Tensions between OEMs and retailers have never been more strained, but could both sides benefit from simply taking a step back and re-examining their roles in the conflict? On this episode of Inside Automotive, host Jim Fitzpatrick is joined by Peter Cooper, the president, and CEO at Lexus of Lehigh Valley, to discuss the effect dealers may unknowingly have on OEM and consumer relations.
Cooper notes that the first quarter was one of the best his dealership has seen in terms of both volume and profit. Careful inventory management and consistent turn rates allowed his Pennsylvania storefront to maintain high margins, even as some retailers saw declining sales over the last three months. Cooper explains that his team zeroed in on day supply, ensuring every vehicle was sold in a reasonable time frame.
Transparency is a major point of conflict between OEMs and franchisees. While most industry insiders would agree that both sides have good reasons for distrusting each other, Cooper suggests that retailers may hold more responsibility for the current status of automaker and dealer affairs than they expect. He notes that car brands are focused on growth, so they can meet their shareholder commitments as publicly traded companies. However, since the market can only grow so much, automakers will eventually need to focus on efficiency and cost-cutting as a means to drive profit for investors.
“The dealers, I believe, have made it really easy for manufacturers to say ‘I’m not so sure we need you,'” explains Cooper, “They’ve taken advantage of customers for so long. Forget buying a car, 80% of consumers never come to use for service,” he adds. For Cooper, the real source of tension between manufacturers and dealers is that store owners, rather than prioritizing their consumers, focus solely on profits. While some businesses excel at making the car buying process up-front and honest, many shoppers still feel that dealerships frequently fail to uphold standards of transparency and fairness. Without making investments in their company culture to build skilled and passionate teams, and without offering reasonable deals to buyers, storeowners will only make the situation worse as time goes on, he explains.
“The paradigm shift that needs to take place is I need to worry about as a dealer what’s my customer experience about versus by what’s my profitability,” reasons Cooper. “I think we’re worried about the wrong things, and not focused on the right things.”