturers historically favored by those geos hit hardest by the weather such as Texas, Florida, S. Carolina, Louisiana, and Georgia. Here’s the scoreboard; GM has experienced an 11.8% increase in sales, Ford at a 14.9% lift, and Toyota at an 8.9% spike.

GM and Ford pickups led the sales salvo with the Toyota cranking out record transactions as well. Nissan reported that its popular Rogue also set a record, selling just 4,000 units less than the Rav4.

What lies in store for car dealers up and down the coast remains veiled in a “wait and see” phase.  If they can keep their inventory above water, and avoid surging flood water, they may be in for a monetary windfall.

Kelly Kleinman

Content Manager/Dealership News

www.Dealershipnews.com

818-817-6343

When former President Obama mandated higher fuel standards for the automotive industry back in 2011, most manufacturers, feeling the pressure to comply and be ahead of the curve, responded by investing billions of dollars into “green alternatives” to the combustion engine. Currently, these include a variety of options as collectively, the industry hopes one or more of these formats will be embraced by the majority of consumers sooner than later. Toyota’s Prius (which I’ve owned since 2011) has been a favorite for several years due to its fuel efficiency.  Early on, I felt as though I was being friendlier to the environment, and sticking it to the oil barons at the same time.  

Whether or not we really have environmentally friendly/green alternatives is debatable on many levels (https://bit.ly/2NuLrBA).  Remember, oil was at $112 per barrel when Obama signed his mandate.  With all of the investment and marketing strategies being employed by virtually every manufacturer, recent sales performances by Hybrids, BEVs, PHEVs, and FCEVs lead one to speculate that America isn’t quite ready to walk away from the combustion engine just yet.  President Trump’s elimination of Obama’s mandate suggests that some manufacturers may have acted too quickly, and that the vast majority consumers can care less about “green” cars, preferring the lure of the SUV and pickup truck.

June sales for EVs, PHEVs, hybrids, and FCEVs are still down.  Here is a quick breakdown of exactly what’s going on through July:

Tesla sales are perhaps the one and only alternative outlier in the conversation.  Tesla is more of a luxury/status brand than anything else as is the BMW 530E which are all showing positive growth but are not practically priced for the average consumer. Granted, it’s cheaper to drive either one from a fuel investment angle, but at the price point that Teslas and BMW 530E’s are offered, it’s not a practical investment for most of us. Tesla drivers may be eager to do their part in eliminating our dependence on fossil fuels, but they still want to show their neighbors that they’re affluent, and so they invest in, and trust the Elon Musk products (The Tesla family has nothing to do with this company).  

Meanwhile, Volvo is working hard to reduce Tesla’s dominant position in the market, and will soon be 100% alternative themselves, having committed to beat Tesla out of its market share by the next decade. Volvo announced earlier this year that it will completely do away with the combustion engine and that all new models in 2019 will have electric motors (BEV, PHEV, HEV) including an all-electric SUV VC-40.  Volvo Cars has been majority-owned by the Geely Holding Group, a Chinese multinational automotive manufacturing company since 2010, and is looking to eclipse Tesla in sales by leveraging their more familiar, trusted, and technologically sound brand to the global market. More on Tesla vs Volvo next month.

So, where are we now as far as new car sales are concerned involving alternative technologies?

Currently, we are experiencing a downturn in sales of hybrids, EVs, PHEVs, BEVS, and FCEVs.  Aside from the west coast, and other liberal, big-city bastions, it’s a trend that’s a bit concerning to automakers who have all banked on just the opposite. When oil prices are stable, and gas prices aren’t outrageous, people will buy vehicles that are less fuel-efficient with aplomb.  Currently, we have very healthy SUV and pickup segments because oil prices haven’t driven gas prices up through the roof like they have in past cycles.

If gas prices stay at acceptable levels, we can expect “Green Car” sales to be far less than robust, unless of course you’re Tesla - whereby status is your primary buying incentive.  YTD, only the Chevy Bolt is besting last year’s numbers, but June’s fall off in sales was precipitous even for the Bolt.

Should you carry alternative inventory on your lot?  If you have slow movers, how do you as a salesman, speed up the turnover of "Green" cars on your lot?

Ask your customer what kind of vehicle they are looking for, and most importantly, why. If they are tight on funds, a hybrid or EV will be 50% of the annual operational costs of a conventionally fueled vehicle. That’s $1,000 less per year, or a savings of $83 per month.

Used Car Dealers need to continue finding the best vehicles available to match their PMAs. If you serve an area with a higher per capita income, and you sell vehicles to parents of new drivers, then carrying some used Priuses, or Volts might make sense. Both are hybrids but the Volt gets 53 miles on battery only while the Prius electric only range is almost negligible.  If you serve a market with a lower per-capita annual income, the Prius, Nissan Leaf, and Chevy Volt are good additions to your inventory.

If you serve a mid to upper middle-class demographic, you’re still looking for SUVs and pickup trucks as your primary movers. Gas prices are stable, and oil prices have actually started to drop despite the media suggesting otherwise. In fact, if one is to look at oil pricing trends, we can see that the artificial forces (banks, investment houses) that historically jack up the price of a barrel of oil, have been muted.  

As a used car dealer, hopefully, you’re seeing a lift in sales this summer.  New car sales are down in most markets if you compare May and June of 2017 with May and June of 2018. People with marginal or bad credit can no longer buy a new car so easily.  Rising interest rates and the fact that loans are harder to get are funneling consumers to used car lots en masse.

QUICK TIP:  If you have EVs on your lot that require a charging station, make sure to amortize it into the cost of the vehicle. Selling it separately as a line item is a turn off and gives a customer pause to reconsider. Charging stations run between $379 and $4500 depending on your vehicle and need for commercial capacity.

Where we will be a few years from now is anyone’s guess, but I’m going to postulate that although sales are slow for alternatives now, there is likely no stopping the transition.  The gas-powered engine is clearly on the endangered list. The amount of maintenance needed is far less in electric-powered vehicles, let alone engines that utilize hydrogen as a power source like the Toyota Mirai which is in its infancy as an experiment. The cows have definitely left the barn, you just couldn’t tell by looking at this summer’s sales numbers.

This article was inspired by Amanda Gordon who responded to a very recent article on this site by suggesting that no matter what, it always comes down to human interaction at some point during a sales transaction, regardless of the circuitous route taken to consummate that sale.  Thank you for the inspiration Amanda.

Now, I wrote a piece a while back suggesting that we can have all of the automated systems we want in order to facilitate salesmen-free car deals, but at some point we need to interact with a real person. We are a social species by nature! We do best face to face and always will,  although technologists are trying to change our core behavioral proclivity with their addictive technological heroin called a "mobile device."

Do you want to make more sales, have more return customers, have more referral business, and improve the performance of your service department?  Here are a 8 novel concepts first published 81 years ago by the one and only Dale Carnegie that are guaranteed to "boost sales." Excuse his dependence on male references, he lived in a day when a man was a man, and ...forget it (LOL).

1. Do not criticize. “Criticism is futile because it puts a man on the defensive, and usually makes him strive to justify himself. Criticism is dangerous, because it wounds a man’s precious pride, hurts his sense of importance, and arouses his resentment.” (Do not even criticize a competitor in the company of a prospective customer!)
2. Give honest, sincere appreciation. “Dr. Dewey says the deepest urge in human nature is ‘the desire to be important."  Find something in everyone to sincerely appreciate, we all have value!
3. Get the other person’s point of view and see things from his (or her ) angle. The thing here is to give to your interlocutor what he (or she) wants, and not what you, you want or want to sell.
4. Become genuinely interested in other people. “Encourage others to talk about themselves."  Folks are generally more interested in themselves than anyone else these days...you don't have to be.
5. Smile. A smile is human sunshine (I made that up just now).
6. Remember names. “Remember that a man’s name (or a woman's) is to him the sweetest and most important sound in the English language. 
7. Be a good listener. God gave us two ears and one mouth, listen attentively and learn about what the customer needs to best serve them.
8. Make the other person feel important. “And do it sincerely”

Seems like some of these concepts overlap a tad, but for the most part, when the best practices of Dale Carnegie's book are followed, really good things happen.  Human behavior hasn't changed since the beginning of our time on earth, and all of the technology in the world cannot change our need to inter-relate with one and other. We are a social species. The bottom line here is pretty obvious; get good at interacting with real people by better understanding their basic nature and needs, and service them accordingly. Technology may be touch screen, but the human touch wins out in the end.

WELCOME TO THE NATIONAL DEALERSHIP STANDINGS SUMMARY REPORT JUNE 2018

If you believe automotive industry articles analyzing June sales numbers, sales of new cars haven't fallen off the cliff as expected. If you look at new car sales numbers in May or June of 2017 compared to May or June of '18 (calendar month sales), some dealers in the big markets are doing OK, but most are seeing a distinct fall off of new car sales. Are we at the precipice of that major downturn in new car sales? Are we already in it?  You be the judge.

LOS ANGELES MARKET: (Sans Luxury car sales and F-150 trucks), new car sales in the LA area are down 14% on a survey of 321 dealers.  3 new dealerships have no previous June to compare against so if we remove the new downtown stores of Kia, Toyota, and Nissan, only Subaru Pacific has had a better June of '18 than June of '17 out of the top 25 car dealers by calendar month sales.  Galpin Mazda, and Puente Hills Subaru were the only other two dealerships who sold over 200 cars with better showings this June than last June.  

WASHINGTON DC MARKET: Four of the Top Ten dealers are showing increases in sales over June of 2017 but the sales fall offs of some of DC's biggest dealers tip the scales to the dark side. Based on 260 DC area dealerships, new car sales are down a whopping 18.04%.  Dealerships doing well in the DC Top Ten, include Carmax Laurel Toyota up 4.37%, Honda of Chantilly up 3.06%, and Autonation Honda Dulles which is up 14.45%.  Dealerships that showed drop offs include Koons Tysons Toyota 16.22%, Darcars 49.34%, and 355 Toyota 18.94%.   

DALLAS MARKET: Unlike the rest of the country, Texas is it's own nation. Although they are down on a survey of 185 dealers 4.5% overall, the Top Ten Dealers are actually doing pretty well in comparison to the rest of us.  Of their Top Ten, five dealers are showing sales growth. David McDavid Honda was up 7.25%, Vandergriff Chevrolet spiked up 142.64%, Clay Cooley Nissan jumped 4.14%, Huggins Honda up 7%, and Toyota of Richardson did a 7% vert.

CHICAGO MARKET:  Based on a survey of 278 dealerships, the windy city was off 16.84% from June of 2017.  Of the areas Top Ten Dealers by calendar month sales, four dealers showed improvement over last June. The Honda Superstore of Lisle was up 16.8%, Castle Honda had a 9.3% lift, Zeigler CDJR calf-raised 2.92% and Sherman CDJR pole vaulted 30.83% over June of 2017. Car sales performances throughout the Midwest look very dodgy when compared to the same month last year.  Overall, Chicago's Top Ten Dealers experienced a 5.56% drop off in new car sales June 2017 over June 2018. 

As loans get more expensive and difficult to get, and folks with less than superb credit scores get rerouted onto the used car lot, we can expect new car sales to suffer accordingly.  I continue to read articles about how new car sales aren't lagging as bad as experts thought they would be.  Still, as I review monthly comparison data dealer by dealer, I see a trend that may suggest the new car stall is happening now, we're just looking at the wrong data sets.

It’s the Dealership News Podcast, this is Kelly Kleinman of dealershipnews.com and today we travel north of the border into Canada to visit Brandin Wilkinson, a Car Dealership owner by trade, blogger and writer in his in-between moments.  If you want a Wrangler, check him out at  Woodworth Chrysler Dodge Jeep Ram Ltd in Kelwona, BC, and tell him Dealership News sent you.  Brandin and I became acquainted through the pages of Driving Sales where we’re both Senior Contributors - to their SEO benefit and our egos gratification.  Brandin, welcome to the Podcast!

DN: Have you always been a car guy or did you just sort of wake up one day and happenstance brought you into the automotive industry?

Total accident! I am a welder by trade and on one of my days off I went into the local GM Dealership to get my wife’s vehicle serviced and started chatting with one of the sales consultants.  This dealership had a fishbowl style office setup in the middle of the showroom so you could see into all of the offices. 4 out of the 6 had their lights off, and to this day I have no idea where this came from, but I blurted out that I could fill one of those offices if they needed someone.  Within minutes I was being interviewed by the Sales Manager and General Manager. This was on a Friday, and I got the call Monday that I’d be starting my new career. I even asked my boss at the welding shop if I could have my job back in 30 days because I was sure sales wasn’t going to work out for me.

DN: Unless you’re a former NFL quarterback, you don’t just become a dealership owner, what did your path look like?

Haha, I can’t even throw a proper spiral so I’m the farthest thing from a former NFL Quarterback. From ages 22-25 I was a Sales Consultant. From 25-27 I was a Sales Manager.  And at age 27 I was the General Manager of a 53 employee team at 2 locations. The dealership was changing its culture as the owners son was beginning to take things over so I was looking for a new opportunity.  Thankfully, my father-in-law and Don Carter, previous owner of Woodworth Chrysler Dodge Jeep Ram Ltd. were attending a junior game in town that they rarely went to. Somehow, they ended up sitting close to each other and started visiting.  One thing led to another, and I went in, met Don and started my Journey with Woodworth Dodge. I bought 20% when I was 28, and because of the rapid growth we had, I was able to buy 80% of the company in 4 years which is what I currently have and will remain to have.  My 2 business partners make up the other 20%. Since I live in Kelowna, BC and the dealership is in Manitoba, they look after day to day operations along with other key team members.

DN: When you joined forces with your dealership, what changes did you implement and how did you leverage yourself into being in position to purchase the dealership?

Nothing too complicated. Marketing and Investing in employee development were the biggest things. I went from a $7 million dollar General Motors facility to a Chrysler facility that had huge fixed windows and didn’t have a/c, or wifi, cell reception, coffee machine, water cooler, or a client lounge. So not only did I have to convince my GM clients to drive an extra 30 miles and change product, but also get adjusted to the new facility. Thankfully, they did end up following me and we now have all of those things I mentioned. We send our team to events such as Darci Lang (motivational speaker), Leadership Courses (Dale Carnegie), and personal development seminars like Unleash the Power Within hosted by Tony Robbins.  This has had a major impact on our culture, growth, and overall success. In regards to marketing, we simply say thank you to our current and past clientele in various ways such as: 1) For anyone who has been in for service, parts, or bought a vehicle, we automatically put their name into a draw on a Tuesday for a pair of NHL tickets, hotel, fuel, cash for food, etc. and pull the name on that coming Friday. 2) We send personalized gifts to clients 30 days after they’ve purchased. Imagine going to the post office and unexpectedly receive a package in the mail. It’s a nice surprise to get those right?! Kind of makes you feel like a kid again. Then you open the gift to see a personalized cutting board, tackle box, gym bag, hoodie or hat of your favorite sports team, etc. That’s what our clients receive. 3) When you come in for service and you’ve been a pleasure to deal with, we look after your oil change.  For example, if we have someone who is always smiling, fills the room with their positive energy, etc., we then surprise them by paying for their service that day (we have a weekly allowance for service/parts). The service or parts person would explain why we are taking care of them today. From there, that person leaves with a new level of confidence and pride, then goes on to share that experience on social media and in person to her friends and family. We do quite a bit more than this, but it gives you an idea of our approach to marketing.

DN: Is there a difference between the way Canadian car dealers operate vs the way we do here in the states?  If there is, what would it be? As a follow up, are dealers looked at with the same healthy modicum of distrust as they are here, and how do you deal with changing that perception?

I can’t speak for US dealers as I’ve never been in one. But I would assume it’s much the same. For the most part we probably aren’t trusted but it’s our own fault in my opinion.  We’ve inherited a lot of that distrust but we aren’t doing enough to rebuild it either. Dealers will say that they provide a pressure free buying experience and then on the last day of the month post a video about how you have to buy today because tomorrow’s programs could be a lot worse. This is why establishing trust starts at the top of every dealership in my opinion. We know we need cultures of trust, integrity, and transparency but the biggest thing is acting on it. I believe Marketing plays a major role in this as well. For example, in our marketing we talk about things like the stronger our culture is and the more we invest in our team, the better experience the client has with us. Rarely do we promote sales, rebates and price. In our experience, it has helped us gain trust and respect from the public, and it shows as I mentioned earlier about the growth we’ve had. No other dealership in our area has come close to that kind of growth, and we’ve kept our Customer Acquisition Cost under $250.  We back what everyone else, including ourselves, preaches which is customer service. The difference for us is that we invest in our team first and that in turn pays dividends through a better client experience.

DN: I’ve noticed that new car sales here in most of our major cities hit an iron wall in May, comparatively with May 2017, sales are down double figures in most dealerships, how are you looking up there?

As an industry we were near breakeven from this time last year, we were down 0.6% but our dealership had its best April and May in the 33 year history with selling 29 new retail units in April and again in May. We tend to have more consistency than other dealers which I contribute to how we approach our clients and marketing.  We’re not concerned about getting the sale today if the client is ready. It’s more about establishing a relationship so we can be top of mind when they are ready.

DN: Which vendors do you swear by, and which vendors do you swear at...be honest and name names!

PBS is awesome, they are our DMS Provider. We don’t really swear at any vendors. although I have literally sworn at our Dealer Operations Manager a few times for various reasons. Mostly because of inventory management and Vehicle performance allowance targets.

DN: What are your thoughts about the direction dealers are taking these days in regards to the ever-changing digital marketplace?  Are Canadian dealers adjusting?

We seem to be adjusting slowly but surely.  There is an obvious disruption coming to the industry when you look at companies like Fair, Carvana, etc. There’s less noise about that stuff up here but we know it’s coming and I welcome it personally.  Any tool or resource that can make the buying experience better for the consumer and still a win for the dealer is a win all around.

DN: Let’s chat about your book; “Rethink Selling”, what motivated you to write it, and what are your top 3 reveals regarding what we don’t know about selling and what we really need to know about selling

Oh great thank you for asking about it.  It will be available on Amazon and all major distributors in the first part of July so watch for it there. I’ve struggled personally with mental health. And the auto industry can be demanding, thankless, and stressful, much the same as any business owner will tell you.  Yet it seems as though we don’t have much as an industry to support or guide on how to handle the roller coaster ride of emotions that is sales. I felt we were missing tools and resources to help sales professionals, managers, and owners develop their much needed mental strength.  When I saw Tony Robbins in West Palm Beach a few years ago he said something that resonated well with me and that was “Success is 80% mindset and 20% skill.” The vast majority of sales training programs focus on the 20% that makes you successful, which are the strategies and in my opinion, as tech evolves, those strategies are becoming less relevant.  Mindset will always be relevant and critical to your success. So I focused my efforts on the 80% for this book and it’s like a new category of sales training. No other sales training book has taken this approach before. We discuss the importance of areas such as self-awareness, gratitude, why having a growth mindset matters, and the power of momentum.  At the end of the book, I provide invaluable resources for fitness, nutrition, personal development, sales, and many other categories. It’s an evergreen resource for sales professionals to lean on throughout their career. And it will be available in audio, digital and print.

DN: Where will our industry be in 25 years when most of the vehicles will be autonomous and or all electric...or not?

That’s a tricky one, at the speed of technology it’s not unrealistic to expect all autonomous vehicles in the year 2043.  I’m curious to see what role the dealership will play at this time. We could end up being a pick up destination for the clients and there will be less need for salespeople as time goes on.  We’ll see where everything ends up. But in my opinion, we’re transitioning into a high demand for providing an excellent client experience. And that won’t change. In order to adapt to this sales transformation, it starts with personal transformation.

DN: What car do you drive and why?

I drive a 2018 Ram Sport and my wife drives a 2017 Chrysler Pacifica for our 2 kids and black lab. I tried driving an SUV but had to go back to a truck.  There’s just something about a guy and a truck. Can’t part with it!

Good vs evil is a never ending battle.  The issue with digital advertising is in distinguishing who is on which side of the battle. We all know Google admitted a few years ago that 54% of their display ads were likely never seen by human eyes due to bogus site placement and viewability issues. They basically sold bogus inventory and knew it for years. It was a variety of industry watchdogs that viewed Google through their crosshairs and pressured Google into taking far more robust actions to stem the rampant fraud that they had been benefiting from for years.

So for all of those dealers and manufacturers who spent billions of dollars on “programmatic display” and other such folly, and had difficulty attributing real results to it, now you know why.  No one saw your ads. Ya, those ads showed up on legit pages when media was purchased direct on reputable websites, but if you went through the exchanges or ad networks - you got tarred and feathered.  

For those of us who do ppc campaigns, you can bet your bottom dollar that your Google Analytics and your ppc numbers NEVER, EVER match up, but the clicks have been paid for. Are you getting a full refund for the discrepancy?  You better be but most are not. 

Google isn’t 100% to Blame but Maybe 80%

Digital ad fraud is an arms race whereby the bad guys are always one step ahead. Google, having to show that it really cares, actually built a tool for better transparency that will allow a marketer to determine the legitimacy of their ad buy. The issue is then handed off to the marketer to decide how they approach a client who they are buying an unpredictable amount of bogus inventory for. How does that marketer go to ABC Auto Group and confess to them that he or she has been scally-wagged, but it’s a game everyone plays all the time so it’s OK to knowingly be ripped off? It might be easier for a big marketing group, but how does a boutique marketer handle that?  By asking Google to credit the account?

It’s a really dodgy business, far too complicated, and sophisticated to be given the leeway they have been for all of these years. Problem is, government is always several steps behind the tech-sector and that’s been the issue...a license to print money, and no one to really call them out or properly oversight them until relatively recently. Oddly enough, in this instance it wasn’t the “fake news” either.

The Wall Street Journal Calls Foul

According to the WSJ article on the Google fraud refund issue, “Google had been refunding only its fees because the digital ad chain is complex, with multiple intermediaries taking cuts of any spending. One dollar spent on an ad on The New York Times, for example, gets divided up between sell-side platforms, buy-side platforms, various ad tech companies and, finally, the publisher itself.”

Google is now giving bigger refunds to marketers who lose money to ad fraud on its platform.  This occurred because the WSJ published an article spotlighting the issue last year and it took time for Google to come clean and develop a tool so marketers can have more transparency regarding their media buys.

The “good” news came a few weeks after The Wall Street Journal reported that Google was issuing refunds to advertisers whose ads reached bots instead of humans, but only for its fees of 7 percent to 10 percent, not the whole cost of wasted ad spending which has been estimated as high as 50% and low as 10%.  A few years ago we tested a dealership group out of Colorado and found that 90% of their traffic was code.

Per the WSJ; “The new policy only applies to inventory acquired through Google supply partners AppNexus, Index Exchange, OpenX, Teads, Telaria and DoubleClick Ad Exchange, though Google estimates they, along with others, comprise 90% of the available inventory on DoubleClick Bid Manager. The refund system is currently being employed.

Customers of DoubleClick Bid Manager, the portal where marketers buy digital ads via Google, automatically receive full refunds for all detectable ad fraud. Still, the issue is in full transparency, how the heck does a marketer know they’ve been the victims of fraud...really?  Can they trust Google to “keep up” with the other “bad guys,” let alone not supply them with rigged software (conspiracy time)?

Here’s How Bad it Is

Google removed 100 fishy ads per second in 2017! Per Scott Spencer, Google’s director of sustainable ads; “We took down more than 3.2 billion ads that violated our advertising policies” that was nearly double` from 1.7 billion in 2016.

The company blocked 79 million ads in its network for attempting to send people to malware hell-sites, and removed 400,000 of these nasty sites in the past year. Google also pulled 66 million “trick-to-click” ads,and 48 million ads targeted to get folks to download unwanted software by dangling a carrot which is usually the actual download they were looking for.  That’s bad enough, but it’s literally one scam after another that the already dodgy Google has to mount a reactive fix to.

Google removed 320,000 publishers from its ad network for violating the company’s publisher policies. It also blacklisted nearly 90,000 websites and 700,000 mobile apps.

As an aside, Facebook removed nearly 500,000,000 fake accounts on it’s platform just to further demonstrate how wild the Internet still is. In 2017, Google removed 2,000,000 pages for policy violations each month after expanding its policy against dangerous and derogatory content in April to cover additional forms of discrimination and intolerance. Aren’t you happy Google, the overlord of the dirtiest digital platform on the planet, decides what bad content is?

Visibility issues complicate the entire issue even further when we take into consideration that 26% of web users have ad blockers on their PCs and 15% or more have ad blockers on their smartphones. The estimated loss of ad revenue to ad blockers is 10-12 billion bucks per year.  

RhythmOne released some research last year that focused on blocking and fraud prevention trends across the programmatic marketplace throughout Q4 2017. The company said it processed 2.8 trillion bid requests on average between October and December.

The report reflects trends of blocking by the platform’s filters of both suspicious and under performing inventory.

Here are the main factoids per ANA:

• 56 percent of ad inventory on desktop was blocked compared to 38 percent on mobile for the quarter.

• On average, programmatic video inventory was blocked at slightly higher rates than that of banner ad inventory; 49 to 45 %.

• On mobile, inventory was blocked significantly more often on mobile web (56 percent) than on in-app mobile inventory (27 percent). The company says fraud on mobile apps is inherently complicated —making detection more varied and more challenging.

The concerns around programmatic video buying are largely focused on fraud and viewability because the worst measurable fraud is in view-through metrics and who or what is actually be viewed.  In many instances, code is created to simulate an actual view...isn’t that nice?

Solution Offered

So, with all that said, what the heck can we do about it?  For one, find a way to correctly measure cause and effect in your digital marketing universe.  If you can’t make the analysis yourself, then bring in a 3rd party to forensically analyze your digital advertising via Google Analytics and see what the heck is really going on. Of course, you have to trust Google Analytics to be accurate which is not always the case but is all we really have.  You may save your company thousands or millions of dollars...and then you’d look like a hero - because that’s exactly what you’d be.

Meanwhile, it’s summer, go catch a wave, some rays, a ballgame, put the top down, and let someone else worry about it for now.  

KK

Patrick McMullen of MaxDigital.com and Senior VP of Strategy and Innovation podcasts with us about developing dealership profit centers and optimizing profits in every nook and cranny of a dealership. If there is a way of optimizing profit, he'll disclose it...hear it here!…