Car Dealerships Die by Suicide

retail automotive industry has changed and evolved in many ways since 2000. Technology and the internet play a dominate roll in sales and service. However, many owners and managers are still operating under the same philosophy as they were in the 1990’s. In some ways, this is the right way to manage, in many ways they are unwittingly killing their business. Ego and denial go hand-in-hand, and like an alcoholic, a bad manager will be delusional about his impending doom even in the throes of death. Sad? Yes. True? Yes. Avoidable? Absolutely. Isaac Asimov asserted that an equation could determine everything in life. The sad thing I often witness in our industry is that so many dealerships are seemingly unable to see specific comparisons as fact, as this would mean admitting they have a problem. This phenomenon in the car business is of significant advantage to the whales like Penske and Van Tuyl. They love nothing more than a willfully blind owner of 1-10 dealerships that is hyper-focused on what he thinks he knows about the business. Hundreds of dealerships in the next five years will be sucked up by a handful of whales and the former owners will have missed the opportunity to have huge profits and true success beginning with one ostensibly hard task…change. More prominent kings taking territory inch-by-inch often conquers small kings. The recipe for success is not that complicated; however, the right ingredients are hard to find with so many vendors that have built their business on a firm foundation of bullshit. However, these unscrupulous vendors know that a fair amount of car dealers and managers seem to love the smell. Arrogance and ignorance go hand-in-hand as much as bullshit and the car business. The dealerships who cease to be seduced by the “wining and dining vendors” will have a chance at finding the right ingredients to accomplish the two primary goals of being a car dealer, conquest customers & customer retention. How this is accomplished evades many in our industry. The positive side of what I have seen in spending time in almost 1,000 new car stores the past decade, is that there are some rising stars. There are some who get it. This is one of the natural rules of capitalism. Some of the influential dealers will lose relevance, and those who are just starting in the business will dominate it in the next decade. I know many managers in dealerships far more talented than I at managing people, inventory, and selling customers. However, I’ve become a proven expert at identifying how to reach new organic customers (conquest) and often triple the customers coming back to a dealership (retention). It involves ever-evolving data sources and creative mediums. It consists of investing in multiple symbiotic initiatives that work. It requires effective long-term branding. Its also about educating my clients as to where they are getting screwed. Where do I get this wealth of information? I am always learning from in-depth, consistent analysis of the market and an elite group of owners/managers who are the real wizards of our industry. I grew up in the retail automotive industry and have had the pleasure of knowing some of the greats and some of the jokes. I’ve held almost every position in medium and large dealerships. My career in and around this industry spans 25 years. It has been my privilege to serve some of the smartest owners in this industry and has learned so much in the process. I wrote this piece as I can no longer stand to see car guys I love hemorrhage because unscrupulous vendors, consultants, and managers are delivering antiquated, ineffective services that ultimately result in a dealership slowly dying by suicide.

Sean Hoffman is the CEO of ProfitMotors? (www.profitmotors.com)