WHY UNDERSTANDING THE ROLE BOTH OEMS AND DEALERS PLAY IN THE AUTO RETAILING PROCESS CAN HELP BOTH PARTIES ACHIEVE QUALITY RESULTS
Dealers often, and quite rightly, look at the vehicle purchaser as their customer. The OEMs have probably always looked at the vehicle purchaser as their customer as well, if for no other reason than for warranty administration and recalls.
This question of who owns the customer came up as part of the manufacturer panel discussion at the 2014 CADA Summit, just prior to this year’s Canadian International AutoShow.
Two of the three OEM panelists took the perspective that the customer didn’t belong to either the manufacturer or the dealer but was shared by both parties. To the delight of a primarily dealer populated audience, the third manufacturer panelist indicated that the he viewed the dealer as his customer and the vehicle purchaser as the customer of the dealer.
It could be argued however that increasingly, the vehicle purchaser is in fact a shared customer of both the dealer and the manufacturer, especially as the symbiotic relationship between the dealer and the manufacturer interfacing with the consumer has become more intertwined than ever before. This has been further accentuated by the increasing integration of technology both within and outside of the vehicle.
As the Internet and social media are becoming increasingly used as tools to connect with consumers, the business of selling and servicing vehicles has moved beyond the showroom and service bays and into the virtual world of bits and bytes.
As a result, the cost and effort of acquiring, monitoring, and responding to customers using these new tools, in addition to the traditional physical dealership and human resources can at times appear overwhelming.
ONLINE COLLABORATION
It could be said that it is online where the manufacturer can really assist the dealer thanks to the standardization of online products such as the “build your own vehicle” tools available on most OEM websites.
As a result of having access to such tools, consumers can then go to a dealership having a pretty good idea of the cost of the vehicle that they want, the options that they want, trade-in value or down payment required as well as the cost of leasing or financing the vehicle. In many cases, before a user can obtain their trade-in value they have to provide information such as name, contact details, postal code, type of vehicle they’re looking for and a time horizon for purchasing. In my own case I wasn’t surprised to receive a phone call the following day from the dealer closest to me seeking to work with me on my new vehicle purchase. This is but one very simple example of how technology and the OEM, working closely with the dealer can ensure that they collectively try to keep their shared customer “within the family.”
Furthermore, if you look to the approach of a shared customer between the OEM and the consumer you can appreciate how a good used car manager can assist both parties. With the average vehicle age in Canada currently residing at approximately 9.3 years, most original owners that trade in after four years are doing so with vehicles that still have plenty of life left in them. Increasingly, manufacturers are setting up “Certified Pre-Owned (CPO)” programs with their dealers to take these quality trades, servicing them (using OEM parts) and providing a warranty before making them available for retail sale again.
HIGHER QUALITY
With a good used car manager, a dealer should be able to sell lots of CPO units that are generally viewed by consumers as being a higher quality used vehicle, available exclusively through a franchised dealer, as opposed to an independent used vehicle retailer.
These CPO sales can result in a decent revenue stream for the dealership, given that there is generally larger gross on used vehicles than new ones. The added benefit with CPO is that both the dealer and the manufacturer also garner a new customer — one who eventually may come back and purchase a brand new vehicle from the same dealership.
The respect for, and careful cultivation of the vehicle purchaser by both the OEM and the dealer is key to a successful long term relationship with those consumers that purchase your vehicles. In a hyper-competitive automotive marketplace, both vehicle manufacturers and dealers understand that the easiest customer to get is the one that you already have. As a result, both the OEM and the franchised dealer would seem to have their own separate and distinct roles to play in not only meeting, but exceeding, the expectations of their customer. It would therefore appear that those manufacturers and dealers that collectively understand this reality are the ones who have the greatest opportunity to make real inroads when it comes to market share.
