Franchise dealers have the skills and the entrepreneurial spirit to adapt their businesses to a changing industry, executives of two retail technology companies said Thursday.
From deploying more electric vehicles, to providing a consistent customer experience, to bringing more technology to the buying process, the franchised new vehicle retail model is best suited to follow. changing trends, said Alex Vetter, CEO of Cars.com, and Brian MacDonald. , CEO of CDK Global Inc., said at the Automotive News Retail Forum: Chicago event.
Dealerships that partner with the automakers they represent will not only gain market share, but will also be equipped to compete with non-franchise manufacturers such as Tesla and Lucid Motors, they said.
“We certainly think the reseller model is here to stay, and we’ve convinced a lot of people to put a lot of money behind us to do that,” said MacDonald, who became CEO of CDK Global in July after the close. of the sale of the company. to investment firm Brookfield Business Partners. He previously served as CEO of CDK from 2016 to 2018.
When meeting with dealers and automakers since joining CDK this summer, MacDonald said he’s heard dealers say, “‘I’ve got 26 brands, I can’t have 26 retail tools. car manufacturers. I cannot operate in this environment. .’ And then you go talk to the OEM, and the OEM says, “Look, I need to have a consistent experience for my brand and that’s why I need to develop my own tools. “
Technology providers can be the link between automakers, who want a consistent customer experience, and dealerships, who handle local delivery and connection with consumers, MacDonald said.
“It remains relatively the same,” he added. “What’s changing is that I think OEMs will take a bigger role in what technology they want dealers to use to deliver that consistent customer experience.”
A competitive advantage for franchise dealerships is that it’s difficult to generate profits when selling vehicles nationally, Vetter said. Technology can be an enabler for dealerships whose business is primarily local.
“I think we’ll see OEMs that partner with their dealership partners are going to take market share from those who butt heads with them over who controls what,” he said.
To protect the franchise model from new entrants, including automakers selling vehicles directly to consumers without dealerships, MacDonald said, it’s critical that dealerships are able to provide a similar experience online.
Not every customer will want to buy a vehicle entirely online without visiting a dealership, but “there are and they are growing,” he said.
A positive sign is that more dealership owners and general managers are engaging in digital discussions, Vetter said. It becomes a central topic of conversations at the management and board level, he added, and not something delegated to a dealership’s internet department.
These discussions should include a reworking of the term “digital retail,” he added. All sales are digital before a vehicle is purchased, he said, whether or not a consumer uses a particular tool to transact.
“The research happens online before the purchase and they’re looking for you,” Vetter said. “We need to get out of some of these legacy boxes that we put things in, like digital retail, and start learning about online customers and how do we get them into our store?”