Used Car Optional Equipment

[mcampo2501]

Uncle Joe,
This is an interesting perspective. You likely have as much dealer experience as I have had birthdays, so I have a hard time disagreeing with you, but I can't help but feel like the only way to win is to be ahead of the bullet. I think the industry is heading in a certain direction, and there's no stopping it. The margins will only be cut in dealerships that haven't embraced the change. My feeling is that if the numbers were all as static as you have described, dealers would be able to buy the cars for the right money and sell the cars for the right money. Does this help the groups that pioneered the automotive internet age? Sure. But why should we be mad if Cox is the new Microsoft? If your premonition becomes a reality, it will create as many jobs in the third party market as it takes away from the dealer market. The industry itself will be fine, the power will just shift. The way it already has... In your example, the airline business is still a $50B industry, it just doesn't all go to the airline. The more important these tools are in the auto business, the more important it will be to have an internet director. I say bring on the change.

 

[joe.pistell]

Uncle Joe,

... The margins will only be cut in dealerships that haven't embraced the change.... But why should we be mad if Cox is the new Microsoft? If your premonition becomes a reality, it will create as many jobs in the third party market as it takes away from the dealer market. The industry itself will be fine, the power will just shift. The way it already has... In your example, the airline business is still a $50B industry, it just doesn't all go to the airline. The more important these tools are in the auto business, the more important it will be to have an internet director. I say bring on the change.

Mike,

CHANGE IS RELATIVE TO YOUR POSITION. If you are DEFENDING TURF, change is usually a bad thing.

Here's my $0.02
--Selling cars is a Team Sport.
--Your pay is based on the health of the entire team AND your role in creating income.

"So what?" you ask, "How does better shopping tools & thinner margins impact me if I am the lucky guy connected to the internet sale?"

Remember this rule?

FACT: The flatter and more transparent the product analysis becomes, the thinner the retailers margins will be. ​

From a shoppers perspective, Used cars can become as easy to shop as new cars*. Assuming some player like Cox pulls this off, anyway you look at it, used car margins get compressed. These shopper tools means the dealer profits becomes less dependent on sales talent, so this means Dealer focus moves away from the sales process and now shifts into operations**.

It is possible, if everything lines up just right KAPOW!! Overnight you're less important to the dealer and to the customer. Result? The Internet Sales Manager position and job description moves into customer service class (incl'ing pay and talent).

Think it can't happen?
Ask yourself why it hasn't happened yet. Look at Best Buy coming to its knees. Ask past sales professionals like Travel Agents and Securities Brokerages.

MORE WARNINGS!
It's happening to us right now. In under 6 years, shoppers use to shop 3.5 dealers prior to purchase, now it's 1.5.

Sorry Mike, IMO, we're right in the sweet spot of the internet evolution in our space. You'd like the evolution to STOP RIGHT HERE.

Embrace the Internet like you hold a rose. It's pretty to look at, but be careful where you grab it.

*Granted, everything rests on the quality of the vehicle condition reports
**removing costs from the sales and vehicle prep process

 

[yagoparamo]

Mike,

CHANGE IS RELATIVE TO YOUR POSITION. If you are DEFENDING TURF, change is usually a bad thing.

Here's my $0.02
--Selling cars is a Team Sport.
--Your pay is based on the health of the entire team AND your role in creating income.

"So what?" you ask, "How does better shopping tools & thinner margins impact me if I am the lucky guy connected to the internet sale?"

Remember this rule?

FACT: The flatter and more transparent the product analysis becomes, the thinner the retailers margins will be. ​

From a shoppers perspective, Used cars can become as easy to shop as new cars*. Assuming some player like Cox pulls this off, anyway you look at it, used car margins get compressed. These shopper tools means the dealer profits becomes less dependent on sales talent, so this means Dealer focus moves away from the sales process and now shifts into operations**.

Embrace the Internet like you hold a rose. If everything lines up just right BAM!! Overnight you're less important to the dealer and to the customer. Result? The Internet Sales Manager position and job description moves into customer service class (incl'ing pay and talent).

Think it can't happen? Ask yourself why it hasn't happened yet. Look at Best Buy coming to its knees. Ask past sales professionals like Travel Agents and Securities Brokerages.

MORE WARNINGS! It's happening to us right now. In under 6 years, shoppers use to shop 3.5 dealers prior to purchase, now it's 1.5.

Sorry Mike, IMO, we're right in the sweet spot of the internet evolution in our space. You'd like the evolution to STOP RIGHT HERE.



*Granted, everything rests on the quality of the vehicle condition reports
**removing costs from the sales and vehicle prep process

Agree with you on everything with the exception that used cars can become as easy to shop as new cars.

I look thru lists of cars in my DB to spot check errors, market size, etc and I'm always amazed how despite having hundreds of the same model they all have something a little bit different than the other. Used car shopping can't be made uniform.

 

[joe.pistell]

I'm always amazed how despite having hundreds of the same model they all have something a little bit different than the other. Used car shopping can't be made uniform.

Yag, sorry. You're wrong on this one.

I'll answer you with a question...

If you can "build a car" on line for a new car quote, then why could you not "build a car" for a used car search result?

(please remember the context of this thread where all known options are automatically populated to the used car as is it's condition).

 

[yagoparamo]

Yag, sorry. You're wrong on this one.

I'll answer you with a question...

If you can "build a car" on line for a new car quote, then why could you not "build a car" for a used car search result?

(please remember the context of this thread where all known options are automatically populated to the used car as is it's condition).

You can make things uniform for DB to provide search results based on input. That doesn't mean that you can bring the same uniformity to the way our brain searches once it narrows down the results:

Emotion

 

[DealerMarketing]

Cox only got into this game (ie Autotrader.com) 12 years ago to protect Manheim Auctions. I really don't see them ever becoming the next Microsoft? I've seen used car margins only increase over the past years?

 

[joe.pistell]

You can make things uniform for DB to provide search results based on input. That doesn't mean that you can bring the same uniformity to the way our brain searches once it narrows down the results:

Emotion

Emotion does not dominate the shopping process until they hit the lot.

C'mon Yag, you gotta know that!

 

[joe.pistell]

Cox only got into this game (ie Autotrader.com) 12 years ago to protect Manheim Auctions. I really don't see them ever becoming the next Microsoft? I've seen used car margins only increase over the past years?

Kevin?

AutoTrader protects Manheim? No. AutoTrader diverse's Cox from Manheim revs alone.

Don't think Microsoft, that analogy is way off the mark. Think Travel Industry or Brokerage Industry or THE POST OFFICE...

Used Car Margins increasing? No Kevin, better check your sources, used car margins are not increasing... for sure!

 

[joe.pistell]

Another Cox property is vAuto.

It's CEO, Dale Pollak, preaches the "Velocity" sales model where you focus on being a finalist on AutoTrader/Cars.com price-search results. Velocity sales model is totally keyed on inventory turns, which forces Dealership management to produce its profits from operations rather than from sales negotiations.

It's all lining up... Every where I look.

 

[DealerMarketing]

Joe: not everyone sells program cars. Good under 50K mile trade's are selling at a premium. I've got a dealer client who went one-price 18 mo ago. Used car gross is up 20% from when they sold traditionally. your correct, it's operations. More now than ever before... Dealers need to market and price the inventory correctly, get the traffic and hold the gross.