Beepi and Vroom and Carvana - will they make a DENT?

[ruggles]

Joe, take that chip off your shoulder. Its ruining your message.

 

[craigh]

I don't think we're in a position to judge the success or failure of these businesses.
Often there's more than enough money to fund them through the hard times and pivot enough to make it work. The model itself may not be proven yet (or it may be proven to some), but I don't think it's dead.

If the economists are correct, it will be interesting to see how any and all of these companies can handle a recession.
http://www.financialsense.com/contr...waves-and-the-greater-depression-of-2013-2020

 

[Tallcool1]

I do not typically find myself in complete agreement with David...and I believe you can read back on this thread and see that we have stood toe to toe a couple times.

I believe David's quote below is worth a second look and certainly some thought.

RE:

At some point I'd like to see auto retail conducting workshops for Apple and Disney employees so they can learn the challenges of selling cars to people with trade ins with negative equity, less than stellar credit, edgy DTI, wild expectations on price and trade value based on their inability to unpack all of the information they get from the Web, make gross profit in a competitive environment, and get a decent CSI survey. TRying to make a comparison between big ticket items and gadgets is a complete non sequitur.

 

[WillMcG32]

Here's an interesting start up.... getaxle.com

 

[Alex Snyder]

I believe David's quote below is worth a second look and certainly some thought.

I just glaze over most of them now, so thanks for pointing this one out.

RE:

At some point I'd like to see auto retail conducting workshops for Apple and Disney employees so they can learn the challenges of selling cars to people with trade ins with negative equity, less than stellar credit, edgy DTI, wild expectations on price and trade value based on their inability to unpack all of the information they get from the Web, make gross profit in a competitive environment, and get a decent CSI survey. TRying to make a comparison between big ticket items and gadgets is a complete non sequitur.

It isn't a matter of consumer behavior it is a matter of culture. The automotive retail sector has deep roots in "horse trading" that (name-appropriate) were planted when our main transportation methods had four legs instead of four wheels. The culture is being challenged at the moment and many are in arms trying to defend it.

Companies like Apple and Disney hire and promote differently than car dealerships. This is the core of where we see the drastic differences in consumer perception. Let's talk about the typical dealership hiring and promotion process and think "what if Apple or Disney did that?"

Do any of these sound like some of the sales people we've worked with?

• I need a lot of money quick because Uncle Sam is taking it or she is
• I didn't go to college and can't find a job that pays this much anywhere else
• I did go to college and can't find a job anywhere else
• My family owns the business
• The real estate business didn't work out for some reason
• I used to sell boats, RVs, motorcycles, etc

So, they've walked in the door asking for an application. If the manager is busy he just gets handed the job application and typically never gets a call back. If the manager can talk to him 9 times out of 10 he gets the job (usually on the spot). Many dealerships accept more than they turn down. The pay plans and healthcare terms are setup to promote somewhere around a 90 day trial run on sales people that doesn't hurt the dealership's bottom line.

Assuming our new guy makes it 90 days he's probably going to make it through 12 months. At that point he ain't the newbie and we begin to consider whether he goes to F&I school. After F&I school we see if he can last another 6-12 months on the floor before being promoted into the F&I office. Then he goes into F&I and does okay for about a year or two.

It looks like the wholesale loss is getting out of hand, so it is time to fire the Used Car Manager. We'll promote a New Car Manager into the used car seat and put one of the F&I people on the tower. Our new guy becomes one of the New Car Managers and eventually finds himself on the Used Car desk under the same circumstances as the previous guys.

However, our guy gets his next big break when the General Sales Manager takes off for a GM slot elsewhere. Now he's the GSM and getting to shake a VP's hand on occasion. He's feeling like he arrived and Uncle Sam is finally paid off! Now it is time to buy the big toys

Lucky him! After 3 years as the GSM his General Manager is getting blown out over some disagreement with the VP of Sales. Woohoo, our guy is now a General Manager. And that's about the end of the road for our guy. He doesn't seem to have the aptitude or larger thinking needed for the higher executive roles.

Does any of this sound familiar? Do you think this is the way Apple or Disney operate?

 

[ed.brooks]

I do not typically find myself in complete agreement with David...and I believe you can read back on this thread and see that we have stood toe to toe a couple times.

I believe David's quote below is worth a second look and certainly some thought.

Disney, Apple, and Four Seasons are experts in customer experience and customer service. No, they have never sold a car, BUT we can learn something from them. That's pretty simple...

 

[Tallcool1]

It all sounds familiar @Alex Snyder, and it is actually a pretty darn good description of how I came through the business. The road forked for me right before GM and I chose the CFO route instead. Had I not made that choice, I would have certainly followed the path you described nearly "promotion by promotion".

I agree with David's quote in that the daily challenges are completely different.

Can we learn from these businesses? Absolutely! World class service without a doubt. Can we replicate their business models in the retail automobile industry? I am not able to see how at this time.

On the retail front (point of customer contact) both Disney and Apple employees do not earn enough money to keep them from being fired from our sales departments.

How many of us would deal with the daily challenges that David mentioned for $25,000 per year? No way. I wouldn't do it.

 

[ruggles]

What do Apple and Disney know that we don't already know?

 

[Cullen C]

What do Apple and Disney know that we don't already know?

It's not what they know @ruggles it's what they consistently do. It isn't a question of knowledge it is a question of execution.

 

[ruggles]

RE: "It's not what they know @ruggles it's what they consistently do. It isn't a question of knowledge it is a question of execution."

Not to split hairs, but they have to "know" it before they do it. But I'll bite. What exactly do they do that auto retail doesn't do, other than to sell gadgets and amusement rides without having to worry about the major challenges of auto retail?

They have managed to create a scenario where they control the supply and calibrate that to demand. Try doing that in auto retail without changing the FTC first.

All of this has no bearing on the challenges of building and retailing cars where starting and stopping assembly lines to meter supply in the marketplace, as well as parts from suppliers, is horrendously expensive. They don't have to deal with issues like "production smoothing" and "inventory buffering." They don't have to deal with reams of paperwork per transaction, the complexity of financing, etc. etc.

Apple and Disney could learn a lot from auto retail, but why should they? The businesses are completely different. But if any of you guys wants to invest your own money to create a Disney/Apple type store, we'd all like to see the results, ESPECIALLY if you do it with your own money. That's when reality comes home to roost.