Exclusive Interview: Finbarr O’Neill discusses the future of car business, new technology, path to purchase, and his plans after J.D. Power

Finbarr O'Neill

Jim Fitzpatrick sits down with Finbarr O’Neill, APCO/Easycare Board Member and Former President & CEO of J.D. Power. The two talk about new technology in automotive, the future of the car business, the path to purchase, and what his plan is after J.D. Power.


Jim Fitzpatrick: If you’re in the car business, and you don’t know our next guest, then maybe you’ve been living under a rock. For the last four decades Finbarr O’Neill has held top management positions with some of the biggest brands in our industry. Companies like Toyota, Mitsubishi, Hyundai, Reynolds & Reynolds, and most recently, J.D. Power and Associates. Finbarr O’Neill, welcome to CBT News, we’re so happy to have you today.

Finbarr O’Neill: It’s great to be here, Jim.

Jim Fitzpatrick: Great. Well congratulations, first and foremost, on your upcoming retirement, I know that’s a big move in your life, right?

Finbarr O’Neill: Well, it is. I actually just turned 66, I’m feeling good, I certainly want to stay engaged in my retirement, but it’s time to enjoy life a little as well.

Jim Fitzpatrick: Sure. That’s great. That’s great. Well, congratulations. So, the industry has changed just a bit since you started in our-

Finbarr O’Neill: Yes.

Jim Fitzpatrick: Wonderful industry. Talk to us about where we are, from your perspective, as an industry, and where you think we’re headed in the next 10 years.

Finbarr O’Neill: Well, first of all, clearly, we’re plateauing for a while as an industry in terms of sales, we see a lot of off lease vehicles coming, etc. So, it’s going to be an interesting two or three years that way. But there are larger trends. Consumer behaviors has really started to change, in terms of being in a mobile connected world. And so consumer expectations, on all of their touchstones in life, whether it’s at department stores, hotels, etc. have changed and that impacts the car industry.

Finbarr O’Neill: And then of course, technology. And we look at the changes in electric vehicles, connected vehicles, autonomous vehicles, off in the future, but starting to impact the industry and how we think about the future.

Jim Fitzpatrick: You’ve been in and around dealers, and running manufacturers, and such, do you think that we’re in a good position as dealer body to take these challenges on, especially when you talk about autonomous vehicles and some of the ride share companies that pose threats, and subscription services now where people can just subscribe and get different vehicles sent to them to use? There’s so much going on. Do you feel as though we’re ready, as dealer body, to take these challenges on?

Finbarr O’Neill: I think dealers really need to focus first on the changes in consumer expectation, and leverage all of the digital tools that are available to them, to execute effectively in sales and service.

Finbarr O’Neill: And I think over the short intermediate term, the dealers who figure that out are going to be the most effective. Autonomous cars are still a long way off. And we talk about all of the infrastructure improvements that have to be made in order for your car to be able to read the signs on the road, and all of these things. That’s some time off.

Finbarr O’Neill: The sharing economy we have to be careful about, a lot of the people you hear talking about it come from New York, and they don’t own a driver’s license, they take the subway and the Long Island railroad to the Hamptons. I think there’s still a need for cars. Now, yes, Uber’s been effective, but Uber, in many ways, is just a highly efficient taxi service. The real question will be whether or not people are willing to buy pieces of cars, buy the ride. Yeah, we have to be careful about that, dealers will have to watch that. At one time it was said millennials won’t buy houses. Now we know, from the mortgage companies, they’re buying houses in traditional numbers, it just was delayed because of the economic impact of what happened in ’08, ’09, etc. all of that.

Finbarr O’Neill: But dealers need to keep these things in mind, I wouldn’t panic.

Jim Fitzpatrick: The impact of used cars in our market. Three, four million vehicles are heading the market. What kind of an impact do you think that will have on our business as a whole, and then maybe more specifically to new car sales?

Finbarr O’Neill: I think, first of all, it will have a dampening effect on new car sales, very definitely coming off lease, it will impact margins both at the retail and wholesale levels, so there will be pricing pressures all the way around. Cars coming off lease now, they’re a great product, and consumers will be looking for that. So, I’m feeling … it’ll be a challenge, and dealers especially are going to have to find ways to make profit by selling accessories, service contracts and the like.

Jim Fitzpatrick: Yeah, we still are challenged with front end growth profit, and the compression, I should say, of growth profit. That’s still a real issue out there with dealers and OEMs, isn’t it?

Finbarr O’Neill: It’s a real issue, Jim, but today we hear Toys R Us, one of the traditional big box retailers going out of business. There’s a lot of pressure because consumers are really aware of pricing, and you see Best Buy struggling with Amazon, right, and they guarantee you meet the best price on the internet. So, consumers have this transparency in almost everything they do.

Finbarr O’Neill: And so, it’s just a question of accepting that that’s the case, and how do we effectively compete in that world, and what can we provide a consumer that will persuade them to do business with us? And I think, for dealers who are looking at that in terms of enhanced service, utilizing methods of communication that the consumers feel comfortable with, etc. whether that’s texting, mobile, scheduling, whatever.

Jim Fitzpatrick: So a hot topic these days is the sales process, if you will, taking place online. Where we’re just using the dealership for the consumer to pick up their new or used vehicle. But otherwise, everything else, including the financing being done online. How long do you think it will be before we see the majority of deals in a dealership being completely completed online?

Finbarr O’Neill: We’ve been talking about this for quite some time now. The capacity to do it has been there, we both know Jim, we’ve been around long enough to know that the BDC is not something new, right? There is data out there that suggests that there are some people who are willing to do this, because they’ve preselected the vehicle, but by and large, the consumers still want to come in and touch the vehicle and test drive it. And dealers should be concentrating on that, rather than cluttering up the customer’s experience, they should be focusing on getting people to the cars they’ve researched, explain the added value of those cars, let them test drive it. Because I think there’s a big demand for that. After all, cars are still a complex, expensive buy. They’re a lot different than buying a washer and dryer that are more utilitarian.

Jim Fitzpatrick: Sure, sure. If you were to step out of the retirement and get into the retail automotive business with a dealership, and it was O’Neill Auto Group, what would be some of the areas that you would focus on immediately to win more market share, and be more profitable, as well as viable for the future?

Finbarr O’Neill: Well first of all, I would focus on using technology to engage with consumers, by and large, and making sure that our team was able to do that. I’d focus, also, on the psychology that we operate in an open kimono pricing universe, and find other ways, in terms of added value, whether it’s accessories, or service contracts and the like, to gain margin. It’s going to be very difficult with the kind of transparency we have, to fight that headwind. I would look at the way consumers like to do business, and how they like to be treated, and I’d leverage those tools and processes that would get me there.

Jim Fitzpatrick: Do you think we’ll see an OEM or some of the popular brands jumping into the direct sales to consumer Tesla business model anytime soon, or … ?

Finbarr O’Neill: I may be a bit of a curmudgeon about this, but I don’t think so. I think there’s a need for brick and mortar in the distribution process, it’s very expensive for OEMs to maintain that. And despite the achievements of Elon Musk, I still that the vehicles have problems when you compare them to competitive internal combustion engines. Fit to finish, it’s not there. It’ll be interesting to see when these batteries and they have to be replaced, how people feel about that.

Jim Fitzpatrick: Yeah, that might be a little shocker.

Finbarr O’Neill: Yeah, there’s a lot to happen yet. So I think that there is … the retail distribution of vehicles is a complex, expensive process when looked at from an OEMs point of view. And I believe that the best answer to that business challenge will be to partner with the owners who are willing to put their capital to work.

Jim Fitzpatrick: Sure. So we hear our president talk about tariffs on imports on Saturday evening at a rally in Pennsylvania, he actually said that on his radar were brands such as BMW and Mercedes Benz. Should import dealers in this country be concerned about the president’s view on tariffs?

Finbarr O’Neill: Well, without delving deep into the political, when I was on the OEM side, I remember the voluntary restraint agreement, I remember a lot of concern. You should never take anything for granted, whether you’re a Lexus dealer, or a Kia dealer, you need to be out there involved in your import association, and articulating the value that you bring to the community at large.

Jim Fitzpatrick: So let’s change gears a little bit and talk about life after J.D. Power. You said retirement, but it sounds like you’ve got some plans here. Talk to us about your new position as a board member with APCO Easy Care, which is a very exciting company.

Finbarr O’Neill: I’m very excited. As I mentioned, I really do want to be engaged in the auto industry, it has been a privilege to be associated with it in my working career. I’d like to still be involved, and I’m very impressed with Larry Dorfman and his team. And I believe especially in their retail network, and how Larry tries to help dealers, because it’s an important product that Easy Care provides to consumers. Larry’s very focused on the issue of helping dealers sell it right, but he’s also very focused on making sure that the claims process, to the extent that our clients are handled well, because it reflects not only on Easy Care, but on the brand of the dealer.

Finbarr O’Neill: Larry understands that things change, just like anything else, and he’s forward looking, he’s actually working on a new product introduction, Savvy is his new product, which helps dealers locate cars on lots using GPS. And candidly, you spend a lot of time looking for the car that the customer wants, if you can take the time out of that and reduce that from 15 minutes to three or four, you’ve got a much happier customer who’s actually looking at the car, sitting in it, off on the test drive faster, it takes a lot of the drama and pain out of the sales process. Makes the salesperson more efficient as well, and constant.

Jim Fitzpatrick: Boy, that’s for sure, he gave us a presentation of it not too long ago here on-

Finbarr O’Neill: Yeah.

Jim Fitzpatrick: CBT News and I will tell you, we got such great feedback and comments from our viewers, and subscribers and such about that very product, because who hasn’t suffered from that on a showroom floor, whether you’re the manager or the salesperson, standing there in an ocean of vehicles and today’s digital savvy customer wants that vehicle in just a-

Finbarr O’Neill: That’s right.

Jim Fitzpatrick: Seconds of arriving at the dealership. So I agree with you, it really is a phenomenal product, I’m sure that the industry will be hearing a lot more about.

Finbarr O’Neill: Yeah, as we talked earlier, yet another way of leveraging technology to make the sales and service process very consumer friendly, and to meet their expectations that they have because they’ve seen similar stuff in other areas of their consumer journey. And so it allows dealers to be as competitive as department stores and everybody else.

Jim Fitzpatrick: I agree. It’s kind of the connecting part, because they’ve now been online, and they’ve had that digital experience, and they’ve shopped 17 different websites and such-

Finbarr O’Neill: Yep.

Jim Fitzpatrick: And they’ve gotten numbers-

Finbarr O’Neill: Yeah.

Jim Fitzpatrick: And the stock numbers, and the facts, and the figures, and the specs on the car, and of course we have than in the NFI office to complete the paperwork-

Finbarr O’Neill: Mm-hmm (affirmative).

Jim Fitzpatrick: But I think that missing piece was when that customer hits the lot, and it-

Finbarr O’Neill: Yeah.

Jim Fitzpatrick: Seems like there’s no … until now, there’s no technology that’s helped that. But so that’s a pretty cool tool.

Finbarr O’Neill: No, they arrive there with expectations and excitement-

Jim Fitzpatrick: Yep.

Finbarr O’Neill: And you want to fulfill that, and connect them with the car that they’re very interested in.

Jim Fitzpatrick: Yeah, for sure. So, just before I let you leave, will we see you out at NADA next week?

Finbarr O’Neill: I’ll be out there, yeah. We’re actually in my new role as a director, I know that Larry has an event on Thursday evening, I’ll be out there to help support APCO and the APCO team.

Jim Fitzpatrick: That’s great. Yeah, I know that he mentioned to us and invited our news team to an event that he’s got coming up, so we’re looking forward to that, learning more about the program, but so Mr. Finbarr O’Neill, again, thank you so much for joining us here on CBT News, we appreciate you taking the time out of your very busy schedule to join us, and hopefully we can catch up with you in Vegas at NADA.

Finbarr O’Neill: I look forward to that, Jim, thank you.

Jim Fitzpatrick: Thank you.

Speaker 1: Thank you for watching the official news source of the retail automotive industry, CBT News.