Bringing home 2019 in just a few more days. As we draw towards the close of the year, I wanted to recap what really happened this year and how much of an impact it is going to have in the coming years. Yes, we will probably touch almost 17MM vehicle sales again this year. Stair step incentives smaller margins, inventory shortages caused by various manufacturer challenges with unions, strong pre-owned sales due to high lease return numbers, increased competitiveness with enhanced digital marketing strategies, artificial intelligence and data mining activities all contributed to a retail environment where the pinch is definitely felt and profitability dipped considerably.
During this past year, our involvement with mobility strategies and reflective comments that I may have made in my communications are only in the interest of shedding some light over the anticipated changes in our future and perhaps exploring alternatives rather than being overly optimistic regarding the status quo. The continuous rebuttal of some of the retailers have suggested that electrification, autonomous vehicles and ride share concepts are pipe dreams and that they are not even on the radar screen yet.
Right after VW announcement at the auto show for going 100% electric in 5 years, Hyundai just recently committed 52 billion dollars for electrification and 35 billion of which is set aside for autonomous technology. They said they did not want to fall behind. Average new vehicle platform costs about 3 billion dollars to develop from scratch including the R&D. Compare these numbers to some of the commitments that these manufacturers are making and size up their serious intentions in developing autonomous technology.
Retailers have to re map their game plan regardless of all of this, they are falling behind the ages of modern day business practices, there are still general managers at some stores who think that they can use a conventional sales board hand written by sharpies to keep track of their businesses and customers are still treated like they can be talked into buying a car. Small Dealer Coalition concept revolutionizes the auto retail industry to the extend that you no longer worry about sharing data with your fellow retailers nor do you think that you are better than them, so you need not to participate. Everyone wins with the union concept, you share very intimate data to learn where your strengths and weaknesses are, you have opportunities to educate your staff in very close proximities to your store, benefit from economies of scale of vendor services including but not limited to flooring, data processing, insurance and marketing activities not to mention the concept of having the most elaborate preowned web-site to market to the masses without paying a dime to 3rd party buying services who eat your lunch and collect your data to use against you.
All the other benefits of the concept can only be valued as “when and if” if that is your comfort zone. But if the shoe does drop you are covered. I will be participating at J.D. Power’s Auto Summit in Las Vegas on April 14th to kick off the NADA convention, hope to see you there. Till then, MAY NEXT YEAR BE THE MOST PROSPEROUS OF ALL AND IN GOOD HEALTH.
ARLAN
