Are OEM direct-to-consumer sales platforms killing dealer innovation?

The STAR Standard is a standard for data exchange between OEMs and the vendor community. Its committee is made up of OEMs, vendors, and soon it will also include key members of the auto dealer community. On the latest episode of Auto Marketing Now, host Brian Pasch, founder of PCG Companies and BPE Enterprises, shares some of the excerpts from his recent presentation to the STAR Standard Committee in Las Vegas, during the 2022 NADA Show. 

The idea behind adding auto dealers to the STAR committee is to answer the question — How can we create standards to make software interoperability easier and faster? For years, auto dealers have been frustrated trying to fill gaps in innovation. Many companies out there operate siloes and are not forthcoming with their data. As a result, new companies are partnering with OEMs to provide end-to-end solutions, reducing the headaches of software interoperability. Pasch’s presentation sought to address this by supporting the dealers’ choice for the in-store sales process while giving OEMs more access to the data that they need.

General Motors and Ford Motor Company have already direct-to-consumer EV sales via national websites. Ford specifically, said dealers will sell vehicles at MSRP and receive a fixed commission, like agency models. Pasch challenges this framework. He wonders if OEMs are oversimplifying the consumer’s ability to configure a car online with many options.

This creates a problem for auto dealer groups that have developed their own online sales platforms. Lithia has Driveway and Asbury has Clicklane just to name a few. This begs the question — Should OEMs be involved in the sales process at all?

Ultimately, Pasch believes that OEMs want a fuller picture of the branded customer experience, and it can be achieved through the right framework, while preserving the dealers’ choice for the in-store sales process. Dealers should have the ability to choose the most effective software that best aligns with their company culture.

Pasch also challenges the likelihood that one company can perform and innovate technology at the rate needed to sustain thousands of stores in the dealer network. Pasch thinks it’s unrealistic. That’s why dealer choice needs to be re-inforced and fought for now. There is a middle ground to reach, but OEMs and auto dealers need to rebuild trust.

How can this happen? Pasch’s framework includes:

• The pace of cooperation and interoperability must increase
• Comparing ourselves to Tesla or Carvana is dangerous
• Binary thinking could decimate automotive technology investments and competition.
• Dealers, OEMs, and vendors must focus on their strongest arguments to rethink the future of automotive retail
• We must have voices that can speak the things that must be said and unite parties to support the needs of modern retailing

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