Dealers are still enjoying tremendous profits despite the economic headwinds and inventory constraints. But with the changing technological landscape and the evolution of consumer needs, is the industry ready for the car market of tomorrow? On this episode of Inside Automotive, host Jim Fitzpatrick is joined by Shawn Vaughan, owner and CEO of Vaughan Automotive in Texas, to share his insights on developing issues in retail automotive.
Vaughan notes that his two Toyota dealerships have been performing exceptionally well over the last few years, both on the dealer and supplier sides. While the sales process became considerably easier for retailers during the COVID-pandemic due to favorable supply-to-demand ratio, he also explains that his sales team has maintained its ability to negotiate deals and identify consumer needs. This is because Vaughan Automotive has prioritized sales volume since the start of 2022, aiming to reach 100% turn on its vehicle stock.
Many dealers sold their vehicles above MSRP during the pandemic, reasoning that customers were able and willing to pay the high prices. However, Vaughan strongly disagrees with this sentiment, explaining that retailers should focus on doing the right thing for their consumers rather than exploiting the temporary economic conditions which have made car buyers so desperate. To grow profits, he instead recommends that storeowners increase the value of their vehicles through accessories and addendums. “These things must have value if we’re going to add something to the price of the car,” he explains.
On the subject of electric vehicles, Vaughan notes that a one-size-fits-all approach will fail to speed up the transition from gas-powered cars. He notes that where his company’s outlet in Boerne has struggled to build interest around EVs, as it serves a rural market, its storefront in Houston has succeeded since it sells to urban drivers with better access to charging infrastructure. Instead of forcing their franchisees to adopt the same electrification strategies across all locations, Vaughan recommends OEMs take a segmented approach, prioritizing EV sales in areas where demand actually exists.
One of the automotive sector’s least discussed issues is the slow monopolization of dealership groups. As major organizations such as Lithia Motors and AutoNation collect more and more storefronts under their corporate umbrella, Vaughan believes the car market will begin to lose access to entrepreneurial and creative talent. This could become especially troublesome as the industry’s aging dealer body begins to leave the business, leaving no capable successors in charge. “The manufacturers, I think, need really good, young dealers that are forward-thinking, that are thinking about the future and how we’re going to meet the demands of our consumers in a changing world,” he explains.
