Month: June 2023

Partnerships all come down to the mindsets of dealers and manufacturers, say industry insiders. 

Steve Finlay | Jun 12, 2023

BIRMINGHAM, MI – Automaker-dealer collaboration is essential and should increase in this new age of auto retailing.

So says Eric Frehsee, president of the Tamaroff Automotive Group, a six-franchise dealership organization based in Southfield, MI, in metro Detroit.

Some automakers collaborate with dealers better than others, he says during an Automotive Press Assn. panel discussion here.

“It depends on the manufacturer,” Frehsee says.

Overall, dealer-OEM relations have improved over the years, but could the collaboration between the two improve?

“Yes,” Frehsee says.

He cites examples. One of them is automakers helping dealers recruit and train auto technicians to work on the growing number of battery-electric vehicles.

“It’s particularly hard for medium and small dealerships to recruit new technicians for EVs,” Frehsee says. “OEMs can be a resource.”

He adds: “The future is scary to some extent. Something like the EV transformation is not something (dealers) can handle alone.”

Data sharing is cited as another area needing stronger dealer-OEM teamwork.

Right now, such information sharing can seem like a one-way street. “In some past cases, we’ve shared our data with OEMs, but they haven’t shared their data with us,” Frehsee says.     

Panelists agree auto industry teamwork is vital to sell vehicles in post-pandemic times that have seen inventory and labor shortages, the growing popularity of EVs and customers increasingly using digital auto retailing tools to shop for and buy cars.

“The last few years have been wildly interesting,” says Matt VanDyke, president of Shift Digital, an auto-retailing technology company, and formerly CEO of FordDirect, an initiative that digitally connects consumers to dealers.

He cites a need for dealers and automakers to work closely to satisfy customers online and in person.

“We see the franchise dealer model as the best way to deliver a world-class customer experience, but it’s tough,” VanDyke says.

Seeing “a dramatic shift in customer expectations” is panelist Jessica Stafford, senior vice president of consumer solutions for Cox Automotive, whose holdings include Autotrader and Kelley Blue Book. “Consumer expectations are high.”

When COVID-related mandates in some states temporarily closed many dealership showrooms, and car consumers subsequently pivoted to online buying, “some progressive dealers were digitally ready, but a lot weren’t,” she says.      

According to a Cox study, the peak of auto customer satisfaction ironically was during the COVID year of 2020.

Today, economic concerns and high interest rates are holding back some would-be car buyers, she says. “But they are still shopping like crazy. We’ve seen the strongest digital traffic in years on Autotrader and Kelley Blue Book, she says.

Likewise, Shift Digital has seen dealer website traffic increase  20%. Yet, sales leads are down 20%.

“It’s the economy,” VanDyke says. “Cars are more expensive, and interest rates are higher.”

Frehsee says his dealership group employs some outstanding veteran salespeople who nonetheless struggle to interact with customers digitally, such as during sales-related text messaging.

That’s why the Tamaroff Group set up a business development department to field customer inquiries by phone, text or email.

But, he adds: “We need to find a way to collaborate with OEMs by using their scale to train dealership people so they embrace digital retailing. It’s not successful to say, ‘We have digital retailing’ and then walk away from it.”

Stafford sees an ideal situation in which automakers and dealers collaboratively offer digital tools to customers.

Such cooperation requires automakers and dealers working more closely together, VanDyke says.

He cites a friction point, though: “Dealers are saying, ‘Leave us alone, we’re doing this,’ and manufacturers are saying, ‘You’re not doing it right.’”

Some dealers fret that automakers’ digital attempts to garner sales leads infringe on their territory.

“But dealers need to understand that brands are going to interact with customers,” VanDyke says.

SOURCE: Wards Auto

Post-COVID digital car sales require dealers and automakers to work together on hybrid strategies to meet customers’ needs.

June 09, 2023 09:34 AM

The post-pandemic digital vehicle sales environment requires dealers and automakers to shift the way they market to and serve customers, said panelists at a recent Automotive Press Association event.

“The environment today, post-COVID really is extremely different than it was pre-pandemic, whether it be inventory or supply chain shortages, labor shortages,” Eric Frehsee, president of Tamaroff Auto Group in Southfield, Mich., said during the June 7 APA panel discussion in Birmingham, Mich.

“The transformation, the digital transformation, the way consumers are shopping with dealers today, it’s changed the entire landscape in our business,” he said. “There’s been a lot of changes with the OEMs in regards to how they work with our dealership network to embrace these changes, whether it be through technology and software, through training.”

Tamaroff, a 55-year-old family-owned business, has six metro Detroit retail dealerships and sells Acura, Honda, Kia and Nissan.

Frehsee stressed the importance of automakers understanding that although the pandemic sparked rapid changes in the industry, the decades-old dealership model will need a lot of time to evolve. Automakers need to lean more on dealers for marketing data, he said.

“We have to figure out better ways to communicate with customers,” Frehsee said. “Just saying ‘buy now’ on your website so that we can tout that we’re able to sell online doesn’t necessarily mean we’re communicating with the customer the way they need to be communicated with.” Tamaroff said his group takes a hybrid approach using digital and in-store customer interactions.

“What we’ve done internally is really focused on streamlining the process and being able to take a hybrid approach where you’ve got a customer that wants to do the research online,” he said. “They want to price out their car, they want to value their trade, giving them the tools and the resources to do that, but then using technology so that when they do come into the showroom floor, because the take-rate on people buying 100 percent online is in the single digits.”

Room for improvement

The post-COVID-19 environment “when cars were selling themselves” created “a lot of bad habits” in the dealerships, Frehsee said.

“A lot of the after-sale, delivery, going over the features and benefits of the vehicle, some of those steps were getting skipped,” he said. “This is a major challenge in our industry when it comes to the retraining and the transformation of EV in the dealerships, because there’s a lack of knowledge and experience and training that exists on our end that frankly, here’s one of the things that we need to lean on the OEM for, and that’s training.”

Veteran salespeople at Tamaroff may have large clienteles but couldn’t adapt to  communicating with customers digitally, he said. In response to that, Tamaroff in May launched a newly built 12-seat business development center to field incoming Internet and phone leads.

Another panelist, Matt VanDyke, a former FordDirect CEO who helped create the automaker’s digital retailing, said “dealers have the opportunity to control a lot of what’s happening by having a pulse on what’s happening in the market and adjusting their digital storefront, their websites.”

Having the right words on a dealer website is essential to optimize online traffic, he added.

“Because so many brands actually kind of have a full shelf of inventory, yet when you go on their websites, you see things like ‘check for availability,’ search for if this car can still be found and customers are smart, they don’t know there’s a 90 days’ supply, but they know there’s plenty of certain models out there,” said VanDyke, now president of Shift Digital, a Birmingham, Mich., digital marketing company.

Data sharing

Collaboration between dealers and automakers also is key, especially when it comes to digital marketing, he said.

“OEMs tend to underestimate the fact that 70 percent of the shopping in the industry is happening on dealer websites,” VanDyke said, noting they’re looking for information on price, payment, inventory and availability.

“You can get into a tunnel mindset as a brand that’s just thinking about your brand.com website and thinking that’s going to solve everything, and it’s not. Beyond that, dealers have to recognize that in addition to them owning their data, controlling it, understanding their data-sharing agreements and things like that, that brands are going to interact with their customers via their branded apps that everybody has to open and lock the doors and now schedule service and do things like that. That’s where the collaboration has to come in, because the technology exists that the customer is going to interact with both entities.”

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The customer experience

Jessica Stafford, senior vice president of consumer solutions for service and technology provider Cox Automotive, said meeting customer expectations “comes down to connecting experiences.”

Cox’s Car Buyer Journey Studies showed customer satisfaction was down in 2022 compared with the previous two years, she said. Financing replaced inventory constraints as the biggest challenge for buyers who also said they prioritize saving time in the car shopping experience.

Giving consumers “personalized, intuitive experiences where they can shop where they want, they can buy where they want” is essential,” said Stafford, who has 16 years of experience in automotive marketing and previously managed search engine marketing and optimization for Coke and Royal Caribbean.

Meeting consumers’ needs includes leveraging technology to provide a simpler buying experience that’s less intimidating and more educational, she said. It also means still including in-store interaction with customers who want a more traditional experience, she added.

Said Stafford: “Ideally, you’re going to be catering to an increasingly divisive type of segmentation of our customers out there and that’s why that concept of meeting them where they are becomes so important. Leveraging the technology that’s out there to enable it and then put this human layer on top, because our business is still a human business, it’s a relationship business, but you can leverage digital tools now to start building the relationship with your buyers even earlier in the process.”

SOURCE: Automotive News

The COVID-19 pandemic greatly accelerated changes in automotive retailing, but it also helped dramatize the need for collaboration between dealers and manufacturers hoping to boost their brands.

Jessica Stafford, senior vice president of Cox Automotive, noted there was a dramatic shift in consumer expectation and perceptions in the first year of the pandemic. The shift compressed what might have been a decade of incremental changes into a single year, noted Stafford during a panel discussion on cooperation among dealers organized by Detroit’s Automotive Press Association. 

Change came quickly

“Consumer expectations evolved 10 years in the first year of Covid,” Stafford said, as dealers and manufacturers raced to install digital sales tools so consumers could shop remotely.

However, brick-and-mortar stores remain a necessary part of automotive retailing, said Stafford. There is continuing need for cooperation between dealers and manufacturers.

“There is no substitute for brick and mortar. We’re still very relevant,” Eric Frehsee, president of the Tamaroff Automotive Group, noted during the panel discussion.

Nonetheless, the environment around automotive retailing has been re-shaped by the pandemic as labor and inventory shortages forced dealers to make sweeping changes in their operations. 

“We have to figure out a better way to connect with our customers,” said Frehsee, who said his group juggled several different strategies as it tried to retain experienced sales personnel, recruit new technicians, and connect with manufacturers to ensure employees were getting the best training on the digital tools.

However, the dealership business model has been around for decades, and it has proven to be resilient as the environment around the automotive business changed during the pandemic. 

Challenges remain for dealers and manufacturers

The pandemic also uncovered some notable weaknesses in the auto industry’s digital transformation, which was expected to appeal to a generation of consumers used to use the internet to order anything online, according to Matt VanDyke, president of Shift Digital.

As dealers have rebuilt their inventories, web traffic on dealer web sites has increased by 20%, VanDyke said. But the number of “leads” generated by the extra traffic have declined by 20%, forcing dealers to adjust their digital strategies. 

VanDyke added early in the pandemic it appeared brands such as Tesla, Rivian and Carvana appeared to have an advantage because of their technology and their direct sales models. 

But the dealer model still works and has some notable advantages in terms of customer service, while the technology of direct sales competitors has not proven to be as effective as many predicted.

While consumers shop extensively online for information before purchasing a vehicle, only a small percentage close the deal without going into the dealership, Van Dyke added. 

Also, the ad campaigns designed by different brands and manufacturers still don’t line up with the day-to-business of dealers. Some 90% of the advertising dollars spent by various brands goes to what VanDyke described as demand creation, while 85% of the customers contact with any automotive brand come after the sale is complete.

“There is a spectrum” between direct sales models and the showroom model. “It’s not one or the other,” Stafford noted.  “You have to meet the customer where they are.”

SOURCE: The Detroit Bureau