By Dave Zuchowski, Chief Strategy Officer, Unite Digital, LLC
Excerpted from Dave Zuchowski’s recent panel appearance on February 8 at the STAR (Standards for Technology in Automotive Retail) General Session
Dealers, by nature, are tactical problem-solvers who react exceptionally well to short-term obstacles or challenges. They are incredibly responsive, adaptive and resilient – entrepreneurial traits that have enabled the retail automotive model to survive and largely prosper for 100-plus years. Yet in recent years, the industry has been plagued by questions, is the dealer model here to stay in the face of technology disruptors and direct sales threats?
In the first quarter of 2020, we were hit with perhaps the most significant disruption our industry has experienced. In the face of an emerging COVID crisis, dealers thrived and, after an early stumble, many actually reported record profit levels. When presented with a burning platform, they didn’t hesitate to leap, and they landed solidly on both feet. This was accomplished by deploying critical business practices on the run in a new model that, if sustained, will materially alter automotive retailing going forward.
This new model can provide a stable foundation for the next 100 years through:
- Embracing technology rather than resisting it – like lead optimization, online-offline retail integration, digital retailing and customer retention and loyalty strategies
- Welcoming change and willingly walking away from the deeply ingrained status quo
- Right-sizing the overall dealership footprint and lowering facility costs
- Reducing marketing expenditures and creating a much more targeted, personalized and customizable shopping journey
- Streamlining the organizational structure and eliminating or consolidating non-value-added positions that support the negotiation model consumers already dislike
- Lowering inventory levels and increasing sales velocity while significantly reducing holding costs and building/land requirements
- Slowing turnover dramatically and increasing employee satisfaction through an infusion of fresh talent attracted to a modern retailing model with better compensation as well as expanded and more rewarding roles and responsibilities
- Increasing customer satisfaction, owner loyalty and retention by significantly elevating the ownership experience at every touchpoint (as customers have come to expect from Amazon, Netflix, Instacart and Uber)
- Improving operating margins by transitioning from a push to pull model and simply following the basic laws of supply and demand
If necessity is the mother of invention, then the pandemic gave birth to the future face of automotive retailing – from facility footprint to organizational structure, staffing levels, pay plans, inventory management, marketing strategy, asset management and operating processes. All while contributing to some of the best operating results dealers have ever experienced. The disruption the industry feared has happened and dealers more than survived, they thrived. The challenge now will be for dealers and OEMs to continue to lean into these changes and not get sucked back into their comfort zones, awaiting the next crisis to remind us all of how today’s model needs to change.
Dave Zuchowski is the chief strategy officer for Unite Digital. He is an accomplished automotive industry veteran with more than 40 years of broad leadership experience in retailing, sales and field operations among the OEM, retailer, agency and solution provider sectors. Dave most recently served as president and CEO of Hyundai Motor America, executive vice president of sales at Hyundai, senior vice president of Dealer Operations at Mazda North America and national director of Field Operations at Ford Motor Company. Additionally, Dave has served as the chief commercial officer for the Automotive Broadcasting Network (ABN) – one of the largest automotive digital signage companies in the United States, and chief investment officer for the BW Automotive Group – a ten-store dealer group doing business with seven brands across four states.