A Micro-Chip Shortage Will Impact Supply – Does It Have to Disrupt the Consumer Shopping Experience?

A Micro-Chip Shortage Will Impact Supply – Does It Have to Disrupt the Consumer Shopping Experience?

Steve Smythe's Headshot

Camarillo, Calif., April 20, 2021

As we’re about to enter year two of the COVID-19 pandemic, the auto industry is facing a continued production and supply challenge stemming from the pandemic, but not because factory workers are being told to stay home.

This time around, a shortage of semiconductor chips, which are also used to build other consumer electronics in high demand, are causing supply backlogs for the production of new vehicles.

The Latest on Semiconductor Chip Shortage

Semiconductor chips today are a critical part of the vehicle build process. The chips are used in everything from engine management systems, bluetooth, road navigation and collision-detection systems, and – remarkably – they can comprise as much as 40% of a new car’s cost, according to Deloitte1.

Research firm, AutoForecast Solutions, recently increased its estimate of the number of cars and trucks that will not be produced because of these supply problems.

Globally, the forecasting firm said that the automotive industry had already announced volume cuts totaling 680,350 vehicles — up from 202,000 vehicles in January. The firm also believes that number may increase to 1,321,701, as additional auto plants and their supply partners run out of chips; as many as 338,822 vehicles are expected to fall out of North American production plans2.

How a Chip Shortage Affects Car Shopping

The shortage will make accurate incentives and rebate setting more challenging for the manufacturers. In turn, dealers will struggle with how to set prices and payment offers as a result. Finally, for consumers it can be expected that the shortage of supply will result in increased MSRP’s.

Even before the pandemic and chip shortage, one of the major concerns among consumers was their inability to shop for a car online and seamlessly complete the transaction at the dealership. Consumers simply don’t understand why the monthly payment they were quoted online is different when they get to the store.

In fact, a recent survey we conducted revealed that 43% of consumers are frustrated that their online offer is different from what they are presented with at the dealership. This is important because 21% of shoppers say they walk away from a deal when this discrepancy is $50 or more per month; this number quickly jumps to 48% when the difference between what is quoted online and in the store is $75 a month.

For dealers who are not using technology solutions that empower them to provide identical price quotes online and in the store, nearly half of their car shoppers will walk away because the payments offered at the store are different from what they were offered online!

How Will Chip Shortages Impact Manufacturers’ Incentive Programs

Payments quoted to consumers are often shaped by manufacturer incentives and rebates, and the new chip-driven supply challenges will only exacerbate the inexact science manufacturers use in determining these.

Manufacturers spend billions of dollars each year on incentives to move inventory to achieve a desired market penetration. Traditionally, the car makers go through a labor-intensive process to analyze the data related to the effectiveness and impact of the incentive and rebate programs they are offering. This is done to determine how best to position themselves competitively – and to determine how much they have to spend to earn their desired market share.

The process is time consuming, mechanical and unsophisticated. Decisions are often made on gut instinct – without having all of the facts. Not only is this very expensive (and seldom accurate), it is also not timely and provides openings for competitors to step in and win market share.

Almost every dealer in the country has experienced an inability to collect rebate and/or incentive monies from their manufacturer because of the misapplication or improper combination of rebates. When this happens there are two options: Rewrite the contract, which always upsets the customer, or take the difference out of the gross.

The data and technology platforms needed to overcome this are available, all of which will greatly enhance the customer experience. Manufacturers, lenders and dealers can now be seamlessly tied together in a complete system that offers a portal and a dashboard containing all pertinent data necessary to build, offer and transact. This technology includes a solution that mines, analyzes and manages the billions of combinations and iterations of all lender and manufacturer programs available in the marketplace and finds truly superior, scientifically perfect solutions for all stakeholders: consumers, dealers, lenders and manufacturers.

Furthermore, today’s best and most comprehensive solutions enhance the consumer experience and the showroom process by electronically presenting all payment and purchase options to customers with full compliance and transparency – on any computer, tablet or mobile device – at any/all points along the consumer’s shopping journey. As a result, the process can dramatically shorten transaction times, raise dealership efficiencies and margins, and elevate customer satisfaction as a result of a more streamlined process.

With these new technologies available to the entire automotive eco system, all parties involved can quickly adapt to changes caused by a disruption to supply – without compromising the optimal shopping experience for the customer.

Written by Rusty West, President and CEO of Market Scan Information Systems.

  1. https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/technology-media-telecommunications/deloitte-cn-tmt-semiconductors-the-next-wave-en-190422.pdf
  2. https://www.autonews.com/manufacturing/new-forecast-13-million-vehicle-loss-microchip-shortage

For additional information, articles or interviews please contact:
Market Scan at info@marketscan.com

Market Scan was founded in 1988 by Father-Son team Russell and Rusty West with a single vision: build a world-class desking platform to fit every customer’s financing and leasing needs like a driving glove while returning the highest profit margin possible to the dealership.

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© 2019 All rights reserved.
Market Scan Information Systems, Inc.

 

How All Components Are in Place for Automotive Digital Retailing in 2021

How All Components Are in Place for Automotive Digital Retailing in 2021

Steve Smythe's Headshot

Camarillo, Calif., April 20, 2021

It is certainly an understatement to say the world has been turned on to online shopping and digital retailing. According to Adobe Analytics, during the 2020 Black Friday event, online sales increased 22% over the previous year. What’s more, the National Retail Federation expected this year’s online holiday sales totals would increase 20% and reach $202 billion1.

The Automotive industry is experiencing this same phenomenon, much of it fueled by the shelter in place orders associated with the COVID-19 pandemic.

Internet Shopping is Now Normal

Particularly for younger car shoppers, digital retailing has increasingly grown in popularity. According to McKinsey, less than a third of younger consumers today want to shop for their next car in-person at the dealership, and a larger number of these individuals are interested in contactless service as well2.

Furthermore, according to Cars.com, 48% of consumers today would like to handle price negotiations online, and another 42% say they want to handle financing online, including being able to obtain accurate payments online3.

In order to truly deliver the optimal automotive retail experience for consumers in an online environment, there are many components that must be artfully tied together to deliver consistent, transparent messaging for every step of the customers’ journey.

Automotive Retailers Are Ready

Expedited by COVID-19, the automotive retail ecosystem is currently undergoing its own shift toward a more consumer-friendly model that promises to mimic the convenience of online shopping found in many of today’s popular Internet retail portals. To successfully tap into this ecosystem and deliver on this promise, the industry is beginning to leverage science, technology and data to create a frictionless automotive shopping experience.

One key is certainly data. The industry has plenty of data that can tell you what the trends were 90 days ago; perhaps even statically advise what is available for a particular circumstance. Yet, all of that data without science is just noise. Now, however, there is a platform that ties together all the pertinent data points necessary to arrive at a scientifically perfect, transact able solution for your customer. After all, there’s a reason why the windshield is much larger than the rear-view mirror. Today, the industry has access to the most powerful analytics platforms ever created to make educated, tactical and profitable decisions.

The best solutions today are designed to empower and enable dealerships to excel in digital retailing and revolutionize the way manufacturers and lenders construct offerings to win market share – without overspending.

The Technological Ecosystem

What’s empowering and driving this ecosystem of digital retailing for automotive is a comprehensive database containing every parameter, policy and factor that can influence an automotive sale or lease transaction – every lender program, every manufacturer rebate and incentive, every municipality tax and fee and every term and condition under which each dealership is willing to transact. Additionally, today’s trusted platforms enable the seamless representation of all five major automotive sectors required for a successful transaction, online or in-store:

  • Manufacturer: Every model and trim offered by every manufacturer; all respective incentives and rebates including compatibility and “stackability” rules, as well as VIN-specific, option package specific, regional specific and dealership specific targeted offers.
  • Lender: Every published program offered by each lender in the country, including all parameters, policies and factors that can influence any automotive transaction.
  • Dealer: Each dealer’s individual selling price rules, lender relationships, fees, reserve policies, and all other required terms and conditions.
  • Municipality & Government: All STATE, COUNTY, and LOCAL laws, rules, regulations, calculation methodologies, tax percentage rates and registration fee and DMV calculations.
  • Consumer: All consumer credit bands – and how those are segmented and considered by every manufacturer and Lender.

Pulling All the Pieces Together

Dealers, lenders and manufacturers all need to be seamlessly tied together in a comprehensive system that offers a dashboard and a portal of all pertinent data necessary to build, offer and transact. This technology includes a solution that mines, analyzes and manages the billions of combinations and iterations of all lender and manufacturer programs available in the marketplace and finds truly superior, scientifically perfect solutions for all stakeholders: consumers, dealers, lenders and manufacturers.

Furthermore, today’s best and most comprehensive solutions enhance the consumer experience and the showroom process by electronically presenting all payment and purchase options to customers with full compliance and transparency – on any computer, tablet or mobile device – at any/all points along the consumer’s shopping journey. As a result, the process can dramatically shorten transaction times, raise dealership efficiencies and margins, and elevate customer satisfaction as a result of a more streamlined process.

With these new technologies available to the entire automotive value chain, digital retailing is poised to see a tremendous lift in 2021.

About The Author: Rusty West is President of Market Scan Information Systems and has more than three decades worth of experience developing leading data and technology-based solutions for the automotive industry. For more information please visit www.marketscan.com.

  1. https://www.wsj.com/articles/black-friday-was-a-bust-for-many-stores-better-for-online-11606676355?mod=article_inline
  2. https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/how-consumers-behavior-in-car-buying-and-mobility-changes-amid-covid-19
  3. https://www.cars.com/articles/ride-sharing-drops-online-car-shopping-increases-in-coronavirus-wake-419581/

For additional information, articles or interviews please contact:
Market Scan at info@marketscan.com

Market Scan was founded in 1988 by Father-Son team Russell and Rusty West with a single vision: build a world-class desking platform to fit every customer’s financing and leasing needs like a driving glove while returning the highest profit margin possible to the dealership.

Market Scan Vertical Logo - White

© 2019 All rights reserved.
Market Scan Information Systems, Inc.

 

Are You Maximizing the Opportunity Each Deal Offers Your Dealership?

Are You Maximizing the Opportunity Each Deal Offers Your Dealership?

Steve Smythe's Headshot

Camarillo, Calif., March 22, 2021

The role of the dealer’s sales executives in a customer’s retail journey – and the technology solutions available to you – continue to be vital to establishing the overall credibility of the dealership – and to maximize a dealer’s sales volume and gross margin potential.

Outlining possible customer deal scenarios is an integral part of the buying experience. Desking solutions still matter, but there are other factors that must be taken into account to elevate the buying experience.

It’s been a year since we launched our current desking solution in two new product module packages, mDesking 360 and mDrive SYNC, the latter designed to form a virtual handshake to other solution-providers’ technologies. I have been curious to get specific customer feedback to understand how these product solutions have been embraced by our clients, as well as to assess if there is room to enhance the solutions even more.

I tasked Robert Mancha, our Director of Strategic Relationships, who has more than 10 years of experience as a sales executive with us, to assist some of our clients with in-field coaching as part of the onboarding process. I asked Robert to report back some of his observations on how the products are being perceived – as well as used. Below, I will share some of Robert’s observations as well as provide commentary and my perspective.

Robert’s recent trip took him to the Chicago metro area, where he visited 10 dealerships during the course of one work-week. He worked with more than 30 dealership representatives that included owners, managing partners, general managers, general sales managers, desk managers and finance managers.

Today’s dealerships are being bombarded with technology to grow sales and profitability. There are many new players in the space, all vying for their share of the automotive retailing market. This includes DMS systems, CRM solutions, inventory management solutions and stand-alone desking solutions, to mention a few. Robert found himself looking at side-by-side comparisons of Market Scan’s mDesking 360 functionality compared to those of several other desking solutions. He recognized the challenge dealerships face in trying to understand what makes one desking solution better than another. Visiting the dealerships and reviewing their current sales processes made it clear to Robert what it is that signifies a clear distinction between Market Scan’s solutions and all others.

Robert watched managers produce deals in multiple competitor offerings throughout his week-long trip, and he observed what was a common theme: The focus of every deal constructed within a competitive offering was isolated to a single lender, and in many cases, one program, one term with either retail OR lease selected. This single-lens approach generally seemed to make sense for those sales managers that Robert visited; they were simply unaware of other, potentially much more profitable opportunities at the same deal structure. The fact is that the captive lender is strongest only 45-50% of the time but, if the existing desking solution does not display those better scenarios, sales and profit will be missed. A solution that displays the range of all available lenders’ offerings on every deal, enables desk and finance managers to see better, more profitable deal structures for every conceivable deal scenario – as well as propose even better options for the customers.

Without getting into the weeds of all the parameters and details needed to construct scientifically-perfect deal scenarios, which consider all pertinent data points, Robert made a notable conclusion after sitting through hundreds of deal structures during the course of one week: The vast percentage of deals that had been accepted by the dealership management, on average, missed hundreds of dollars of available profit at the accepted payment and down stroke! In a big store, which might retail 250+ vehicles monthly, the net cost could be $50,000-$100,000 in missed gross – considerably more than that same dealership enjoys in floorplan credits.

All of Market Scan’s solutions, whether mDesking 360 or our mScanAPI which powers other technologies, focus on the profitability of the structure. In other words, you determine “how” you want to sell the vehicle by setting the deal structure in just a few clicks. All that’s left to reveal the most profitable offerings, from your available lenders, is to select “Calculate”.

Your management team instantly gains access to the best programs for every one of your available lenders, along with the analytics for optimal application. The most profitable and competitive scenarios for every term available and deal type selected (lease/retail/balloon/one-pay) are displayed every time.

Market Scan’s systems also correctly applies all standard/automatic (VIN-specific) incentives, and provides a preview of every conditional offer for any given consumer (zip code specific), with all federal, state, county, local and municipal taxation rules and registration fees for all 50 states properly applied. This helps minimize incentive errors and audit exposure.

Additionally, because we also ‘power’ many of the online and digital retailing technology providers, our systems help you and your team quote more competitive, accurate and consistent payments all along the consumer’s buying journey.

As a former dealer principal, the take away for me is simple: In a time where digital retailing and online presence plays an increasingly important part in any dealer’s retailing efforts, giving your sales team access to the best information, data and calculations will help secure your future.

If you would like to discuss this at greater depth, please feel free to reach out to me directly at 805.823.4256 or ssmythe@marketscan.com. Thanks for stopping by!

Best Regards,

Stephen Smythe, Chief Executive Officer
at Market Scan Information Systems

Steve joined Market Scan as its CEO in 2009 after 30 years in the retail automobile business, bringing extensive knowledge of the industry and what it takes to sell and lease automobiles. During his career, he spent 20 years as a Dealer Principal/Owner, operating multiple dealerships in major U.S. metro markets including Los Angeles and Washington, D.C. Among the brands his dealerships represented were Mercedes Benz, Toyota, Volvo, Bentley, Rolls-Royce and Acura.

After 12 years as Market Scan’s CEO, the University of South Florida alumnus has decided to spend more time with his family (and grandkids) and has returned to his old stomping grounds in the Sunshine State. Steve will continue to work with the team at Market Scan in a near full-time capacity role as “Chief Strategic Advisor”.

For additional information, articles or interviews please contact:
Market Scan at info@marketscan.com

Market Scan was founded in 1988 by Father-Son team Russell and Rusty West with a single vision: build a world-class desking platform to fit every customer’s financing and leasing needs like a driving glove while returning the highest profit margin possible to the dealership.

Market Scan Vertical Logo - White

© 2019 All rights reserved.
Market Scan Information Systems, Inc.

 

Dealers: Let Me Suggest a Better Way to Grow Your Business and Long-Term Asset Value.

Dealers: Let Me Suggest a Better Way to Grow Your Business and Long-Term Asset Value.

Steve Smythe's Headshot

Camarillo, Calif., October 23, 2020

In my previous blog, I asked you to think about the true impact that 0% long-term financing has on your business. I suggested that there may be a far healthier strategy for your dealership. Before I get into that, let’s review the impact of 72 and 84 (even 96) month financing on your dealership and customers.

On the plus side, 0% financing and lower payments are hard to find fault with; every consumer likes the thought of “free” money, and the lower payments have brought many consumers back into the marketplace. We will all look back on the 6-month period following the onset of the COVID lockdown and celebrate everything that brought consumers back into your stores, whether virtual or in-person. But, there is a long-term price that your store will pay for those long-term loans and the sooner that you move away from such financing, the better off you will be.

I recall an Acura-Honda loyalty study years ago that found that the loyalty to a dealership or brand diminishes proportionally with the duration of the term. On a 5-year loan, consumers were only 11% likely to buy from the same dealership. (Back when the study was done, 6 to 8 year auto finance terms were unheard of; customer loyalty will clearly be even worse on those terms than on a 5-year loan.)

However, there is some good news: the shorter the term, the more loyal the consumer. On 4-year loans or leases, the loyalty factor jumps to 30%. That’s better. The true “AHA!” moment comes when you convince your customers to look at leasing. According to that Acura-Honda study, on a 3-year lease, the loyalty jumps above 72%. That means that nearly three-quarters of the customers that you put into 3-years leases will return to buy from you again. That same loyalty to the brand and your store climbs to a mind-boggling 91% on 2-year leases.

So, why is that? If you think about it, consumers in 3-year or shorter leases typically do not grow tired of the car and are always covered by the factory warranty. There are few, if any, surprises. According to a Digital Dealer study: “A high percentage of your lease customers are already accustomed to coming back to your dealership for maintenance. They also boast a shorter trade cycle of 24-48 months, compared to five- to eight years for a sold vehicle. Play your cards right and you’ll have lease customers coming in every couple of years to trade-up, resulting in more service revenue opportunity, PLUS, a continuous stream of off-lease vehicles to boost your used car inventory.” (https://www.digitaldealer.com/dealer-ops-leadership/dealer-management/increase-lease-penetration-rates-combat-shrinking-profit-margins/) The same study found that the best desking solutions offer grid presentations that display multiple different financing and lease options so customers can see side-by-side comparisons [Market Scan can help with that!].

There are other factors which speak in favor of shorter-term leases. First of all, the monthly payment on a 39-month lease is generally about the same as a 72-month loan. As indicated above, you can count on being able to easily put that buyer into their next car. So, that is two cars sold to that same consumer in 72 months, not one.

Short term leasing is also a way to attract millennials. According to Brian Skutta, writing in Dealer Marketing, “The findings suggest that millennials are more willing than older generations to sacrifice the long-term financial benefits of car ownership in favor of more affordable near-term options or more luxurious vehicles that are typically most affordable through leasing. This is really good news as dealers seek to capture and retain millennial-generation buyers.” (https://www.dealermarketing.com/leasing-and-millennials-gateway-to-customer-retention/)

I know that you have heard much of this before. However, deep down, you know that leasing is a better solution for you and for the consumer. You just have not wanted to educate/fight/incentivize your sales and finance teams to get it done. If ever there were a time to do this, it is now. There are several great leasing trainers and consultants. One of the best is Cedric Rashad. I had him in three of my stores and his combination of benefits training, suggested pay plan changes and staff motivation is magic in transforming a store’s focus to a healthier lease-orientation.

Know also that your customers are better off in shorter term leases. The residual value is a de facto ‘guaranteed buy-back.’ They are protected if the value of the car plummets during the lease; they simply turn the car in. On the other hand, if the car builds equity over the lease term, they can buy it and keep it – or trade it in, and participate in that increased value.

Allow me to give you another, even more compelling, reason to do this: The overall value of your dealership will skyrocket with a large portfolio of short-term leases on your books. Because consumers on short term leases are 72-90% likely to buy again from you, your store is bound to be worth far more to any buyer/consolidator knowing that a high percentage of previous buyers will be returning every month. I experienced this very thing when my partners and I sold our dealership. There were several major bidders for the store, but the bidding had stalled at a level that we would not accept. The Chairman of one of the groups vying for the store asked me why his group should pay more. I advised him that we had 5,400 vehicles out on short term leases, with 1,700-1,800 returning each year. The next day, that group raised their bid by $10 Million and bought the store.

Philip Reed, writing for Nerdwallet (08/21/2020), states, “In the end, brands [and dealers] with high lease penetration will always have a shot with the client.” Patrick Roosenberg, Director of Automotive Finance Intelligence at J.D. Power adds, “Retaining lease customers is crucial for dealer and lender profitability as they navigate a constricting market and economic downturn.” (https://www.jdpower.com/business/press-releases/2020-us-end-lease-satisfaction-study)

So, get about building your short-term lease portfolio. Train your people how to introduce and sell leasing. Realign your managers’ and salespeople’s pay plans to focus on and support leasing. Such a transition will also bring with it a far healthier culture: You will automatically create a true relationship-based business rather than one that is simply transactional in nature. If your retention and repeat business is very high, it means you will spend far less on advertising and promotional initiatives. Every department in the dealership – and your CSI – will benefit, and you will build a long-term annuity and greater value in your store. When it comes time to sell or transfer to your children, you will have created significantly greater value.

If you would like to discuss this at greater depth, please feel free to reach out to me directly at 805.823.4256 or ssmythe@marketscan.com. Thanks for stopping by!

Best Regards,

Stephen Smythe, Chief Executive Officer
at Market Scan Information Systems

Steve joined Market Scan as its CEO in 2009 after 30 years in the retail automobile business, bringing extensive knowledge of the industry and what it takes to sell and lease automobiles. During his career, he spent 20 years as a Dealer Principal/Owner, operating multiple dealerships in major U.S. metro markets including Los Angeles and Washington, D.C. Among the brands his dealerships represented were Mercedes Benz, Toyota, Volvo, Bentley, Rolls-Royce and Acura. Today, the University of South Florida alumnus leads all non-technical aspects of Market Scan’s business.

Market Scan combines science, technology and data to provide industry leading solutions that enable OEMs and lenders to maximize their market penetration through analytics, and empower dealers to achieve digital retailing supremacy. Market Scan solutions help companies optimize their competitiveness and profitability, as well as deliver an enhanced consumer experience.

For additional information, articles or interviews please contact:
Market Scan at info@marketscan.com

Market Scan was founded in 1988 by Father-Son team Russell and Rusty West with a single vision: build a world-class desking platform to fit every customer’s financing and leasing needs like a driving glove while returning the highest profit margin possible to the dealership.

Market Scan Vertical Logo - White

© 2019 All rights reserved.
Market Scan Information Systems, Inc.

 

Dealers: What Is the Real Impact of 0% Long-Term Finance Loans on Your Business?

Dealers: What Is the Real Impact of 0% Long-Term Finance Loans on Your Business?

Steve Smythe's Headshot

Camarillo, Calif., October 6, 2020

In order to stimulate the auto retail market, OEMs and their captive lenders recently began offering 0% financing for 72 – 84 months. Many factions have heralded this as a great move for the car business. The question is, is this a positive benefit for dealers – or is it a pending disaster? Well, probably a little of each.

While it is pretty much impossible to find anything wrong with free money, especially if it creates interest and moves inventory, there is plenty to be concerned about when tying up (“burying”) your customers for six or seven years. “Yet 38% of new-car buyers in the first quarter of 2019 took out loans of 61 to 72 months, according to Experian. More alarmingly, Experian’s data shows 32% of car shoppers are signing loans for between 73 and 84 months. Used-car financing is following a similar pattern, with potentially worse results. Experian reveals that 42.1% of used-car shoppers are taking 61- to 72-month loans while 20% go even longer, financing between 73 and 84 months.”*

This year, the lowest volume year in decades, dealers are pushing 75% of their customers out five years or longer. The ability to put that consumer into another car before end of term will be very challenging. What could go wrong?

Study after study have shown that buyers grow tired of their cars after three years. The problem is that, three years in, they are invariably in a huge negative equity position, often to the tune of several thousand dollars. Guess whom they blame for that?

Another issue is how a typical consumer takes care of the vehicle once it is out of factory warranty – even if it was sold with an extended service policy. Yes, your service department may see them after the warranty period for an occasional repair covered under the ESP (don’t they love that deductible!), but you will likely never see them for more lucrative maintenance work.

Finally, in 4 or 5 years when the consumer does reach an equity position (or a lesser negative equity position) and is potentially able to trade, will you really want that higher-mileage, questionable-condition trade? I suspect not. So, other than moving a unit today, is tying your customer up for 5-7 years really good for your business – or are you shooting yourself in the foot?

Zero percent longer-term financing was introduced as a survival tactic – and, perhaps, more for the OEMs than for dealers. Nevertheless, as a marketing ploy, it has helped bring consumers back into the marketplace – and that is a very good thing. The true cost to your dealership for this basic survival tactic should concern you, however.

Wouldn’t you rather THRIVE than simply Survive?

Allow me to suggest that there is a much better solution than 0% long-term financing; a solution that generates at least as much gross, benefits every other dealership department – and keeps consumers happy and financially protected during every moment of their ownership. Most importantly, it actually increases the overall value of your dealership, often significantly.

This may take a minor rethink of the way you have been doing business, but only minor. You have a unique (perhaps once in a career) opportunity to easily implement meaningful change in your store’s front-end structure and culture because of the sweeping changes wrought by the COVID pandemic.

Position your store to truly Thrive! In my next blog post, I will delve into the specifics. If you can’t wait to hear about how Market Scan’s solutions can help identify some of the specific alternatives to locking your consumers into 72 – 84 months’ finance contracts, feel free to reach out to me directly at 805.823.4256 or ssmythe@marketscan.com.

Additionally, Rusty West, Market Scan’s Co-Founder and President, will participate in tomorrow’s Digital Dealer Keynote panel, which will discuss ‘Modern Retailing’. Please sign up with Digital Dealer to hear some great minds offer their expert opinions on key challenges facing retailers in today’s market.

Best Regards,

Stephen Smythe, Chief Executive Officer
at Market Scan Information Systems

Steve joined Market Scan as its CEO in 2009 after 30 years in the retail automobile business, bringing extensive knowledge of the industry and what it takes to sell and lease automobiles. During his career, he spent 20 years as a Dealer Principal/Owner, operating multiple dealerships in major U.S. metro markets including Los Angeles and Washington, D.C. Among the brands his dealerships represented were Mercedes Benz, Toyota, Volvo, Bentley, Rolls-Royce and Acura. Today, the University of South Florida alumnus leads all non-technical aspects of Market Scan’s business.

Market Scan combines science, technology and data to provide industry leading solutions that enable OEMs and lenders to maximize their market penetration through analytics, and empower dealers to achieve digital retailing supremacy. Market Scan solutions help companies optimize their competitiveness and profitability, as well as deliver an enhanced consumer experience.

* Nerdwallet, 8/21/20: Philip Reed: “5 reasons to say no to 72- and 84-month auto loans”

For additional information, articles or interviews please contact:
Market Scan at info@marketscan.com

Market Scan was founded in 1988 by Father-Son team Russell and Rusty West with a single vision: build a world-class desking platform to fit every customer’s financing and leasing needs like a driving glove while returning the highest profit margin possible to the dealership.

Market Scan Vertical Logo - White

© 2019 All rights reserved.
Market Scan Information Systems, Inc.

 

The Auto Retail Environment Has Never Changed So Radically. How Well are You Positioned to Succeed?

The Auto Retail Environment Has Never Changed So Radically. How Well are You Positioned to Succeed?

Steve Smythe's Headshot

Camarillo, Calif., October 1, 2020

Automotive retailing is undergoing the most profound change in more than 50 years. The traditional “brick & mortar” dealership business model is no longer sufficient, in and unto itself. Sales transaction models are changing as more and more digital retailing power-players enter the marketplace.

It is consumers, of course, who are driving this change. Motivated by the pandemic and the “Amazon phenomenon,” consumer buying behavior, including yours and mine, has rapidly transformed. Ease of shopping (online and in-store), transparency, immediacy, consistency, and, of course, accuracy are key components for retail success today. A Google study released earlier this month finds that, among automotive consumers, “65% expect more online purchase options in the future.” Having the right online presence is more critical to your success today than is the $5-50 million facility that the factory required you to build.

Dealers able to provide consumers with an engaging and consistent digital through in-store retailing experience will clearly be the winners in this new environment. Those who fail to adapt are destined to struggle.

I have been in and around the car business for more than 40 years, 20 years as a Dealer Principal / Owner, and 11 years at the helm of Market Scan. I have seen plenty of change in my time, but never so pervasive or dramatic. This has created some incredible opportunities – and some significant threats.

At Market Scan, we are involved with several OEMs and hundreds of lenders; we power more than 40 technologies serving automotive retailing, and nearly 8,500 dealerships. We have dealers in our system who have grown their already solid businesses by more than 220%, during/post-COVID! Many great stories to tell. In spite of the challenges, it is also an incredibly exciting period for our industry.

One of those great stories is Prestige Volvo in New Jersey. When COVID hit, New Jersey was shut down. Dealer Principal Matthew Haiken was forced to lay off his sales department. At that time, Haiken had an online presence mostly designed to create interest and inquiries. However, Haiken realized that he had an opportunity to continue to operate by transforming his business into “an internet dealership,” fully set up to accommodate sales transactions.

“COVID-19 presented a challenge for every dealer in automotive retailing,” said Haiken. “When your sales showroom and the manner in which you do almost all of your sales gets shut down, you can feel sorry for yourself – or realize this is a massive opportunity. Being a small but nimble business, driven by creativity and a willingness to reinvent our business model – and how we actually accommodate clients – were key drivers. Couple that with the cutting edge technology and solutions that FRIKINtech and Market Scan offer and you have a powerful recipe. Objectively, we’re simply providing the consumers with the experience they have been looking for all along. Through this experience, we became the No. 1 volume Volvo dealer in the country, with 100% of deliveries [300+ per month] taking place at the customers’ homes. This would have been an absurd notion a year ago – but that’s the new normal for us.”

In future columns, I will do my best to relate more great stories, plus some advice based upon what we are seeing and what our experience tells us.

With Respect and Best Regards,

Stephen Smythe, Chief Executive Officer
at Market Scan Information Systems

Steve joined Market Scan as its CEO in 2009 after 30 years in the retail automobile business, bringing extensive knowledge of the industry and what it takes to sell and lease automobiles. In his career, he spent 20 years as a Dealer Principal/Owner, operating multiple dealerships in major U.S. metro markets including Los Angeles and Washington, D.C. Among the brands his dealerships represented were Mercedes Benz, Toyota, Volvo, Bentley, Rolls-Royce and Acura. Today, the University of South Florida alumnus leads all non-technical aspects of Market Scan’s business.

Market Scan combines science, technology and data to provide industry leading solutions that enable OEMs and lenders to maximize their market penetration through analytics, and empower dealers to achieve digital retailing supremacy. Market Scan solutions help companies optimize their competitiveness and profitability, as well as deliver an enhanced consumer experience.

For additional information, articles or interviews please contact:
Market Scan at info@marketscan.com

Market Scan was founded in 1988 by Father-Son team Russell and Rusty West with a single vision: build a world-class desking platform to fit every customer’s financing and leasing needs like a driving glove while returning the highest profit margin possible to the dealership.

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Market Scan Information Systems, Inc.