Welcome to the 2019 National Automotive Dealers Association … · 2019-03-06 · Introduction. The...
Transcript of Welcome to the 2019 National Automotive Dealers Association … · 2019-03-06 · Introduction. The...
Welcome to the 2019 National Automotive Dealers Association (NADA) ReviewEdition 1
February 2019
ContentsIntroduction 1
The state of the US retail automotive market 2
Key Performance Indicators for automotive retailers around the world 2
USA state of the industry – NADA data 2018 mid-year update 3
The best ideas from NADA 20 Groups 4
Guided dealership tour – Toyota Sunnyvale, San Francisco Bay Area 6
Google automotive presentation 7
2019 NADA Review – Edition 2 8
IntroductionThe 2019 National Automotive Dealers Association (NADA) conference was hosted in San Francisco 24 - 27 January 2019, and we were delighted to be in attendance.This annual event continues to be the largest retail automotive convention in the world with over 22,000 people attending from over 50 different countries.
The theme of the conference was “Focus on Innovation.”
An appropriate theme for the NADA event given San Francisco and the Bay area is a global leader in innovation with organisations such as Airbnb, Google, eBay and Facebook have headquartered there. As part of the Australian Automotive Dealers Association (AADA) Study tour, we were lucky to visit the HQ’s of Google and eBay.
Despite the focus on innovation the messaging was very much “digital retail is just a tool, not a mission.”
As noted in the NADA Daily Magazine, “… buying a car simply is more complicated – framed by a century of laws layered upon each other – and a much bigger purchase than a pair of Cole Haan (shoes). So it’s ok if the process takes longer than a pizza delivery.”
So it makes sense that digital retail is a tool, albeit an important one, but not the end-game.
Highlighted in this edition are key takeaways from the conference and learnings from the “Best ideas presentation” from NADA 20 Groups, a guided dealership tour of Toyota Sunnyvale, Bay Area and presentation held by Google Automotive at Google HQ.
We certainly learnt a lot and are more than happy to pass on our learnings to you. Happy reading.
John GavljakPartner – Automotive
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The state of the US retail automotive marketIn 2018, the US achieved a strong number of car and light truck sales of 17.2 million units – an increase of 0.5%. Light trucks were popular in 2018 – accounting for 69.2% of all light-vehicle sales – while the car market share fell to its lowest point in US automotive sales history.
According to NADA, aside from US stock market volatility, most other economic data (tight labour market, accelerating wage gains, high consumer confidence and low petrol prices) suggests that new vehicle sales will remain robust.
For 2019, NADA expects new light-vehicle sales to fall slightly to 16.8 million units.
Key Performance Indicators for automotive retailers around the worldOff the back of our study tour to NADA, below are some international benchmark comparisons (for non-luxury dealers).
Key Ratio Australia US UK
Net profit % of sales 3 – 3.5% 4% (nat. average 2.6%) 3%
Fixed absorption 55% minimum 100% 80%
Used to new retail ratio 0.5 to 1 1.25 to 1 1.5 to 1
Used vehicle inventory 65 – 70 30 45
New vehicle inventory 60 – 65 45 – 60 -*
Labour hours per retail RO 2.0 2.0 – 2.5 2.5
Service gross profit as % of sales 65 – 68% 68% -*
Parts to labour ratio 0.65 1.1 (national average) -*
Parts gross profit % 23 – 25% 38% 22%
*Data not made publicly available.
As we can see across mature markets for automotive retailers, similar results have been achieved. However, in the area of used vehicles it appears that Australia has room for significant improvement.
Source: Pitcher Partners, NADA, ASE
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Source: NADA 3
USA state of the industry – NADA data 2018
USD 20,390AVERAGE SELLING PRICEOF USED VEHICLES SOLD
(by new-vehicle dealerships)
USD 35,249AVERAGE SELLING PRICEOF NEW VEHICLES SOLD
435AVERAGE NEW VEHICLES SOLD PER DEALERSHIP
USD 16,794TOTAL NEW-CAR
DEALERSHIPSCALIFORNIA
Highest dollar sales for all dealerships
USD 59,119,125,130
ARIZONAHighest dollar
sales per dealership USD 49,459,312
TOTAL DEALERSHIP SALES
USD 503,859,356,600...per dealership
USD 30, 002,343
TOTAL NEW VEHICLES SOLD THROUGH JAN-18 TO JUN-18
SOLD
11.8Y E A R S
mid-year update
Average age of vehicles on the road (Q1 2018, cars and light trucks)
NEW-CAR INVENTORY
3,983,600NEW-VEHICLEDAYS’ SUPPLY
Domestic
2,074,200Import
1,909,400+
8,574,268
82Domestic
61Import
38%Percentage of dealerships operating on-site body shops
The best ideas from NADA 20 GroupsTim Gavin, 20 Group Consultant from the NADA 20 Group conducted a session at the 2019 NADA conference on the best ideas and practices from the top performing automotive retailers with key tips for every automotive retailer – regardless of franchise, market or sales volume. His insights are as follows:
1 Marketing window sticker: “We have your car”• Sticker is put on every new vehicle next to
MSRP level
• Tells the customer there is more inventory
• Attention! If you don’t see the vehicle you want, please let us know
2 Marketing window sticker: “Benefits of lease”Benefits of leasing:
• Higher grade vehicle
• Closer to your budget
• Peace of mind
• No haggle on trade-in
3 First responder discount program• Create an ad using a photo of actual first
responders – local community focus
• Promote the discount program through traditional and social media
4 Video appointment confirmation• Send the customer a video of car - “This is your
car, this is me showing you your car!”
• Subject line of email “A video of your car”
5 Recondition your wholesale units• Beauty sells
• Light detail, inside and out
• Build the detailing cost into trade appraised
6 Source pre-owned vehicles outside the auction• Street purchases
– Dealership website
– Cold calling
• Other dealer’s websites
• Lease turn-ins
• “We pay cash for cars!”
7 Signage• Service intervals
• Tyres
• Give the customer all the information
• Let the customer upsell themselves/options
• Always supply the most expensive option
Good Better Best
8 Smart phone service app• When you deliver a new or pre-owned vehicle,
have the salesperson (with customer’s permission) install your dealership’s service app on your customers phone
9 Battery test• At every service, test the customers battery
• 15% upsell in new batteries
10 New tech, new toolbox• Offer to sell a new toolbox for $1
• If you stay, after 18 months of service you get to keep it
11 Colour coded folders in service• Green folder = less than 75,000 and 5 years old
(might be getting CSI) survey
• Black folder = regular customer to the service department
• Orange folder = pay attention to this customer (VIP)
• Red folder = come back
12 Risk - free inspection• Not 16 point check but 81 point check
13 No more shuttles• Contract with Uber
• Uses a dealership credit card
• Promoted pick up spot near service drive
• Reduced expenses - USD 11,140 per month
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14 We sell tyres• An inflatable tyre - 20 feet high
• POS display
– Materials
– Tyre racks with prices
15 Cost-effective annual inventory• Annual inventory conducted on a Sunday,
neighbouring dealer supplies the talent
– Host dealer supplies breakfast and lunch
– Host dealer pays the inventory “checkers”
– Then switch roles the following month
16 Watch the pennies• Each month the department managers met as a
group to review the OEM parts statement which contains all the programs, fees and mysterious charges
• 1ST year savings - USD 152,550
17 Community donations: Cases of water• Rather than donate money, donate cases of
water with dealership logo
18 Community events: Flu shots• Team up with local pharmacy or health care
provider
• Run event in your showroom on a non-busy day
19 Oil filter with tech ad on label• Place a stick-on oil filter saying, “we are hiring
techs - great pay, training and benefits”
• When gets changed at another service outlet the technician will see it
20 Dutch auction• Pre-owned vehicle sales - vehicle is parked in the
showroom for delivery
• Each Monday, the price is lowered by USD 250
The best ideas from NADA 20 Groups
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Ranked the No. 1 Toyota dealership in customer satisfaction in a JD Power survey of Northern Californian dealers
Fastest growing Toyota dealership in Northern California
Part of a large private group (Price Simms Auto Group)
• 7 locations through the Bay Area
Full return of vehicle (new and used) within 3 days if not satisfied
One price on used, on trade – no negotiations – Hassle Free Zone
Look for efficiency in transaction, everyday low-cost proposition
Offer delivery of vehicle to customers’ home – only 6-8% of customers decide to get their car delivered direct to their home
Internet enquiries are only dealt with by one person from start to finish, that is, through the whole process
New vehicle sales – 60-65% of leads are from the internet, 35-40% off the floor
In Used Vehicle sales the reverse is true – customer wants to know
• Is the car still there?
• Want to see the physical car
4 of the dealerships are “One price, no negotiation” – Hassle Free Zone
Rules of internet leads
Two-way communication to be established within the first 48 hours
Earn the ‘last right of refusal’
Just tell them what you can do, not what you can’t do
Benchmark
10% close on new car leads
12% close on used car leads
The dealership is averaging 7.5% in closing on internet leads
Guided dealership tour – Toyota Sunnyvale, San Francisco Bay Area
The big part about auto dealerships is, you don’t
get another one, unless you’re doing well in one.
One of the owner’s mantras
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65% research on their smartphones while at your dealership
2.4 dealer visits
1.4 test drives
CONSUMERS MOVE ONLINE
42%
45%
% Offline touch points used at any time until the final decision by all buyers
Test drives
Dealer visits
2.9 car brands considered
of customers watched videos during the research process57%
Of those who watched an online video actually did at least one follow-up action triggered by what was shown in the video73%
Source: Google automotive presentation 2019
THE 3 STAGES OF THE CAR BUYING PROCESS
CONSIDERATION“In -market” Which car is best? Is it right for me? Can I afford it?
INFLUENCE “Out-of-market” I notice you
PURCHASE“In-dealer”Where should I buy? Am I getting a deal? How can I make the most of my car?
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Google automotive presentation
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2019 NADA Review – Edition 2 In our next edition of the NADA Review, we will cover the following topics:• Expense reduction: Best practices
• Leadership skills and used car strategies for champions
• From apprentice to visionary: How to innovate business and life
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NADA Report 2019 Series 1_040219_v2
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Get in touch...
John GavljakPartner – Automotive
+61 2 8236 [email protected]
John TaouilManager – Automotive
+61 2 8236 [email protected]