From the risk of U.S. imposed tariffs, to a shortage of service technicians, the retail auto industry is confronting several obstacles. However, May sales were on the upswing, showing positive signs for the rest of the fiscal year. Here to go more in-depth about the challenges that face dealers today, and how to persevere through them, is David Long, a veteran of the auto retail industry who has held top positions at several high volume dealer groups.
David says that despite the fact that some dealers are reluctant to embrace digital retailing in their dealerships he believes it is here to stay, and that dealers should really begin to put more focus on to it. He says that companies such as Carvana and Fair are doing a great job in making it easier for customers to shop online and have their vehicles delivered right to their door.
However, David says that he sees this for only a small portion of the population and that the majority of the population is not quite at the point of online transactions. Therefore, he estimates that we won’t truly start to see these changes develop for another 10-15 years. Yet he says the transition will come non-the-less and that dealers should work to move towards digital retailing within their dealerships.
To hear more about from David Long on digital retailing within the auto industry check out the full interview above.
Jim Fitzpatrick: Hello everyone. I’m Jim Fitzpatrick. Thanks so much for joining us on another edition of CBT news. Today I’m so excited to have on our show, Mr. David Long, who is a veteran of the retail automotive industry and one name I’m sure that you recognize. He’s been out there and knocking the cover off the ball. David, welcome into CBT news.
David Long: Thanks Jim. It’s great to finally be here. It’s good to see you.
Jim Fitzpatrick: Yeah, so it’s great to finally have you here. I think we’ve been kind of chasing each other and finally we got some time in your schedule, so thanks for joining us here. Let me just throw some things on the table that dealers are challenged with, right. You mean you’re out there, you know what it’s all about. And one of them would be digital retailing. Is it here to stay? Is it something that dealers should be focused on? Is it something that is going to be taking over the industry in the next three to five years where the vast majority of cars will be completely sold online? Like the Carvana ads that we all see each day.
David Long: So Ernie Garcia is brilliant as you know. He leads the Carvana charge in a really compelling way. Will digital retailing and takeover the auto industry? I think it will, in part. And I say that, “in part” in quotations. I do believe that sections of our business will transition, but I don’t know that it will ever fully shift, if that makes sense.
Jim Fitzpatrick: And what do you mean by that? Not fully shift. Do you mean that the whole transaction being done online and having the vehicle delivered right to your front door, you don’t see that as a strong possibility?
David Long: So when I see that as a strong possibility, I see that in fragments.
Jim Fitzpatrick: Okay.
David Long: I do see that as a strong possibility for a small population. And I could be very shortsighted Jim. But I have these conversations with some of our industry leaders and thought, most progressive thought starters. And it’s just the way that we’ve gotten around where this is headed. Three to five years, you’re talking, 10, 15 years fully delivered door to door, press the button and have it show up. That’s what it’ll be by then in my estimation and opinion, but not three to five.
Jim Fitzpatrick: It’s interesting that when we speak to industry types that are out there, and many of them are in the digital space and … or I should say in the high tech space, and many of them have come up with phenomenal different technologies that help dealers grow their business, and talk to consumers, and communicate with consumers through chat and all kinds of things, right. If it’s in the automotive space, it’s digital, it’s in the automotive space and you know that there’s somebody out there that’s created it and is pushing it in a big way.
Jim Fitzpatrick: Of course we have self-driving cars right around the corner. Heck, they’re here now for the most part. And so there’s so many different elements out there. But when we talk to dealers and we talk to the players out there and we say digital retailing. Many of them will say, ah, “People still want to come into the dealership and kick the tires. That’s way down the road.” Why is that? Why do they not see that people want to pick up their phone, hit the app on it, look at the vehicle, check it out 13 ways to Sunday with all the different angles and then hit a button and say, yes, I want to buy I. Sign it right there or have it delivered over to me like a pizza. And if I don’t like it I’ve got seven days to return it.
David Long: So to answer your question, I know that the consumer, just based on the consumer behavior I’ve seen in the San Francisco Bay area, which is probably one of the most cutting edge bay or areas in the marketplace or in the country that is. Look at Fair. I am a big fan of Fair and I would personally do business with Fair. I would press the button, I would sign the app and I would have a car delivered to me tomorrow. I don’t think that the majority of the consumers throughout the United States are there today or will get all the way there in the next three to five years. However, what I do see going away is that three to five hour incubation period inside of a dealership with that old control withhold and working old retail sales process. I see that being gone ten years ago. Most people just haven’t gotten the message yet.
Jim Fitzpatrick: I think you’re right. And there’s a lot of dealers that you know are sitting there with blinders on that have just finished building these mausoleum showrooms and feel good about it and say, Nope, I’m still holding. I’m … we sold a record number of cars last year and my kids are taking over the dealership and I’m here for the long haul. And I just think that people still want to come in and come to the showroom and buy a car and do it the way that we’ve been doing it for the last 95 or 100 years in the industry. Right.
David Long: Yes. And I couldn’t disagree with that more. So, as it relates to that, when I think about the OEMs and the manufacturer requirements for the buildings that they’re asking us to build, –
Jim Fitzpatrick: Right.
David Long: … They’re talking a little bit out of both sides of their mouth in that they want us to have a digital presence, an online platform for a consumer to do business. Yet they want us to have a $20 million facility.
Jim Fitzpatrick: Right.
David Long: I don’t know that all that lines up in the future of automotive.
Jim Fitzpatrick: Yeah. That’s … and I think a number of dealers listening to your right now agree with that and say which way we’re going to go here? Are we going to go where it’s going to be done online and the car is going to be shipped to you? Or do we have to have this huge facility? Right.
David Long: Agree. Totally. And then when you, when we look at … just go ahead because I had a couple other thoughts about that. But-
Jim Fitzpatrick: Yeah.
David Long: … Let’s keep moving through the list.
Jim Fitzpatrick: Okay. Employee retention. As you know, dealers have suffered in excess of 70% turnover each year, especially in the showroom floor. What does the industry have to do to at least slow that down?
David Long: That’s a great question. Is that question motivated from the article that was written about a process that I did last week in the automotive news? Did you happen to see that?
Jim Fitzpatrick: I did. Yep.
David Long: So part of what I see is, and I just from a 30,000 foot view, I look at the employee of the dealership relative to the complexion of the consumer. And there’s a gigantic disparity. The employee of tomorrow is not necessarily employee of today. The needs of the consumer have changed. The abilities and talent level of the employee have changed. So it’s just a completely different landscape. So for an employee retention idea, like I mentioned in the automotive news article last week, it’s more about the right schedule, the right environment. It’s about making sure that the people feel engaged, giving them a plan for future growth. It’s not the work seven days a week, 72 hour schedule and burn them out and replace them. That’s just not where the automobile will be able … the automobile industry will be able to sustain itself. Those days have been gone a long time. But again, back to conditional or traditional retailer, they missed the memo.
Jim Fitzpatrick: Why is that? Why are dealers so slow in moving in this area? Even though there’s been a number of articles, there’s been a number of discussions both here on CBT, in automotive news and so many other forms that say we have to change the way that we treat our associates within the dealership. And unless that changes, you’re going to continue to see a 70% plus turnover rate. But yet you still talk to dealers and they’ll say, “Sure, we have a 45 hour work week, but boy, you better be on your sales target because if you’re not, you know your butt better be here on the showroom floor selling cars.” That’s not exactly what we’re talking about, right.
David Long: It’s a mixed message Jim.
Jim Fitzpatrick: It is.
David Long: So completely uncharacteristic to the car business. So I have this vision of the elders coming down from the mountain with the tablet and passing along how business has always been done. Therefore, that’s how business traditionally always is done. And until that whole, what I call a meme, a mind virus, shifts out of the dealership space, it’s going to to perpetuate itself. And I think unfortunately it’s going to take a real difficult time for dealers to, to start changing. Think about how long we’ve been talking about that change. And the fact of the matter is the change still hasn’t come. For most dealers.
Jim Fitzpatrick: No, you’re right. And we paint with a broad brush here too often on CBT and we’ll get emails and some comments about that, that, “Hey, I’m not, I’m doing it right in my dealership. And you’re talking about all the others.” And that’s … and so there are some really good, well-run dealer groups out there that have realized that, hey, we better change the way we’re treating our people otherwise this craziness isn’t going to stop. Right.
David Long: And it. It’s craziness.
Jim Fitzpatrick: Yeah.
David Long: For sure.
Jim Fitzpatrick: It is.
David Long: And there are some good ones out there, a lot of which you and I both know. It’s unfortunate that the other, well, it’s fortunate for the ones that get it. That the ones that don’t, don’t.
Jim Fitzpatrick: But it’s still got this, the negative vibe to it about even getting into the retail automotive industry for those that are coming out of school, whether it be high school or college and saying, “Hey, I want to get into an industry and I want to start a job.” And, and it still has that stigmatism about it. Long hours, you get beat up, you’re only as good as the last car you sold. There’s no real clear career path ahead of you. And I think those things have to be addressed at some point in time in order for the industry to move ahead.
David Long: I think you’re absolutely right about that. So our daughter, about a year and a half away from having her PhD. As much as I love and support the direction she’s headed, she would’ve never considered, even though the automobile industry has provided us with a fantastic life-
Jim Fitzpatrick: Right.
David Long:… It would have never entered her mind that this would be an industry that she should explore.
Jim Fitzpatrick: And maybe one that is-
David Long: So that’s up to us.
Jim Fitzpatrick: And maybe if she came to you and said, “I’m thinking about getting into the car business and start selling cars.” What would you tell her?
David Long: Let’s change the car business together. She’s seen me for the last 20 years. She’s 25. She has seen me try to change the car business one, not consumer at a time, not just consumer at a time, but salesperson at a time, sales manager at a time. I have never been in the car business Jim and this is my 33rd year in showrooms.
Jim Fitzpatrick: You just don’t subscribe to that way of doing business huh?
David Long: No. I just can’t. I just honestly thought 30 years ago I could make a difference. And maybe I have the one or two people or a half a dozen or more, but obviously I haven’t helped shift the industry the way that that I had hoped.
Jim Fitzpatrick: Yeah.
David Long: But there’s a lot of change that needs to be made.
Jim Fitzpatrick: Well, David Long automotive veteran. Been around a million years in the car business. I want to thank you so much for joining us here on CBT news. It’s quite a pleasure. I know our subscribers and viewers will get a lot out of our talk here today. Many of them agree with you, and I’m sure there’s many that don’t agree with you, which is what’s great about CBT News, right. We want to bring all the thoughts and concepts to the table that we can.
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