Market Predictions and New Car Buying Trends for 2019 – Bill Wittenmyer

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It’s crucial for dealers to start the new year off on the right foot, and that begins with being mindful of market predictions and new car buying trends. On today’s show, Jim Fitzpatrick speaks with Bill Wittenmyer , vice president of sales and operations for eLead CRM, now part of CDK Global, to discuss what we’ve learned so far from car subscription services, advances in digital retailing, and the importance of your dealership’s online presence.

VIDEO TRANSCRIPTION:

Jim: We are so happy to bring in our next guest Mr. Bill Wittenmyer with CDK Global. Hey Bill. How’s it going? Welcome back to CBT News.

Bill W.: Hey Jim great to see you.

Jim: You still doing a lot of traveling? I know you crisscross the globe all the time visiting dealers.

Bill W.: Yeah, it hasn’t slowed down, probably sped up a little bit, which is always a good thing, right? The main unemployment line doesn’t complain about having too much to do, so I’m definitely happy to be out on the road.

Jim: Well and that’s great. And as you know, we’re in some crazy times here in the retail automotive business with one minute business is up 17 million plus new vehicles sold and the next we got tariffs to worry about, or digital retailing, or what’s going on in subscriptions.

Jim: So we want to throw some of these things at you today and talk about them and talk them through for our dealers and managers that are watching today. Maybe they can get something out of that and feel a little bit better about all the craziness that car dealers are faced with today.

Jim: So let’s start off with this car subscription that we’ve heard a lot about here in the last six or eight months in retail automotive. Where does that stand and what do you think the future of subscription based programs are for the car business?

Bill W.: I think we’re at an interesting crossroads. This just kind of feels like a comet that was burning really bright and hot the first part of last year and now it’s kind of faded a little bit. What I can tell you is the feedback that I’m getting from dealer groups right now that are doing the subscription services on their own, they feel the play is really on the pre-owned side and not the new, right. And they’re looking at different things such as those that are a little bit more difficult to get financed and kind of really putting them into, I don’t want to call it a longterm rental, but that’s really what it is when you look at a subscription service. Or you get unique areas where maybe there’s a lot of work abroad folks that can’t get financed on a vehicle and they still need one, and they’ve got good credit and jobs.

Bill W.: So I think the used car play is where some of the dealer groups are going with that, certainly from a profitability because then you have the other aspect which is, my first question, how do you pay the salesperson, right. And what you really have to do is put them on a type of annuity, right. So as long as that customer is on the subscription, they’re getting a little piece of that pie which gets them involved in that.

Bill W.: So look, I don’t want to say that it’s fading, but it certainly doesn’t have the glow, it certainly doesn’t have the legs that it did a year ago this time.

Jim: Let’s switch gears a little bit and talk about digital retailing that we hear so much about here in the last year, and maybe the last two years in terms of customers that are online and want to take that transaction all the way through and stay online to the point that they have the vehicle delivered by the dealer right to their front door or they go to the dealership just to pick the car up. But otherwise everything has been done, the financing, the choice of vehicle, everything. Where is that today, where do you see it going and what do dealers have to do to pivot to make sure that their dealership is up and running to handle that business?

Bill W.: Yeah, good question. Look, I think a little bit similar to the subscription, right? It’s slowed down in the burn a little bit, but I think that’s because a lot of regulatory issues in terms of a lot of states … Look, in most states you still really can’t do a full end to end digital delivery where I have to sign some paperwork somewhere, right? In Florida I’ve got to sign a rainbow form, which is the tag and title. Every state’s a little bit different. So we’re not there quite yet from a regulatory standpoint, but I think we’re moving there. That’s one hurdle.

Bill W.: I think the second thing is, although there are a lot of great companies out there providing the digital retail experience online, very few are making that connection all the way through to the store experience, right. And this kind of gets back to the classic car business unfortunately, which is we set the expectation level here and then when they come into the store it’s here, right?

Bill W.: It’s lowered down and I think a couple of the companies are making some really great strides. I think we’ll see that at NADA where that connection is really a little bit more seamless. I think where you’ll see that experience is a little bit more seamless were all the things that we promised in terms of, hey, you’re at the couch at home, feet up, you did the shopping, you’re this far in the process. You come into the store and you pick it up right from there. That’s not always the case right now.

Bill W.: So that’s the first to the last one is you still have to have the dealership embrace, right? I think the dealerships have to embrace this from a standpoint of if you don’t control this, somebody else is going to. So you’re better off controlling and embracing it yourself and you have that ability with the tools that are out there right now.

Jim: Sure. Do you think 10 years from now, what percentage of retail deliveries do you think will be done completely online?

Bill W.: Heck, I don’t even know where I’ll be in 10 years. I think I’ll look at a five year timeline and I’ll tell you that I think there’s going to be a percentage of it, whether that’s a 10% or a 15%, I think that’s probably would be a modest number. I would hesitate to think it’s going to be much more than 25 or 30% at that point. It’s like leasing. You and I’ve talked about this before, it’s an option that I think we have to provide as an industry to our consumers, and if you choose not to provide that option, you’re going to get left out in the cold because somebody else is going to, right.

Bill W.: Leasing is not 100% of the market. It’s maybe even 50% in some areas and a little bit less than others. So I think it’s going to be just another one of those options that as a good provider, as a good dealer, where we’re going to want to make sure we have those options available. It’s not going to overwhelm us, but it’s going to be a significant part of the business.

Jim: Sure. And you just mentioned about the process and really what I think has pushed people completely online or to want to do business and the transaction online is the sales process in many cases inside of the dealership that a lot of consumers just hate. There’s no better way to say it. They just can’t stand it.

Bill W.: It’s dreaded. It’s dreaded.

Jim: It’s dreaded, right.

Bill W.: It’s not even always what we like to think is back to the negotiation and the grind and this and that. I mean there’s a segment of customers I firmly believe that prefer to negotiate. They don’t feel like they’re getting a good deal if they don’t. There’s another segment that certainly buy into and enjoy the one price or whatever we want to label that as in different markets. The reality is it’s time. It’s 100% time. It’s a two, three hour process, hands down in most cases and yes, I know there’s some great dealerships out there that have streamlined that down even further. But the reality is it’s still two to three hours between getting car through PDI, delivery, FNI, whatever process that’s happening, the car detailed and then explaining it, you’re easily invested half of a day and most people time is just so critical now.

Bill W.: And we’re so used to being able to do everything really quick. I mean that’s really what the Amazon experience is. I think people kind of misread that when people talk about Amazon experience for the car business. It’s not really just going online and plugging this and saying yes and delivering. It’s the fact that you could do it very quickly, very easily and all the information is right there.

Jim: From your perspective, what can dealers do to enhance the sales process? And I know that’s an entire show that could be three hours alone, but if you hit some of the high points, what are some of the areas that you think make for the biggest rub against consumers that we can change pretty quickly if we focus on them?

Bill W.: Sure and no new words, right? Transparency is number one, but transparency doesn’t mean giving away all the information all immediately upfront. It’s providing it in a timely and in the right manner, right. And I think it starts with online presence number one, 100%, ease and availability. What are those VDP looks like on your page? Do you have those different shopping cart pieces? Are those kind of same Amazon feature sets built into the website? How far down the process can I actually go on your website in terms of the purchasing, the vehicle information, trade information, even credit and/or credit check.

Bill W.: And really getting that far down the line, I think we have to provide as much of that customer journey as possible and really ideally, ultimately all of it. Then again, make sure that that communicates back to the dealership in whatever form, whether it be the DMS, the CRM, so that I can pick right up when I come in as a consumer and start right where we left off. And it’s all the way at the end, great. I’ve just saved a significant amount of time, which is what we just talked about earlier is one of the biggest rubs of the dreaded part of coming into the dealership.

Jim: Yeah. That is for sure. Let’s talk a little bit about NADA. NADA is just a few weeks away in San Francisco. It should be a great show this year from all indications and what should dealers expect or look for when filling up their schedule for NADA? What are some of the things that they should focus on?

Bill W.: I think the best thing and what the really great dealers go to look for is solidifying their existing partnerships and notice I left out vendor, right. I think there’s a big difference between vendors and partners and I think it’s really important to look for those dealer people. And dealer people are on both sides of the aisle. Dealer people are those that are in the booths and those that are coming from the dealership and I think when you find that strong synergy between companies, you have a true partner that’s invested in your business, right.

Bill W.: I’ve said a lot of times before, at the end of the day I want somebody who is a partner with me and I say that from the vendor side, right. Our best clients are our partners, the ones that we’re included in their business, they’ve included us in that and what those roles are. It may not always agree, but we’re working for a common bond versus a vendor is just going to be there to take checks and I think a partner is going to be there to help you make them.

Jim: From your perspective, and as I mentioned you work with dealers every day, and what are some of the things that you see down the road that keep you up at night? That say, “If we don’t pay attention to this or that, that might have the potential to hurt us in the industry?” What are some of those?

Bill W.: Yeah, I think there’s a couple of key components there. I’m not so worried about some of the disruptors that are out there. Again, I think we have control of that as an industry and as I mentioned earlier, we kind of provide some of the unnecessary objections and quite frankly, we create those cottage industries because of our own faults. So we shore that up. That’s one thing.

Bill W.: I think we’ve got to be really conservative as we look at 2019 in terms of what that [inaudible 00:10:22] is going to be. I think that boils down into your inventory control and management. That’s going to be a huge piece and then finally looking at that repeat referral, how do we continue to go after our existing database within the dealership?

Bill W.: We talk about that a lot. There’s a lot of great data mining programs out there, but not all of us really have a process down that’s solid for that and I think it goes back to what I talked about earlier, which is key components and communication. Finding out how they want to be communicated with and when, and not just making the assumption or the carpet bomb.

Bill W.: So I think those are a couple of things that hang over me. I’m not too worried about the tariffs. I think this is again, a little bit more of the sable rattling and kind of the negotiation tactic that our current president does quite a bit of. And most of them, outside of the shock and awe, what ends up happening is we kind of come back to the center, right. And let’s hope that it keeps that way because that’s a certain little bit of challenge for the business.

Bill W.: So outside of that, I think those real key components, I think we’ve just got to focus on the basics at the end of the day.

Jim: Yeah. We had a guest on recently, he was a dealer that said, “We don’t use our CRM the way that we need to. We use it at about 40%,” was his estimation for his dealer group. Why do you think that is that dealers don’t use their CRMs to the fullest capabilities? I know I’m speaking obviously about your company as well, it’s one of the leaders in CRMs out there, but from your perspective do you go into clients and see that wow, it could do so much more, but you’re not utilizing it?

Bill W.: Yeah, look 40% is probably doing pretty good overall in the grand scheme of things. And look, nobody wants to be average, but at the end of the day I think there’s a couple of different things. And you could probably say this about any tool, whether it’s CRM, whether it’s DMS, it certainly starts with execution, but it starts at execution at the top. We’ve found that those stores that are operating on a very high level of knowledge and usage of any system, including CRM, it starts with the general manager and the general manager knows the system as well as anybody and I talk about this in a lot of seminars.

Bill W.: Look, that you can’t get fooled if you know what’s going on, right? And if you’re one that’s not logged in, if you’re not one that’s using it daily and-

Jim: Yep. Engaged.

Bill W.: … you get some of that uproar that comes up and says, “Oh, it’s broken. It sucks, it doesn’t work,” and you can’t define whether that’s true or not, you’re in trouble, right.

Jim: That’s a very good point.

Bill W.: So you’re going to buy into that and next thing you know, you’re on the vendor parade and you’re looking to switch and six months down the road, guess what? Same problem, same [inaudible 00:12:58], same usage. So I think it starts at the top and that’s difficult. General managers have a lot to do and a lot of responsibilities, but somebody has to be a key component or that champion inside the dealership so you’ve got one throat to choke, so to speak.

Bill W.: I think that’s really a synopsis and how to solve it all in one, right. I would go there and look, there’s a lot. There’s a lot that’s always upcoming. All great companies that have software, and CDK obviously included, they’re always putting out additional resource. There’s always additional upgrades. The Elite product, we have a iteration every four weeks and there’s maybe 200 different things that are inside the Elite CRM product at CDK. That’s a lot to absorb.

Bill W.: So my final would be make sure you’ve got that vendor, that partner, again, that helps you with that. That ongoing training, that ongoing support, that ability to be able to absorb all those new things that are out there as they come because they do come quick and fast.

Jim: Sure, sure. So you mentioned it, for the dealers that are watching, just so we can have offer some clarification, the Elite one product is still alive and well, it just falls under the CDK umbrella of different offerings. Correct?

Bill W.: Absolutely. And we’ve been really fortunate and what a great company. What a great transition. I know there’s going to be a lot talked about at NADA and I’m really looking forward to that and excited about some of the things that we’re going to be releasing, but Elite CRM is a product, 100% agnostic, right. I mean any DMA and any different piece out there, it’s going to have that ability to integrate with obviously rolled up under the CDK family as a product division and really excited about it.

Jim: Yeah. What horsepower you have under the hood now with that CDK brand as well. I mean, needless to say-

Bill W.: Feeling very fortunate with the support and all the great folks at CDK and really such a smooth transition. It’s just been wonderful.

Jim: Well, Bill Wittenmyer, I want thank you so much for spending some time with us today. We’re excited to see you out at NADA in just a few weeks and can’t say enough about the product that you guys have offered over the years and happy for your new marriage with CDK. I know that it’s been a big-

Bill W.: Right. Thank you Jim.

Jim: … big move.

Bill W.: Likewise. Look forward to seeing you. Safe travels out to NADA. I know you’re going to be super busy. Keep great job on the show. I can’t wait to be on next time.

Jim: Sounds good, man. Thank you so much.

Bill W.: Thanks Jim.

Jim: All right.

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