Looking ahead, it’s going to be a year of shifting sand and changing tides. But dealers are used to that.
After a dreadful 2020, Canadian automobile dealers are looking for better days ahead. Our business, as we knew it, shifted immensely during the pandemic of 2020, and that will more than likely be the playbook for 2021 as well.
More of the same, with more pivots than a running back, constantly changing direction to avert tacklers. The goal line seems further and further away as we continue to trade yardage as the months go on. Predicting the future has never been so elusive unless you happen to be an OEM where the future is always bigger than reality.
For certain brands, some dealers have entered 2021 with planning volume targets so high that they seem impossible to reach. For others, revised targets do not provide the necessary volume to support historical and current investments made. Only time will tell what actually happens.
Dealers have always been accurate in taking the pulse of their local markets. OEMs, on the other hand, have a significant role to play in creating the macro product environment that consumers will hopefully embrace. All OEMs will not be successful in achieving their targets.
From my vantage point on the sidelines, it’s like watching two games at once. One game is steeped in the realities of local markets, while the other is focused on global positioning. Listening to OEMs, they speak of online sales dominance and vehicle electrification.
Retailers, on the other hand, look forward to tire season to get service customers in their bays and hope to have the right inventory at the right price to attract buyers. It’s like two different worlds. Is this the sign of things to come?
As we know, all brands are different. Many times, all brands — even different brands under the same OEM roof — behave differently. The automotive world is in the midst of the biggest product shift of the past century and no one really knows how or when this is going to shake out. It could take several years or even decades for some brands to build their new brand identity.
And although we call ourselves “car dealers,” most of us have blown past that moniker years ago: we operate several businesses that fortunately have different cycles and offer consumers opportunities for varying experiences.
Consumers are moving at a different timetable. The pandemic has changed some of the rules (perhaps temporarily), but for some the changes could be permanent. Dealers will have no choice but to be flexible and pivot at the drop of a hat.
Dealers have always been resilient. This was proven in spades during the year 2000, and again in 2010, and yet again in 2020. Time after time, decade after decade, once given up for dead, dealers rise from the supposed ashes to live another day.
My advice to you is to stop reading the headlines. Very few pundits actually understand what constitutes a car dealership. The fact that we operate several businesses under one roof escapes many observers. And although we call ourselves “car dealers,” most of us have blown past that moniker years ago: we operate several businesses that fortunately have different cycles and offer consumers opportunities for varying experiences.
When new vehicle sales are down, used vehicle sales increase. When the retail side of the business struggles, our parts, service and body shop businesses hum right along. When in-store visits are challenged, we quickly pivot to online. Our in-house finance business is a hedge since most Canadians need to borrow money to buy or lease a vehicle.
Then there is the do-it-yourself side of the business where dealers provide parts and accessories to the aftermarket. Many of us have vehicle rental, ride-share and car-share opportunities in our sights. It’s all about keeping wheels rolling and keeping them on the road regardless of who is driving. So, stop reading the headlines.
And while it’s true that the pandemic has both consumers and OEMs in a tizzy, consumers are showing the head fake like pros — seamlessly moving in one direction, but quickly adjusting to whatever direction suits them. They can run in any direction, at any time, like a lion out to catch Sunday dinner.
OEMs, on the other hand, are students of the business. Yes they hold some good cards, but like school kids watching the older kids playing the game, learning to play a game by watching at recess and actually graduating to the big table are two very different things.
Actually, holding some real cards that are different in each hand while making split decisions is not easy in the beginning — if it ever is. Their lack of in-the-trenches retail seasoning and experience is quickly figured out. Some get good at it and others just decide to play a different game. It’s very different when you’re doing, rather than just watching. Something might look easy until you try it. Ninety-nine per cent of the time, it’s not so easy.
Dealers have learned by and large how to run their dealerships and be successful in their local markets. OEMs are often like painters, with only one colour and one paintbrush regardless of the surface to be painted, lighting and weather implications. Dealers however, carry a very elaborate pallet of colours, styles, and application options needed to weather most storms.
What I am saying is that dealers are beholden to both their customers and also the brands they represent, while brands are beholden to their parent companies. Often the two are not in full alignment. Flexibility is required on both sides of the aisle and both must learn to adjust on the fly.
Think of a quarterback lining up behind the centre viewing the defence, stepping back and calling an audible before reaching in to accept the snap. The defensive middle back linebacker, on the opposite side of the field, does the same with the defence alignment, yelling new commands to his on-field teammates.
We must respond in a way that provides clear guidance and support to our employees, respect brand initiatives, and continue to provide the experiences our customers are looking for.
Now think back to 2020. How many audibles did you call? Lots, as the world began to unfold differently than planned, when consumers and governments put forward multiple defences. At the same time, in 2020 you also played defence as the brand you represent called their own audibles, causing you to react with a new strategy.
As dealers, we march to the beat of consumers, our brands, and now government regulation. This will still be the case for much of 2021. And as dealers, we will need to pivot and be flexible. Constant change will be facing us from so many directions. We must respond in a way that provides clear guidance and support to our employees, respect brand initiatives, and continue to provide the experiences our customers are looking for.
In many ways, we are not completely (100 per cent) in control of our businesses. We are, after all, franchisees with serious skin in the game. We must continue to be flexible and pivot on-demand to protect and grow our invested assets and human resources.
This attitude will get us to the other side, with our teams being leaner and stronger, and our customers safe and satisfied. This will allow us to continue to build long-term customer loyalty and set us up well for the future that is to come.
Flexibility is the key word for 2021 and beyond.