Why Buy/Sell Activity Continues to Thrive Despite the Inflationary Environment – Erin Kerrigan
Today on CBT News’ Inside Automotive, Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors, shares her insights and expertise into the current state of the buy/sell market. To the surprise of many, 2022 got off to a stronger start than 2021. Q1 2022 earnings surpassed prior Q1 2021 earnings as well. There are stockpiles of cash in dealer pockets and most want to use that capital to expand, explains Kerrigan. There is still tremendous opportunity in the auto industry, despite troubling economic factors. Auto retail is a counter-cyclical business. If a recession does come, the industry will likely still do well. “[Automotive retail] is almost a perfectly hedged business model with a high variable cost structure that really makes it sustainable through thick and thin,” says Kerrigan. Interestingly, even in the inflationary environment, auto dealers are not immediately affected because most of the expense structure is variable and customers have more equity in their trade-ins. Click here for the full interview.
Fixed Ops Director Injects Some Pep in Old Dealership's Step
As the old saying goes, the easiest way to eat an elephant is one bite at a time. Shawn Butler can relate. The recently hired fixed ops director at Bristol Honda in Tennessee is taking that metaphorical advice to heart as he works — step by step — to revive a moribund and neglected service department that's been underperforming for years. Automotive News reports the importance of Butler's mission is magnified by the inventory shortage hampering dealerships' vehicle sales, which fosters more reliance on fixed ops revenue. Furthermore, service departments now serve as valuable funnels for potential used-car acquisitions that can at least partially replenish stores' flagging inventories. The problems at the 55-year-old store, recently purchased by Umansky Automotive Group, of Memphis, Tenn., are, well, elephantine in scale: a well-below-average level of customer-pay repair orders per day; a low effective labor rate stemming from below-market prices for services; inadequate investments in training and equipment; little marketing to generate customer traffic; no express service lanes; and insufficient emphasis on processes and protocols. Click here for the full story.
Puttin’ on the Ritz at Car Dealerships
Car dealerships don’t offer spas, swimming pools or elegant guest rooms for overnight stays. Still, auto retailers could take cues from the Ritz-Carlton. Wards reports a dealer and an automaker representative agree on that during a Reuters webinar, “Rethinking the Automotive Customer Experience.” Ritz-Carlton trains staffers to focus on personalized guest service, something worth emulating at dealerships, says Amanda Skura, Audi of America’s head of digital experience technologies. She lauds the Ritz philosophy of ladies and gentlemen serving ladies and gentlemen. “What if you had that model at dealerships?” Skura says, recommending a measured approach in handling car shoppers. “You want it to be, ‘I’m here when you need me.’ But you don’t want to be chasing people around the store.” David Long, executive general manager of the Hansel Auto Group based in Santa Rosa, Calif., said. “If you had asked for extra towels during an earlier stay, there will be extra towels in your room during the next stay,” he says. “It is part of their system.” “If someone has bought 10 Acuras from me, I should know their preferences,” Long says. “When they come in for service, have their favorite coffee ready for them. Click here to learn more.
Car Buyers Will Go Nearly 500 Miles to Get a Vehicle
When Erik Nelson started searching for a car last fall, he knew he wanted a Subaru and a great relationship with his dealership. He didn't know that he'd have to travel across the country to get it. Nelson purchased a 2017 Outback from Quantrell Subaru in Lexington, Ky., in September, nearly 1,400 miles from his home. His reasoning for the trip? A car with great mileage for a great price that just couldn't be found closer to home. "It was difficult to find something. I went to Carvana to see if I could get something delivered, and nothing was really clicking until I talked to the dealership in Lexington." After a short test drive at the dealership and visiting friends in Kentucky, the car was his. "We were able to see friends and get a car, and it was just a good overall situation," Nelson said. Automotive News reports experiences such as Nelson's are becoming more and more common, according to recent data. A survey of 2,690 buyers across the country commissioned by Quantrell Subaru found the average person willing to travel up to 469 miles to purchase a used vehicle. Click here for the full story.
Record 19 BEVs Among 47 Models Vying for 2023 North American Car, Truck and Utility Vehicle of the Year Awards
To get a sense of how quickly the automotive world is transforming, simply check out the list of candidates for the 2023 North American Car, Truck and Utility Vehicle of the Year Awards. The Detroit Bureau reports the list includes a record 19 all-electric models. There are numerous models that are available only as hybrids, including the new Toyota Sequoia, other offered with multiple powertrains that include electrified options. All told, 47 cars, trucks and utility vehicles are on the newly released NACTOY list, tying the previous record number of eligible models included in 2019. Of those, 13 are all-new or substantially updated passenger cars, with another three trucks and 31 utility vehicles on the list that jurors will have to consider before winners are announced. “This high number of eligible vehicles highlights the wide range of choices consumers have among new vehicles this year,” said NACTOY President Gary Witzenburg, “driven primarily by increased offerings of battery-electric vehicles, continued popularity of the utility category and arrivals of new OEMs. We look forward to testing and evaluating this list of exciting vehicles to determine this year’s winners.” Click here to learn more.
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