Legacy businesses that have an established, long-term customer base and a specific way of operating face the challenge of doubling down on their successes and core competencies now, while also making room to explore future growth.
That is according to James Ricci, President of Roy Foss Automotive Group. He told Canadian auto dealer he is looking at this situation through the lens of a 36-year-old, third-generation president of a 61-year-old business his grandfather started, and wonders what the next 60 years will be like.
“What’s triggered my interest is that there is talk about changes (in the industry),” said Ricci. “A lot of the OEMs are looking at alternatives to the traditional dealership model. There’s a lot of talk about the agency model. [And] there’s a lot of investment being made by the dealers and the OEMs in capabilities to empower the transition to electric vehicles.”
Furthermore, he added, there is a push by all manufacturers to look at the dealer sales and service agreement and use electric vehicles in some examples to do things differently.
“When you layer on the challenge of finding our labour right now, specifically skilled technician labour, there’s a lot of question marks to the business,” said Ricci. “I’m a student of business and I’m thinking: what’s our next legacy going to be?”
What is/will be the role of dealers, he wonders. “There’s a lot of people that have predicted the end of the dealership model in the car business, and I completely disagree with that.”
Ricci also has a specific interest in dealerships that have invested in their communities and have invested in millions of dollars worth of inventory.
“They have relationships and these are huge assets for OEMs in general and a competitive advantage for many of them,” said Ricci. “I see the value that dealers can have, but on the other hand I also see [that] we have to think about how we’re going to pivot and where we’re going to be investing to make the purchase experience as convenient and as frictionless as possible, and just evolve as technology evolves.
It’s pretty open-ended for us and that’s how I’m kind of thinking about it.”
What traditionally “butters the bread” of dealerships may not be the driver of future growth, he noted.
“If you overly focus on a future that is not ready to unfold, then you neglect your responsibilities to manage the existing core business of what’s generating value today,” said Ricci. “But at the same time, if you are exclusively focused on the short-term and the immediate-term, and you are not thinking about how to allocate capital in smart ways to invest and grow long-term, I think you leave yourself vulnerable (to new competition from disruptors).”
