There were many lessons learned in 2020 for dealers across the country. On today’s show, CBT News host Jim Fitzpatrick is joined by David Kelleher, President of David Auto Group. Kelleher is also the Chairman of the Stellantis Dealer Council.
Kelleher begins the conversation by discussing recent success and lessons learned from 2020. He says that dealers learned many new lessons including efficiency of inventory, operating with digital technologies, and quickly pivoting a business model. 2021 provides a perfect opportunity for dealers to carry over those lessons and apply them to their yearly business model.
Kelleher then discusses the agenda for Stellantis dealers in 2021. After the recent merger, Stellantis wants to incorporate a collaborative effort between the OEM and the dealers. Stellantis dealers want to keep profitability on the table, as gross profits were up 55%. Dealers are also committed to meeting the needs of Stellantis, which include growing the company’s share and improving the overall customer experience.
In 2020, dealers benefited from lower inventory levels driving up gross profits. Kelleher says that he feels strongly that dealers will receive help from the OEMs, primarily due to the ongoing chip shortage.
“There’s going to be an issue for the next 12 to 18 months,” said Kelleher. “We’re behind at producing cars. They’re hopeful in the next 12 to 18 months we can get back to a 70 or 80 day supply.”
Kelleher then talks about the growing EV market. He says he, like many dealers, is concerned about the cost of expanding his fixed-ops department while EVs are being advertised as needing less maintenance than a combustion engine. Kelleher feels like the EV push is slightly artificial as government mandates and other regulatory standards push OEMs in that direction. Stellantis dealers must learn how to sell EVs effectively to compete with industry disruptors like Tesla and Rivian.
Kelleher concludes the conversation by sharing his thoughts on affordability. Before the pandemic, many dealers were concerned about the average transaction of a vehicle surpassing $30,000. Now the average price of a vehicle has passed $40,000, yet Kelleher doesn’t see affordability as a concern. He says that customers drive the market, and he hasn’t seen any form of hesitation from car buyers.