Welcome to this episode of The Friday 5 with Steve Greenfield, Founder and CEO of Automotive Ventures, an auto technology advisory firm that helps entrepreneurs raise money and maximize the value of their companies.
Well, I am back out in Las Vegas this week for another automotive conference, and I’m recording this Friday 5 from my hotel room at the MGM Grand.
We have changed up the format of the Friday 5, and instead of reporting on the past week’s Auto Technology deals, I’m going to use our time together to report on some of the biggest news in the industry and the implications to the dealer body.
The ‘Agency’ Model
First up on this week’s Friday 5, more news out of Europe about the evolution of the automaker-dealership relationship towards more of an Agency Model.
The agency model, which is being talked about more and more in the press but is not very well defined, is an evolution away from a more typical franchised dealership model to “agents” who sell products on the OEM’s behalf.
This model is more attractive to the automakers because they see the potential to reduce operating costs and eliminate discounting.
As an OEM moves towards a direct-sales model, the dealers need less expensive facilities – to store fewer vehicles; consumers order the vehicle ahead of time so inventory costs are lower; advertising costs are lower, and there isn’t any competition on price as all vehicles sell at MSRP.
It was just last week on the Friday Five that we reported that outside of the U.S., Mercedes-Benz is moving towards a more direct-sales – or “agency” – model, and is targeting 80% of European sales through this method by 2025.
Mercedes-Benz announced plans to cut 15 to 20% of its dealerships in Germany, and about 10% of its dealerships globally, as part of a broad overhaul of its distribution network.
Last week, we also reported that Stellantis has said it would end all current sales and services contracts with European dealers for its 14 brands, effective June 2023. Stellantis also reported plans that they would allow dealerships to achieve 5% front-end profit on new cars sold.
BMW Group and MINI
This week, news that BMW Group and MINI may switch to an “agency” distribution model in Europe in which the manufacturer sells direct to consumers and dealerships only serve as delivery and service points.
Autohaus magazine reported in March that BMW plans to end its authorized dealer system in Europe in 2024 for MINI and in 2026 for the core BMW brand, and to rely instead on agency sales for new vehicles.
But BMW said the timing for the idea is still under discussion and that while the agency model could be applied to BMW and MINI, it would not apply to the company’s Rolls-Royce ultraluxury brand, which will stay with the franchised dealer model.
We will be keeping a watchful eye on how this dynamic unfolds over in Europe and its implications back here in the U.S. market.
Next up this week, we saw an acquisition in the dealer technology space, as J.D. Power purchased finance and insurance menu and reporting programs from the auto retail software company Tail Light.
Terms of the deal were not disclosed.
Tail Light’s Showcase software offers consumers — in dealerships and online — the ability to pick F&I products and choose a means of financing the vehicle.
J.D. Power also purchased Tail Light’s reporting analytics software, allowing auto retailers to examine their performance and compare it with industry metrics.
About 2,000 dealerships, nearly all of which are franchise operations, use at least one of the two Tail Light products. Roughly 60% of that customer base use the Showcase menu software, with about 40% having adopted the reporting tool.
Through Automotive Ventures, I’m going to be on the lookout for clever dealer technology startups that are solving big dealership needs for our new DealerFund.
If you’re an early-stage company working on a unique solution to help dealers, let me know at email@example.com.
Companies To Watch
So with that, let’s transition to our companies to watch.
Every week we highlight interesting companies in the automotive technology space to keep an eye on. If you read my monthly industry Intel Report, I showcase a few companies each month, and we take the opportunity here on the Friday Five to share some of those companies each week with you.
Today, we have two companies to watch: The Autominer and Serve Robotics.
Our first Company to watch this week is The AutoMiner.
The AutoMiner makes Data Ingestion seamless by putting all of a dealership’s data sources on one platform. No more untangling data feeds to find what you need.
With industry-leading data cleansing, dealers can be certain that your marketing is reaching low-funnel customers who are ready to buy.
Dealers are able to use your own data to easily create customized audiences that you can use on any outbound marketing channel.
The AutoMiner allows dealers to take your targeted marketing to the next level. You can streamline your marketing campaigns using custom-tailored strategies to increase profitability in both sales and service.
Dealers can use the AutoMiner to reach more customers and ease the frustration of shared BDC lists. Now you can create call lists with the most up-to-date and relevant customer data available for each BDC agent.
Check out The Autominer at www.TheAutoMiner.com.
Our second company to watch this week is Serve Robotics.
Why deliver a 2-pound burrito in a 2-ton car?
Serve Robotics is the future of sustainable, self-driving delivery.
Serve Robotics was the first autonomous vehicle company to commercially launch Level 4 self-driving robots.
Their small, sidewalk-based, zero-emissions rovers are designed to serve people in public spaces, starting with food delivery.
They partner with platforms and merchants to help local businesses reach more customers.
Check out Serve Robotics at www.ServeRobotics.com.
So that’s your weekly Friday 5, a quick wrap-up of the big deals in the automotive technology space over the past week.
If you’re an early-stage automotive technology entrepreneur looking to raise money, or an entrepreneur who is trying to decide whether and when they should raise money or sell their business, I’d love to speak with you.
Thank you for tuning into CBT News for this week’s Friday Five, and we’ll see you next week!
Did you enjoy this episode of the Friday 5? Please share your thoughts, comments, or questions regarding this topic by submitting a letter to the editor here, or connect with us at firstname.lastname@example.org.