When the Fed Bails Out the BIG 3...Who Bails Out the Dealers?
When the Fed Bails Out the BIG 3...Who Bails Out the Dealers?
make an investment in retrofitting the new designs and displays into their current facilities, adding expense and eating up operating capital. Many of the new dealerships followed the “Big Box” concept of other retailers, multi level showrooms, parking decks, high tech, and lots of land. The monthly expenses were staggering so the business model had to insure high volume. This was also a function of the publicly held dealership groups that emerged in the mid 90ʼs when Wayne Huizenga , realizing the
mistake of the ill conceived Autonation Used Car Mega Store concept, started to collect large family owned new car dealership groups like Maroone of South Florida. Wall Street embraced the concept which was a mystery to me at the time, but knowing what we know now about the brain trust of Wall Street, I am no longer surprised. With the recent demise of the Bill Heard organization of #1 Volume Chevrolet stores, a lot has risen to the surface. I ran Chevrolet stores that competed in markets where Bill Heard sold Chevroletʼs. They built their business on misleading “in your face” advertising, showroom intimidation, and a focus on the secondary finance customer, may he rest in peace. Building a loyal following of regular repeat and referral customers was not in
their game plan. They located their dealerships in high growth-high turnover areas of the country and felt that their were enough new “bodies” moving into their market that it was needless to win the Miss Congeniality contest. Because it is difficult to quickly
ratchet down the expenses in the dealership business, particularly with an attitude of “If you build it they will come”, Bill Heard succumbed to “If we build it we will go” and go they did...out of business. The Big 3 will come out of this in some shape or form;
redundant products will be pulled, the union will get realistic, and there will be better more fuel efficient vehicles. Dealerships, however, will continue to drop like flies which will be beneficial to those that remain, as long as the manufacturers donʼt fill the
vacancies. The dealership business will have to change radically if they expect to have a future in the customer and employee satisfaction arena. The levels of staff needed to sell a car today is burdensome, laughable, and ineffective. As a result, nobody makes any money, causing discontent and turnover. Our company shops Auto Shows and Retail Dealerships, expecting nothing and not being disappointed. To buy a car, you are herded into a specific parking area and entrance door, met by a pretty “greeter” with a clipboard (Employee #1), handed over to a “product specialist” (Employee #2), turned over to a “closer” (Employee #3), a “better closer” is brought in (Employee #4), introduced to the “delivery coordinator” (Employee #5) who will try to sell you accessories and invisible protectors while reviewing manuals with you. You then meet the “Finance Manager” (Employee #6) who will prepare the contracts and applications while selling you extended warranties, GAP insurance, Accident and Life insurance and whatever is “on the menu”, then to the delivery department (Employee #7) where the operation of the vehicle is explained to you and you are encouraged to give the dealership a “completely satisfied” score on the survey. Once you are home you will be called by the “customer relations manager” (Employee #8) who will ask you once again if you are completely satisfied. How did the business evolve into this mess where eight people do one job. Why is every business focused on productivity except these guys. No wonder the facilities are so big, they need to provide a roof over all of these heads. I ran multi-franchise auto dealerships as a Vice President and General Manager for over 12 years. I did not subscribe to the above structure but I still could have improved our operation. We had a large store selling almost 40,000 vehicles per year at our peak. I have many friends who are still in the business doing the same things they did years ago, only with a few less balloons and benefits. Occasionally I have the desire to get back in the car business and I have developed a plan in my head on how I would structure the business and the processes I would adopt. When I discuss my plan to reenter the car business with my wife, who spent almost 20 years in the business, she threatens to leave me. So I have no choice but to share it with you. The concept is to have a seamless, professional experience for the customer while providing the training and compensation to attract a higher qualified, more educated employee. If eight people can be trained to perform their individual tasks, why canʼt one person learn all eight tasks? If you added the compensation along with the individual health benefits for the eight employees there is enough to compensate the employee handsomely as well as saving money overall. The Sales Professional will have the authority to approve the deal and the qualifications to perform the Finance tasks. The process helps the sales person gain rapport while building a relationship with the customer, but most importantly you distinguish your dealership from the competition. As a bonus, the word of mouth advertising will be substantial as you have exceeded the customerʼs expectations and it just makes sense. The bi-product of this approach is that your staff will stay sharper as they are busier and more productive, they will earn an above average pay, their hours will be shorter, the business will be easier to manage, turnover will be reduced, and you will have a steady supply of quality individuals wanting to work for you. This is my idea for the survival of the retail side of the auto industry. If you have any feedback, write me at gsilverman2@mac.com.
When the Fed Bails Out the BIG 3Who Bails Out the Dealers - To learn more about this author, visit Gary Silverman's Website.
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The newer locations had to adhere to strict consistency in the design of their locations and the older points had to
make an investment in retrofitting the new designs and displays into their current facilities, adding expense and eating up operating capital. Many of the new dealerships followed the “Big Box” concept of other retailers, multi level showrooms, parking decks, high tech, and lots of land. The monthly expenses were staggering so the business model had to insure high volume. This was also a function of the publicly held dealership groups that emerged in the mid 90ʼs when Wayne Huizenga , realizing the
mistake of the ill conceived Autonation Used Car Mega Store concept, started to collect large family owned new car dealership groups like Maroone of South Florida. Wall Street embraced the concept which was a mystery to me at the time, but knowing what we know now about the brain trust of Wall Street, I am no longer surprised. With the recent demise of the Bill Heard organization of #1 Volume Chevrolet stores, a lot has risen to the surface. I ran Chevrolet stores that competed in markets where Bill Heard sold Chevroletʼs. They built their business on misleading “in your face” advertising, showroom intimidation, and a focus on the secondary finance customer, may he rest in peace. Building a loyal following of regular repeat and referral customers was not in
their game plan. They located their dealerships in high growth-high turnover areas of the country and felt that their were enough new “bodies” moving into their market that it was needless to win the Miss Congeniality contest. Because it is difficult to quickly
ratchet down the expenses in the dealership business, particularly with an attitude of “If you build it they will come”, Bill Heard succumbed to “If we build it we will go” and go they did...out of business. The Big 3 will come out of this in some shape or form;
redundant products will be pulled, the union will get realistic, and there will be better more fuel efficient vehicles. Dealerships, however, will continue to drop like flies which will be beneficial to those that remain, as long as the manufacturers donʼt fill the
vacancies. The dealership business will have to change radically if they expect to have a future in the customer and employee satisfaction arena. The levels of staff needed to sell a car today is burdensome, laughable, and ineffective. As a result, nobody makes any money, causing discontent and turnover. Our company shops Auto Shows and Retail Dealerships, expecting nothing and not being disappointed. To buy a car, you are herded into a specific parking area and entrance door, met by a pretty “greeter” with a clipboard (Employee #1), handed over to a “product specialist” (Employee #2), turned over to a “closer” (Employee #3), a “better closer” is brought in (Employee #4), introduced to the “delivery coordinator” (Employee #5) who will try to sell you accessories and invisible protectors while reviewing manuals with you. You then meet the “Finance Manager” (Employee #6) who will prepare the contracts and applications while selling you extended warranties, GAP insurance, Accident and Life insurance and whatever is “on the menu”, then to the delivery department (Employee #7) where the operation of the vehicle is explained to you and you are encouraged to give the dealership a “completely satisfied” score on the survey. Once you are home you will be called by the “customer relations manager” (Employee #8) who will ask you once again if you are completely satisfied. How did the business evolve into this mess where eight people do one job. Why is every business focused on productivity except these guys. No wonder the facilities are so big, they need to provide a roof over all of these heads. I ran multi-franchise auto dealerships as a Vice President and General Manager for over 12 years. I did not subscribe to the above structure but I still could have improved our operation. We had a large store selling almost 40,000 vehicles per year at our peak. I have many friends who are still in the business doing the same things they did years ago, only with a few less balloons and benefits. Occasionally I have the desire to get back in the car business and I have developed a plan in my head on how I would structure the business and the processes I would adopt. When I discuss my plan to reenter the car business with my wife, who spent almost 20 years in the business, she threatens to leave me. So I have no choice but to share it with you. The concept is to have a seamless, professional experience for the customer while providing the training and compensation to attract a higher qualified, more educated employee. If eight people can be trained to perform their individual tasks, why canʼt one person learn all eight tasks? If you added the compensation along with the individual health benefits for the eight employees there is enough to compensate the employee handsomely as well as saving money overall. The Sales Professional will have the authority to approve the deal and the qualifications to perform the Finance tasks. The process helps the sales person gain rapport while building a relationship with the customer, but most importantly you distinguish your dealership from the competition. As a bonus, the word of mouth advertising will be substantial as you have exceeded the customerʼs expectations and it just makes sense. The bi-product of this approach is that your staff will stay sharper as they are busier and more productive, they will earn an above average pay, their hours will be shorter, the business will be easier to manage, turnover will be reduced, and you will have a steady supply of quality individuals wanting to work for you. This is my idea for the survival of the retail side of the auto industry. If you have any feedback, write me at gsilverman2@mac.com.
When the Fed Bails Out the BIG 3Who Bails Out the Dealers - To learn more about this author, visit Gary Silverman's Website.
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