It has been a strange year, with many of the old standards falling by the wayside. The impact of the global economic crisis on the automotive industry, both globally and locally, has hit home hard.
Now we need to put the pieces of the puzzle in place that will best position us to take full advantage of our local opportunities, and there will be opportunities, as the turmoil subsides. We must make sure we are ready.
The next year
As a starting point, let’s examine some of the dynamics that will emerge over the next year.
By my calculations there will be over 2,000 technicians looking to land a stable job. The closing of over 2,400 service bays across
For the remainder of 2009 and throughout 2010,
Competition, already fierce, will get tougher, as customers of all shapes and sizes try to make sense of the last six months and try to re-build long-term commitments and relationships. Many will have felt burned, abandoned. Others will seek new dealership relationships because of the disappointment and uncertainty caused by the brand failures. After all, most customers are smart enough to believe that nothing really has changed except that the hype has reached new levels. Brand promises must be acted upon and believe me, the consumer is skeptical.
New-vehicle market share is up for grabs. I have read some estimates that five or six percent of the market is there for the taking. That’s around 80,000 vehicles. Would you like to have a big piece of this in your market?
Using a conservative used to new ratio, there could be 40,000 used vehicles or more and additionally, hundreds of thousands of CP labour hours in the mix.
On top of all of that, the market will begin to come back as consumer and business credit becomes available and the pipeline begins to fill itself through natural growth until sales levels reach a historical equilibrium of 1,500,000 new units per year.
People, capacity and a passion for above average customer service
What will it take to be well positioned to take advantage of these one-time opportunities? People, capacity and a passion for above average customer service.
· People:
Our bricks and mortar are totally useless without people to bring them to life. Now is the time to invest in people, in finally getting those new processes and systems in place and once and for all making sure that we train our people to take 100-percent advantage of the tools at hand. Accomplishing this goal will more than pay for the cost of getting there and will provide a solid base for the financial annuities that will follow, year after year.
This is not just about adding bodies to your payroll. It’s about doing the right things right and running lean. For many of us this is still a huge challenge. We like to focus on our short-term profits. Unfortunately this sometimes leaves maximizing long-term profits off the table. We don’t make the right short-term decisions and thus end up always putting ourselves in a position where we must constantly be tinkering. We cannot see the forest for the trees and thus develop a reactionary management approach. We only see meaningful bottom line improvements when certain aspects of the market hit hyper speed. It is in our control to change that and I suggest now might be a good time.
Capacity and capability:
Capacity and capability must be looked at from a few different angles: facilities, finance and resources.
For example, many of us do not use our service bays efficiently. Our service scheduling does not optimize the use of our resources on a day-in and day-out basis. We have waste but never seem to be able to remove it. Inefficiency means opportunity. Ask yourself: “Can I handle another 50 hours of CP labour per day with my existing capacity? Can I handle 100 additional hours?”
Some of you may lack the service bay capacity, others, however, have the capacity but not the right processes and thus have become sloppy.
Traditionally automobile dealers have had the luxury of deep pockets and short arms. The days of short arms, unfortunately, have been temporarily suspended. Some dealers need to reach deep into their pockets to stay alive. Others are sitting idly on the sidelines waiting for external forces to look after them.
Spending money wisely, in a time like this, is a no-brainer. The confusion comes when you come to define “wisely.” I believe this down time is the best time to prepare for future opportunities by increasing your capacity and capability. This usually means investment in some way, shape or form. Be it training, new technology, new lean processes, a spiffed up website, marketing message and dealership positioning, a shift in used-vehicle inventory investment, a new partnership, adding or eliminating partners or investors, estate planning, acquiring a neighbouring store, etc… this is a good time to get a lot of these things done and increase your long-term capacity and capability.
Customer handling and competition:
We all need to keep the customers we have and to attract new ones. Every one of us can improve our customer handling processes. A recent J.D. Power survey of over 14,000 consumers in
The aftermarket operates one business, while we operate five or six. The aftermarket competition can devote 100 percent of their minds, management and resources to fixed operations. They can take time with the customer and they can build loyal cost-effective relationships.
We, on the other hand, are first and foremost new-vehicle dealers. That is where we put most of our mind, management and resources. If you disagree with me, honestly sit back and listen to the discussion at your next managers’ meeting. I guarantee that at least 80 percent of the discussion surrounds the new vehicle department and the rest of the business gets much less airtime. Then look at your investment. The new-vehicle department takes the lion’s share of the investment dollars, too. Lastly, look at our own behaviour. How much time do we spend as business owners in fixed operations. Are we always visible to the customer? To the staff?
We tend to rely on managers to do this. I would seriously ask you to examine how much customer interaction your managers are having on a daily basis? Is this really something that you want to delegate?
We as dealers need to adopt the single-purpose focus to compete effectively. We have the opportunity to keep more of our customers but must proactively and passionately go after this business. We must behave like we have a single focus. We must behave and perform better than our competition. This makes our job much harder than our competitions’ but ultimately our rewards will be greater and sustainable over the long run.
Is it time to expand?
These days I am being asked a lot about acquisition opportunities. Many of us want to expand our brand footprint. On the flip side, many are tired of the struggle and would like to cash in their chips and move on.
For those with sound financial backing this is a great strategy and the timing is right to pick up strategic acquisitions. For many with under-performing current operations, however, acquisitions are a distraction and an excuse to avoid the hard work it takes to become a top performer.
Yes, we are living through a crisis; however we are also living through the greatest period of opportunity in the last 25 years. The markets are all over the place and “dealerland” seems to be in a state of disarray. In my mind that spells multiple opportunities. Our job as dealers and entrepreneurs is to make sure we position ourselves to best capitalize on those opportunities and make sure we are ready when opportunity knocks.
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