In today’s ultra competitive marketplace, dealer buying groups are leveraging purchasing power and providing a whole range of quality products, services and rewards for their members
It’s human nature to get the best value out of something. When consumers walk into a dealership, it’s exactly what they’re looking for when it comes to their next vehicle purchase. On the other side, dealers are also looking for the best value in terms of the products and services they receive from suppliers. That’s why more and more see the advantage of being members of a buying group.
Leader Auto Resources (LAR) Inc., headquartered in Montreal, Que., has seen rapid growth since it was founded in 1980. Today, LAR is the largest new vehicle dealer franchised buying group in North America, not only in terms of dealer members, but also geographical footprint, sales, profits and the range of products and services it provides.
Robert B. Issenman
Robert B. Issenman, President and CEO of LAR Inc., says a key part of that growth comes from the group’s core mission — delivering high quality products and the lowest possible prices to its members. “We’re able to drive down procurement costs by leveraging the purchasing power of 1,578 dealers and bringing peace of mind to our members through control and the purchase order process.”
As dealers continue to witness shrinking margins in areas such as new car sales and at the same time look to distinguish themselves in an ultra competitive marketplace by improving retention and boosting profits, the business office has become more of a focal point for overall operations. LAR has responded by creating an all-inclusive LAR Finance & Insurance program for its dealer members.
Issenman says that by including a full range of quality products, along with effective training and in-store development, the result is a leading-edge technology solution that enables dealers to provide an effective F&I process that satisfies their customers and boosts the bottom line.
REAPING THE REWARDS
Besides providing tailored products and leveraging buying power through its substantial dealer member network in both Canada and in the U.S., LAR has also been able to deliver record discounts and dividends. Issenman says that to date, over $276 million has been distributed to LAR’s dealer members, a result of growing purchasing power and through it, the ability to deliver consistent market-leading low prices on professional grade products.
Issenman says that dollar remittances continue to grow significantly — in 2013, the total amount was $13 million, up from $900,000 in 2011. He says a big part of the buying group’s success rests on its unique approach. “LAR is exclusively dedicated to new vehicle franchised dealerships and all of our Canadian customers are LAR shareholders.” As a result, Issenman says, all members are treated equally and thus benefit in the same way from the group’s buying power.
“Dealers know up front exactly what their dollar rebates will be with respect to any given purchase,” says Issenman. “There are no ifs, buts or maybe we’ll see what is available after year-end results.”
Issenman says that LAR’s success hinges on its ability to align closely with the needs of its dealer members and “to drive added value to them at every opportunity in a rapidly changing environment.”
CLOSER TO HOME
Dealers often find themselves having to travel south to the U.S. in order to get their hands on the latest equipment, services or supplies for their dealership. For many stores, the time and cost to travel to big U.S. events such as the NADA Convention and Expo can become prohibitive. That in itself was a good reason why Ont.-based buying group Co-Auto, in conjunction with the Trillium Automobile Dealers Association (TADA), decided to host a Canadian trade show, in Canada, for Canadian dealers.
Co-Auto and TADA joined forces for the inaugural Ontario Dealer Day (pictured left to right) are Tom Langton, CEO and President, Co-Auto, Bob Verwey, President, TADA and Todd Bourgon, Executive Director, TADA
Ontario Dealer Day, which took place on April 16, 2014, brought together hundreds of dealers and suppliers under a single roof, giving both a chance to seek new opportunities and forge stronger ties. Tom Langton, President & CEO of Co-Auto, says that while it was a busy day (the event ran from 9 a.m. to 9 p.m.), “there were a lot of networking opportunities and it made good use of attendees and exhibitors’ time.” Additionally, because it was hosted by both parties, Dealer Day also enabled Co-Auto and TADA to hold Annual General Meetings on site, bringing further value to those who attended.
Langton says that feedback from the initial Ontario Dealer Day has been tremendously positive so far. “The main comments we’ve heard have been ‘keep doing it’ and make it ‘bigger and better” (the next Ontario Dealer Day is scheduled for April 14, 2015).
Langton notes that dealers appreciate the fact that Co-Auto has been forging ahead with new and existing partners, as well as continuing to look for ways to save dealers money on products and services. At the same time new partners are providing opportunities to strengthen dealers’ brands, increase their revenue and deliver value to their customers.
TAKING IT BACK
A partnership with Mighty Auto Parts has helped WD Co-Auto members tackle their aftermarket Tier 1 service competition
In Western Canada, WD (Western Dealers) Co-Auto, based in Edmonton, has also been looking at ways to further strengthen buying power and enhance the products and services it provides to dealers. Mike Reid, CEO, says there’s been a big emphasis on winning back the service business from independents and partnerships. Companies, such as Mighty Auto Parts, are helping. “We started this program just over a year ago and we’ve continued to expand it,” says Reid.
Through WD Co-Auto’s buying power, dealers have been able to better compete with aftermarket rivals when it comes to Tier 1 service, thanks to lower prices, particularly on common wear items such as fluids and filters. Reid says that dealers also have the added advantage of being able to offer Tier 2 service as well, which many aftermarket express service providers simply aren’t able to offer. Reid says that in order for dealers to compete in the Tier 1 environment, they have to take the same approach as aftermarket rivals, by being able to perform express oil and fluid changes and enable the customer to remain in the vehicle while the work is done.
Besides helping dealers take back the service business, WD Co-Auto has continued to see its membership numbers climb, giving it further leverage in negotiating the best deals from suppliers on the products and services it can provide to dealers. “With more than 900 dealer members there is a significant advantage,” says Reid, who notes that WD Co-Auto is now the largest single customer for some equipment suppliers in Canada.
Reid says that the rapid consolidation of dealerships in the West has actually fueled growth for WD Co-Auto, with more stores actively involved in purchasing products and services through the group. “Out of approximately 1,150 dealerships in Western Canada, we’re selling to probably 1,100 per month,” says Reid. “And it continues to grow as more stores are bought and sold.”
CCS: A WIN-WIN
While the collision business continues to prove challenging for many dealers, Co-Auto is helping to turn the tables via its Co-Auto Collision Services (CCS) program. Launched in May 2013, CCS is the brainchild of Sandy Ligouri, a Mississauga, Ont.-based dealer and former TADA President. The idea behind it is to help dealers operating in the collision industry pool resources and work together to achieve better efficiencies and greater profitability. Co-Auto CEO and President Tom Langton says that by standing united, dealers are able to share ideas through performance groups, as well as gain access to new technology and new business opportunities in the collision sector. Additionally, through an innovative insurance proposal program with HUB International (Canada’s largest broker), dealer customers are able to receive savings on insurance premiums, as well as obtain repair quotes within minutes. “A customer can literally obtain five different quotes within five minutes,” says Langton.
For dealers, Langton says CCS is a win-win because not only does it help dealer customers save both time and money on insurance, but also the partnership through HUB also promotes CCS dealer members as prefered collision repair facilities. HUB ensures the work goes to those that are approved via the quoting process. “Our feedback so far is showing that dealers really like it and are seeing the additional value it brings, both from a retention and value standpoint,” says Langton. All too often, dealers find themselves having to fight to retain collision business. With CCS, however, they now have the tools to effectively gain it back.
