Is WHAT you stock a marketing decision?

[john.quinn]

</rant>

Soooooooooooo.... lousy vacation??? Ouch!

 

[Dan Rudd]

If I understand Joe's last post correctly I am in complete agreement. If I didn't than I am off point of this thread and I apologize. Ill speak my mind anyway.

If manufacturers were to give a discount to consolidators particulary ones that own multiple dealerships of the same make throughout the nation it would potentially spell the end to single point stores (at least in metropolitan areas) and put a serious damper on local family owned auto groups.

Those consolidaters are about cutting expenses especially ones that have stock holders to answer to. The problem is that ends up in them loosing their best talent.

And in the era of ZMOT and FMOT I would like to believe that as Joe stated you would have to become a specialist.

A specialist in quality of service and personel not price, in a similar fashion that I would like to see the local hardware store make a comeback. Instead of having to go to Home Depot and wander around aimlessly trying to figure out what you need and ending up asking someone for help that doesn't know the difference between a Phillips or a Flat head screw driver.

I have said it in prior threads. This is the second biggest purchase most people make in their lives. I think that at some point $500 difference is worth a good positive human interaction that leaves you feeling good about what for most people is a very stressful purchase need.

Again Im not sure if this is on point but it is something I have been thinking a lot about.

 

[joe.pistell]

You got it Dan.

This federal law that keeps all dealers (big and small) purchasing at close to the same price exists in no other industry that I can think of. Lawmakers built the law to protect consumers and small rural dealers. Should this law be removed... our industry would be WalMart-ized, or, HomeDepot'd, or BestBuy'd. Mega-players would buy up select franchises in cities all over the USA, erect "super centers" and thru marketing, merchandising and cost advantages, they'd crush the fat and happy.

You know how manu'fers hate dealer groups (rather than focusing on a single brand). If, for example, some giant retail player sat down with Hyundai and promised Hyundai an exclusive in every market they enter, in turn, the giant retailer would expect giant concessions from Hyundai.


Don't say it can't be done, if the financial extras from the factories are significant, I could build this new sales model in my sleep.

 

[ed.brooks]

...And in the era of ZMOT and FMOT I would like to believe that as Joe stated you would have to become a specialist.

...I have said it in prior threads. This is the second biggest purchase most people make in their lives. I think that at some point $500 difference is worth a good positive human interaction that leaves you feeling good about what for most people is a very stressful purchase need.

Dan, in this 'ZMOT' era the single biggest change is that consumers don't physically visit a half dozen or more stores as they did a few years back. The last number I saw was an average of 1.8 dealer visits before purchase (and this was a couple of years ago).

Much of the shopping is being done online without store visits. EVERY dealers portrays themselves as THE kindler, gentler place to buy a car. Of course few are. So we head off to the reviews. In all but the least competitive markets, there will be a number of dealers with good reviews. These are the stores fighting to get on the 'short list' of one or two stores the 'ZMOT' customer will visit for the 'FMOT'.

This brings me to the $500 difference. Are we talking $500 above the AVERAGE dealer in the market or $500 above the LOWEST dealer in the market? From my experience, if you're facing pretty solid competition on a car, $500 above the middle of your market will KILL traffic on the average car. A nickel above the middle will generally put you WAY above the more aggressive dealers in the market.

What are your thoughts?

 

[Dan Rudd]

Ed,

Yes I am talking about $500 more than the bottom. You might stand a chance in the middle if you found a way to really brand yourself above and beyond with customer service and care. But if you were from $500 more than the top you would be dead in no time even if the Pope was there to deliver your car when you purchase.

My over all point I guess comes back to the fact that consolidaters want to trim overhead. That usually comes to some extent in the form of cuts to human resources which leads to lower quality employees in the long run.

Lower quality employees means more bad reviews on line thus my refrence to ZMOT.

On the ZMOT note. I am not drinking that coolaide 100% because I personally still like to do things the oldfashioned way with a twist of the new.

Check it out on line. Get a feel for where the prices are and then buy it for as close to that best price as I can get it at the place closest to where I live. Unless I have a bad human experience when I go to the buisness to buy I will most likely go there again. If I have an above average human experience the next time I won't even think twice about it. I will go just go there.

But thats just me I am a people person.

Which is why I like Joe's statement about becomming a specialist. I just hope that if the McDealership concept ever really comes to fruition those who still want a better experience purchasing a car will have that option.

 

[ed.brooks]

Ed,

Yes I am talking about $500 more than the bottom. You might stand a chance in the middle if you found a way to really brand yourself above and beyond with customer service and care. But if you were from $500 more than the top you would be dead in no time even if the Pope was there to deliver your car when you purchase.

My over all point I guess comes back to the fact that consolidaters want to trim overhead. That usually comes to some extent in the form of cuts to human resources which leads to lower quality employees in the long run.

Lower quality employees means more bad reviews on line thus my refrence to ZMOT.

On the ZMOT note. I am not drinking that coolaide 100% because I personally still like to do things the oldfashioned way with a twist of the new.

Check it out on line. Get a feel for where the prices are and then buy it for as close to that best price as I can get it at the place closest to where I live. Unless I have a bad human experience when I go to the buisness to buy I will most likely go there again. If I have an above average human experience the next time I won't even think twice about it. I will go just go there.

But thats just me I am a people person.

Which is why I like Joe's statement about becomming a specialist. I just hope that if the McDealership concept ever really comes to fruition those who still want a better experience purchasing a car will have that option.

Dan, I love that you get out and visit places - actually shop. You're part of a shrinking, if not dying breed. With car shopping in particular, there is too much time between purchases and too much money being spent to depend on your customers coming back. IF you did a good job with their last purchase and IF you were able to keep in touch with them over the years, the best you can hope for is automatically making the short list - being under consideration - for the next purchase. But you better bet they will still do their research, as you've said Dan, it's a big purchase.

Now here's where it get's fun and interesting. If we agree that what we stock is a marketing decision, it makes sense to do some market research as we make these decisions. What are people searching for online? What are people buying in my market? How are my competitors pricing these vehicles? Can I find these cars on the wholesale market? Can I buy them for the right money? Where can I buy them most cost-effectively? And really interesting stuff like: Is my market overstocked? Will I be facing competing vehicles that are aging, putting downward price pressure on the market?

It's only when we realize the importance of stocking as a marketing decision that the importance of this market research comes into focus.

 

[Dan Rudd]

Dan, I love that you get out and visit places - actually shop. You're part of a shrinking, if not dying breed. With car shopping in particular, there is too much time between purchases and too much money being spent to depend on your customers coming back. IF you did a good job with their last purchase and IF you were able to keep in touch with them over the years, the best you can hope for is automatically making the short list - being under consideration - for the next purchase. But you better bet they will still do their research, as you've said Dan, it's a big purchase.

Now here's where it get's fun and interesting. If we agree that what we stock is a marketing decision, it makes sense to do some market research as we make these decisions. What are people searching for online? What are people buying in my market? How are my competitors pricing these vehicles? Can I find these cars on the wholesale market? Can I buy them for the right money? Where can I buy them most cost-effectively? And really interesting stuff like: Is my market overstocked? Will I be facing competing vehicles that are aging, putting downward price pressure on the market?

It's only when we realize the importance of stocking as a marketing decision that the importance of this market research comes into focus.

And V-Auto is just the tool to help you do all that right? Built to kill off my breed once and for all!

 

[ed.brooks]

And V-Auto is just the tool to help you do all that right? Built to kill off my breed once and for all!

Provision certainly does do all of that BUT, with some work and digging, much of this information is available from other sources (such as the AutoTrader.com Dealer tool). Whatever resources you have available to you - use them!

 

[yagoparamo]

IMO;

Dan, I love that you get out and visit places - actually shop. You're part of a shrinking, if not dying breed. .

It is done differently, more electronic and less in person, because we have less time and we have better tools. However personal interaction, salesmanship, etc will always be a great factor in a large purchase.

With car shopping in particular, there is too much time between purchases and too much money being spent to depend on your customers coming back. IF you did a good job with their last purchase and IF you were able to keep in touch with them over the years, the best you can hope for is automatically making the short list - being under consideration - for the next purchase. But you better bet they will still do their research, as you've said Dan, it's a big purchase.

Now here's where it get's fun and interesting. If we agree that what we stock is a marketing decision, it makes sense to do some market research as we make these decisions. What are people searching for online? .

Accords
Civics
F150
BMW

BUT they are expensive, so poeple buy whatever they can afford.
Everything is being searched for online with the exception of maybe a Pontiac Aztek. Maybe a M3 is not a big search because it appeals to a small segment, but it will sell anyway. I guess what I'm saying is that there is no mystery here: cars with big traffic behind them menas that everyone wants them so wholesale will be book or above book etc.

What are people buying in my market?

At the Lexus store theyare buying whatever they want to buy and at the Chvy store wth a Spi-Fi department they are buying whatever they can fit in their payment.

How are my competitors pricing these vehicles?

Easy one to figure out with vAuto.

Can I find these cars on the wholesale market?

Yes, go to the auction (they all have online tools to check what is going thru).

Can I buy them for the right money?

Depends how many people at the auction, etc. And if you can't what? Are you going back empty to the store. How many of you bought cars at book because you had no choice?

Where can I buy them most cost-effectively?

Auction OR Wholesaler (unless you know a secret place I don't)

And really interesting stuff like: Is my market overstocked?

It is always full of Cavaliers, Corollas, etc and it never has enough M3, WRX, RX7, etc

Will I be facing competing vehicles that are aging, putting downward price pressure on the market?

There will always be a dealer who----g cars and a guy doing great recon and holding to them.

It's only when we realize the importance of stocking as a marketing decision that the importance of this market research comes into focus.

To finally to the point:

So if by looking at market movement can predict with certainty market future; shuldn't we invest like this in the stock market?

While you think that the answer is yes, large companies that invest know that besides market data being analized a lot more that we can possible do wth one car we also need the decision maker's knowledge. If we didn;t have that, every Wall Street investor will make the same decisions. In Wall Street you have the guys that sell and buy with the market (and they never make or lose big) then you have the guys that make their own choices based on their own knowledge.

My point is that a good used car manager should know, now-in the past- and in the future, with or without vAuto, to read the market and be able to decide what cars to buy and at what price.

 

[ed.brooks]

To finally to the point:

So if by looking at market movement can predict with certainty market future; shuldn't we invest like this in the stock market?

While you think that the answer is yes, large companies that invest know that besides market data being analized a lot more that we can possible do wth one car we also need the decision maker's knowledge. If we didn;t have that, every Wall Street investor will make the same decisions. In Wall Street you have the guys that sell and buy with the market (and they never make or lose big) then you have the guys that make their own choices based on their own knowledge.

My point is that a good used car manager should know, now-in the past- and in the future, with or without vAuto, to read the market and be able to decide what cars to buy and at what price.

Yago - although you seem willing to pick apart specific points, let me just answer a few since we're headed into a holiday weekend. Anyone who invests in the stock market without doing some basic research is taking a huge risk. The reason not all investors make the same purchases, is they all have individual philosophies. But know that no smart, savvy investor with a long term record of success invests in anything without some research.

None of this will give you certainty, but it will give you better odds. I want the best odds possible on every purchase I make - backed up by my experience and knowledge, as well as hard data.

I want to shy away from assumptions (they are often incorrect). As an example you said Subaru WRXs are always in short supply. I did a dive into your market using a Redmond, WA Zip. It's just not the case. If I was looking to buy a 2009 Subaru Impreza or 2, it most likely wouldn't be a WRX. Here's why; There are currently 11 for sale in the market, but only 7 have sold in the last 45 days giving it a Market Days Supply of 71 days. Not bad at all BUT - the 2.5i might be a better choice to stock. There are 13 available but there have been 17 sold in the past 45 days giving it a Market Days Supply of only 34 days. Neither one is a poor choice but I want this data before I make a decision. These vehicles hit different price points and appeal to different buyers, but I'm convinced I'll make better decisions with the data than without it.

The last thing I want to do is get into a point-by-point argument with you, but feel free to give me a call anytime. I'd be happy to roll up my sleeves and dive into it with you.

Have a great Thanksgiving!