Insights from South Africa

All we seem to hear lately are moans and groans (not saying they’re not warranted), so it’s refreshing to read thoughtful positive comments on things we can do in the auto industry to move forward.

Brand Pretorius, CEO of McCarthy Ltd., South Africa’s leading automotive group, recently spoke at Automechanika South Africa and shared insights that are surely applicable in emerging markets around the world.

General issues Pretorius thinks should be addressed:

• Dealer network rationalization, to ensure competitiveness of dealerships
• Better business terms between manufacturers, importers and local dealers
• Margin restoration on new/used vehicles, and parts and service

And more importantly in my view, some direct suggestions on what dealers need to do to survive today and, in the longer term, prosper:

• More efficient processes and operating systems
• Aggressive cost-cutting measures
• An improvement in staff productivity
• More focus on supplementary income from finance and insurance
• Increase level of customer retention
• Increase level of after-sales contributions

This ties directly into some recent posts on what auto dealers can do in times of crises, where the focus is on how process improvements paired with a good DMS (not necessarily ours can help a dealer move ahead.

Tags: Brand Pretorius, McCarthy Ltd, Automechanika South Africa, Automechanika, automotive, auto industry, automotive industry, DMS, Autologica

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What can auto dealers do during world crises? (Part 1)

The global financial crisis is severely affecting the automotive industry. No news there. But in difficult times it is vital to center efforts on three main imperatives:

• Focus on current customers

• Mind costs

• Improve productivity and efficiency

We can driill down and translate this into 5 five specific objectives:

1. Retain customers

2. Purchase parts intelligently

3. Detect unsold parts and vehicles

4. Increase service efficiency

5. Evaluate the dealership performance in detail

A good DMS (Dealer Manager System) is key to providing the dealer with specific and vital information in order to work on these targets.

Here is a list of reports a good DMS should provide to help you in this process.

Target 1: Retain customers

Benefits for the dealer:

• Retain customers

• New sales to current customers

DMS Report that can help:  Customer Segmentation

In times of crisis it’s hard to gain new customers, so it becomes essential to retain your current ones.

If we can achieve a lasting relationship with all of our customers, it will be easier to sell to them again in the future, and much more difficult to lose them.

This will also result in cost reductions since you will require less marketing effort and can achieve a shorter sales cycle.

A good DMS, through its CRM tool, should provide a thorough report of current customers in order to obtain a detailed profile for each, detecting their tastes and needs. It is important to be able to segment customers and create focused marketing campaigns for each segment. A good DMS also lets you generate contacts, send e-mails automatically and follow-up until the sales cycle completes.

DMS Report that can help: Sales Trends

Your DMS should offer a report which lets you evaluate customer sales period by period (monthly, bi-monthly, quarterly, yearly).

You´ll be able to see purchase habits and frequency, and can estimate the best time to contact your customers and offer them special promotions or discounts so as to motivate them towards a purchase.

To be continued…

Tags: automotive, auto industry, automotive industry, DMS, dealer management systems, auto dealer software

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Smaller auto dealers disappearing

The main reason: Outdated processes and software systems

Around the world, there is a clear and significant move away from traditional, one-store dealerships (which are mainly family-owned) towards large multi-dealer groups. 

To see a very straightforward example, let’s look at Canada.

There are a total of 3,000 new car dealerships in Canada. The number of dealerships with individual principal owners has shrunk by 1,000 during the past decade. Today some 85 groups own 900 dealerships. And this trend looks to continue.

The same has been happening in the U.S., where the average public dealer company has gone from 22 to 150 stores over the ten years.

Auto manufacturers are encouraging their best dealers to buy other outlets, particularly underperforming ones. And this worldwide trend towards larger groups will accelerate, despite profitable dealerships under family ownership.

Many manufacturers want to reduce their dealership base and increase volume per franchise, which would give store owners more money for investment and improvement of brand image.

As industry experts are saying:

• In today’s world, stores need to become more sophisticated in their management, which is easier for larger groups with more capital.
• Traditional family dealerships use legacy systems and processes that are the same today as 20-30 years ago. The days of success with such methods are numbered.

What you can do

• The right DMS is a big step towards professionalizing a dealership.
• But a system alone will not suffice. You need your DMS to be aligned with industry best practices, and your DMS provider to offer help in implementing these best practices as well as efficient processes using the software as a backbone.

Tags: auto industry, DMS, dealer management systems

Dealer consolidation trend in Canada

There is a significant move away from traditional, one-store dealerships (which are mainly family-owned) and towards large multi-dealer groups in Canada.

There are a total of 3,000 new car dealerships in Canada. The number of dealerships with individual principal owners has shrunk by 1,000 during the past decade. Today some 85 groups own 900 dealerships. And this trend looks to continue.

The same has been happening in the U.S., where the average public dealer company has gone from 22 to 150 stores over the past decade.

Comments from Dennis DesRosiers of DesRosiers Automotive Consultants:

• It won’t be long before dealer groups control more than 50 per cent of Canada’s annual new vehicle sales (1.65 million units).
• Auto manufacturers in Canada are encouraging the best dealers to buy other outlets, particularly underperforming ones.
• In today’s world, stores need to become more sophisticated in their management, which is easier for larger groups with more capital.

 Comments from Vigen Ghazarian of Cormark Securities:

• Some manufacturers want to reduce their dealership base and increase volume per franchise, which would give store owners more money for investment and improvement of brand image.
• This trend to groups will accelerate, despite profitable dealerships under family ownership.
• Traditional family dealerships use legacy systems and processes with sales-force productivity that are the same today as 20-30 years ago. The days of success with such methods are numbered.

Read this here.

Tags: auto industry

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NADA 2008 Highlights: What makes a great leader? (Part 3)

If you missed NADA 2008, this series of articles recaps the major issues covered at this year’s event.

The National Automobile Dealers Association represents 19,700 new car and truck dealers. Every year, NADA organizes the world’s largest convention for auto dealers, where thousands gather to see the latest products and services geared to dealerships, attend workshops on best practices, and hear industry leaders. 

This year’s event was in beautiful San Francisco and spanned 80,000 m2 (700,000 square feet), included 700 exhibitors and 36 workshops, and received 24,000 attendees from all over the world.

Focus on Leadership

A major focal point of the NADA 2008 workshops was leadership, more to the point: what it means to be a leader, and how we can foster a suitable environment within our company so that leaders can flourish.

Several straightforwardly applicable lessons stand out:

Lesson #1 was: Be slow to hire, quick to fire

Lesson #2 was: Our people can and will drive growth

And today…

Leadership Lesson #3: What great leaders do

One of the keys to successfully run companies is the leader’s ability to build teams, and to motivate the entire workforce.

Great leaders are a wellspring of positive energy, and naturally inspire all those around them. Uninspired leaders breed uninspired employees, a “sleepy” culture, and tend to focus on “maintenance” issues instead of “momentum” issues.

Great leaders know that they need all hands on deck in order to get things done, and are convinced of the need to tell everyone where they’re going and why, and what each person needs to do in order to get there.

Great team leaders have a vision for their department, something specific and measurable, and in line with the company’s objectives.

Great leaders sustain momentum after the initial launch of key initiatives, persistently keeping everyone energized and focused on the right issues.

Great leaders renounce excuses, and don’t allow their team members to use them to explain why things don get done.

Great leaders are catalysts and enablers, not micro-managers. They facilitate decision-making, encourage risk-taking and insist on bi-directional feedback.

Other NADA Highlight posts:

• DMS Panel
• Should I change my DMS? (Part 1)
• Should I change my DMS? (Part 2)
• What makes a great leader? (Part 1)
• What makes a great leader? (Part 2)
• What makes a great leader? (Part 3)

Tags: leadership, hiring, training, NADA 2008

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NADA 2008 Highlights: What makes a great leader? (Part 2)

If you missed NADA 2008, read this series of articles that recap the major issues covered at this year’s event.

This year’s event was in beautiful San Francisco and spanned 80,000 m2 (700,000 square feet), included 700 exhibitors and 36 workshops, and received 24,000 attendees from all over the world.

Focus on Leadership

A major focal point of the NADA 2008 workshops was leadership, more to the point: what it means to be a leader, and how we can foster a suitable environment within our company so that leaders can flourish.

Along this vein, among the standout courses were Paul Cummings’s “The Halo Effect of Powerful Leadership” and Dave Anderson’s “Identify and Develop the Eight Must-Have Qualities of Effective Leaders”.

Several straightforwardly applicable lessons stand out:

Leadership Lesson #2: Our people can and will drive growth

Successful companies are the ones that fulfill these six basic needs that people in general all have:

Certainty. We all want to experience a sense of safety, of security, at the company we choose to work in. Possible pitfalls: certainty can sometimes breed complacency, as well as boredom.

Excitement. We also like to be surprised, which helps energize us to rally around common goals and projects.

Significance. We want to be recognized for what we do, and to feel that what we do truly matters. No one likes to feel starved for recognition.

Connection. We all want to feel cared for by, and connected to, the company where we’ve chosen to work. This also holds especially true, and especially so, regarding the people we work with everyday.

Growth. People need to grow, as do companies. Do we, as a company, have a growth program for our people? If we do, does everyone know about it? Is the plan incrementally defined?

Contribute past ourselves. The best people (and if eve taken the time to choose correctly we will have the best people) have a natural tendency to go above and beyond the line of duty. But that will happen only in an environment where everyone feels that the previous five conditions are being met.

Other NADA Highlight posts:

• DMS Panel
• Should I change my DMS? (Part 1)
• Should I change my DMS? (Part 2)
• What makes a great leader? (Part 1)
• What makes a great leader? (Part 2)
• What makes a great leader? (Part 3)

Tags: hiring, training, Paul Cummings, Dave Anderson, NADA 2008

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NADA 2008 Highlights: What makes a great leader? (Part 1)

If you missed NADA 2008, read this series of articles that recap the major issues covered at this year’s event.

The National Automobile Dealers Association represents 19,700 new car and truck dealers. Every year, NADA organizes the world’s largest convention for auto dealers, where thousands gather to see the latest products and services geared to dealerships, attend workshops on best practices, and hear industry leaders. 

This year’s event was in beautiful San Francisco and spanned 80,000 m2 (700,000 square feet), included 700 exhibitors and 36 workshops, and received 24,000 attendees from all over the world.

Focus on Leadership

A major focal point of the NADA 2008 workshops was leadership, more to the point: what it means to be a leader, and how we can foster a suitable environment within our company so that leaders can flourish.

Along this vein, among the standout courses were Paul Cummings’s “The Halo Effect of Powerful Leadership” and Dave Anderson’s “Identify and Develop the Eight Must-Have Qualities of Effective Leaders”.

Several straightforwardly applicable lessons stand out:

Leadership Lesson #1: Be slow to hire, quick to fire

Companies need to take ample time in finding and selecting new personnel.

It helps to standardize the entire recruitment process. If we can determine the ideal talent and skill sets for every role to be filled, and then perform tests, interviews and other steps in the process accordingly, we have a much greater chance of hiring the right person for each position.

One of the bigger mistakes managers make when hiring is not taking enough time to interview potential employees. If you think about how along people will be with us, this initial investment is time well spent; we should make the effort to do it right instead of trying to push through it as fast as possible.

Once someone is chosen, we need to have a plan in place to train new hires adequately and consistently not only at the beginning of their careers, but for their entire lifetime within the company. This has multiple positive effects beyond professionalizing our team: it is a great motivator, and creates loyalty to the company because people understand that they are cared for.

As a corollary, we need to be as swift as possible to fire someone when we detect that they do not fit within the company’s mission, values and standards. Most companies tend to put this of as long as possible, which is natural given the negativity involved.

But is firing a negative act?

Firing quickly is a positive step for the company, true, but it is also good for the employee. Someone stuck in a job they are not right for cannot be happy: they don’t like what they are doing, and they know that they will not be able to advance within the company.

Unhappy people suck the energy from those around them, and lower morale across their department. Letting them go gives them the chance to find a job they can perform with enthusiasm and dedication.

Firing quickly also sends a message that team leaders are on the ball. Not doing so tells people that leaders are either unaware of the problem, or are too wishy-washy to do anything about it.

Other NADA Highlight posts:

• DMS Panel
• Should I change my DMS? (Part 1)
• Should I change my DMS? (Part 2)
• What makes a great leader? (Part 1)
• What makes a great leader? (Part 2)
• What makes a great leader? (Part 3)

Tags: hiring, training, Paul Cummings, Dave Anderson, NADA 2008

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NADA 2008 Highlights: Should I change my DMS? (Part 2)

If you missed NADA 2008, the world’s premier event for auto dealers, read this series of articles that recap the major issues covered at this year’s event.

This year’s event was in beautiful San Francisco and spanned 80,000 m2 (700,000 square feet), included 700 exhibitors and 36 workshops, and received 24,000 attendees from all over the world.

Should I change my DMS? (Part 2 of 2)

Renowned DMS expert Sandi Jerome held of one of the more interesting workshops at NADA 2008, focusing on how to dealers can validate the change to a new and better dealer management system.

In part one we talked about why technology typically fails, reasons why a dealer should look at changing their DMS system, and how to know if a new DMS system pays for itself.

The top five issues dealers look at in a DMS

Reason 1: Cost

In general DMS systems are going up 5-10% every year.

But newer DMS systems are beating out the older DMS systems not only with lower monthly software charges, but also because they include many of the services and extras that the older players charge for.

Newer DMS systems don’t charge for proprietary hardware or supplies, as they run on off-the-shelf PCs, servers and printers that most dealers already own. Nor do they have “click” charges for laser printing. In the examples analyzed, a new DMS system can cost up to 65% less than an older system.

A note: One of the big differences with how dealers are staffing their stores is that not too long ago they had no IT staff, whereas today that is not the case anymore, and larger dealers even find the need for an entire IT department.

Reason 2: Manufacturer integration

Dealers need to understand how integrated they really need to be. There are up to fifteen different points of integration between a dealer’s DMS and the manufacturer, depending on the OEM. These include financial statements, parts orders, warranty submissions, recalls, delivery reporting. Manufacturers are working with smaller DMS providers, not just the big two.

Reason 3: All the modules you need

Along with the traditional Parts, Service, Sales, and Accounting/Financials, dealers need a good CRM module as well as F&I. Regarding Payroll, it might be better to look for a third-party solution as you get many more features. And of course, all modules in a DMS need to be integrated.

Reason 4: Multi-company

This is a feature not found in all DMS solutions. A good DMS system will have multi-company functionality in order to allow:

• Individualized and consolidated reporting across all departments

• Individualized and consolidated views of parts, vehicle and customer information

• Parts transfers

Reason 5: Third-party integration

Dealers using third-party add-ons should make sure they can “speak” with their core DMS software.

Dealers have low technology budgets

In general, auto dealers spend much less on technology than other industries. For example, the tech budget of a 200 unit per month, eighty employee dealership will be one third the budget that other industries assign to this area.

Other NADA Highlight posts:

• DMS Panel
• Should I change my DMS? (Part 1)
• Should I change my DMS? (Part 2)
• What makes a great leader? (Part 1)
• What makes a great leader? (Part 2)
• What makes a great leader? (Part 3)

Tags: DMS, dealer management systems, auto dealer software, NADA, NADA 2008

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NADA 2008 Highlights: Should I change my DMS? (Part 1)

If you missed NADA 2008, read this series of articles that recap the major issues covered at this year’s event.

The National Automobile Dealers Association represents 19,700 new car and truck dealers. Every year, NADA organizes the world’s largest convention for auto dealers, where thousands gather to see the latest products and services geared to dealerships, attend workshops on best practices, and hear industry leaders. 

This year’s event was in beautiful San Francisco and spanned 80,000 m2 (700,000 square feet), included 700 exhibitors and 36 workshops, and received 24,000 attendees from all over the world.

Should I change my DMS?

Renowned DMS expert Sandi Jerome held of one of the more interesting workshops at NADA 2008, focusing on how to dealers can validate the change to a new and better dealer management system through a simple step-by-step process:

1. Evaluate current technology
2. Create a technology budget and calculate ROI
3. Understand available technology, mainly newer DMS systems and CRM tools
4. Reduce costs with technology budgets and by avoiding mistakes

Why technology fails

The main reasons surrounding DMS system letdowns at dealerships are staff talent and training, the inability (or perceived inability) to afford a new system, the lack of goals when deploying a new system, and problems with the technology itself.

When a new DMS software solution is deployed, everyone needs to be on board. If just one key manager is not on the same page, the project will fail.

Some of the main drawbacks with traditional DMS systems are their slowness, mainly caused by Windows interfaces grafted on top of old systems, and overall lower productivity compounded by the fact that dealers have more employees than before.

Why a new DMS system?

In addition to today’s imperative of reducing monthly costs, there are many reasons dealers invest in a new dealer management system.

But before making any decisions, dealers should be very clear about what they would like out of their new system. They may want to increase vehicle sales, increase service business, improve customer service and satisfaction, increase staff productivity, and improve collections.

A list should be made, and DMS alternatives graded accordingly in order to find the best fit for the dealership

Special care needs to be taken with staff training as each member has their own unique knowledge and special needs based on their experience. Hands-on on-site training, that is sitting next to the user as they use the system themselves, looks to be the best way to train users. Class training is a less effective method.

Most DMS providers are currently focusing on improving and diversifying their training initiatives.

A new (and good) DMS system pays for itself

Dealers need to learn two vital things:

How to budget for a new IT investment

A new DMS system has initial software costs (licenses and training) plus several associated costs such as hardware upgrades, increased Internet bandwidth. DMS monthly costs include software support; new staff needed to fully leverage the DMS, such as a CRM Manager; and increased printing and phone costs related to increased marketing activities.

How to calculate the ROI on a technology investment

Ms. Jerome provided a blueprint to help dealers understand in what areas they could expect increased revenue thanks to a new and better DMS system, in order to compare against the fixed and initial costs discussed before, and thus calculate the estimated return on investment. The speed with which a dealership can recoup its investment in a new DMS system was eye-opening.

Next: The top five issues dealers look at in a DMS

Other NADA Highlight posts:

• DMS Panel
• Should I change my DMS? (Part 1)
• Should I change my DMS? (Part 2)
• What makes a great leader? (Part 1)
• What makes a great leader? (Part 2)
• What makes a great leader? (Part 3)

Tags: DMS, dealer management systems, auto dealer software, NADA, NADA 2008

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Accountability

´Nuff said.

Reprinted with permission from Savage Chicken.

Tags: accountability, Savage Chickens, Doug Savage

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