OFFICIAL PUBLICATION OF AADA | APRIL 2021 | ISSUE 34

AADA ACHIEVES MOMENTOUS FRANCHISING REFORMS CAR BUYERS STILL FAVOUR DEALER MODEL: SURVEY THE YEAR OF REFORM FOR THE AUTOMOTIVE INDUSTRY AADA CONVENTION 2021: ONSITE, LIVE AND ON-DEMAND www.automotivedealer.com.au PRINT POST 100019106 It all starts with spirit.

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CONTENTS ISSUE 34 | APRIL 2021

WELCOME From The AADA Chairman...... 4

From The AADA CEO...... 4

CONTACT AADA PO Box 4409, POLICY Kingston ACT 2604 AADA Achieves Momentous Franchising Reforms...... 5 CONTACT AUTOMOTIVE DEALER 936B Glenhuntly Rd, Senate Committee Urges ACCC To Expedite Holden Probe...... 7 Caulfield South, VIC 3162 Service And Repair Sharing Legislation Introduced...... 8 Issue No. 34 | APRIL 2021 PUBLISHER: AADA Car Buyers Still Favour Dealer Model: Survey...... 9

MANAGING EDITOR: Luke Prendergast ASIC Releases Deferred Sales Model Guide...... 12 PRODUCTION MANAGER: Stace Agombar The Year Of Reform For The Automotive Industry...... 13 CREATIVE DIRECTOR: Nick Murphy ADVERTISING MANAGER: Geoff Vine Government Reforms Drive Dealers Towards A Fairer Future...... 14 [email protected] Mobile: 0408 189 295 AADA 2021 CONVENTION: ONSITE, LIVE AND ON-DEMAND Phone (03) 9576 9944 | Fax (03) 9576 7277 Join Us In Brisbane For AADA2021 Future Focused...... 21 AUTOMOTIVE DEALER DELIVERY/CHANGE OF ADDRESS Meet Your New Convention Host David Speers...... 22 (03) 9576 9944 or [email protected] Dealership Of Tomorrow Update...... 23 EDITORIAL [email protected] Build Your Millennial Workforce With Jared Hamilton...... 23 EDITORIAL & ADVERTISING OFFICE Deloitte’s Industry Overview & Economic Outlook...... 24 936B Glenhuntly Rd, Caulfield South, VIC 3162 Service Management Structures That Increase Returns...... 24

Be Part Of Our Onsite And Virtual Expo And Workshops...... 25

FEATURES Digital Focus Of NADA Show...... 16 No responsibility is accepted by the publisher for the accuracy of information contained Dealership Of Tomorrow (DOT): 2021 Update...... 18 in advertisements in the Automotive Dealer magazine. Publication of any advertisement does not constitute endorsement by the publisher Deloitte Releases Consumer Study Findings...... 27 of any product, nor warrant its suitability. Advertisements are published as submitted by advertisers. “I Shall Be Released..."...... 29 COPYRIGHT No part of this magazine may be reproduced Your Service Department In 2030...... 32 without the publisher’s written permission. CONTRIBUTORS How Close Are We To ‘Click And Buy’?...... 34 The views expressed in Automotive Dealer by external contributors and advertisers are not Do We Need A Motor Show?...... 35 necessarily those of AADA. Use The Football Playbook To Run A Great Dealership...... 37 AUSTRALIAN @AADA_ASN AUTOMOTIVE DEALER ASSOCIATION Convenience Is King – And Today That Literally Means At The Touch Of A Finger...... 39 WE’D LIKE TO HEAR FROM YOU. We’d like to hear from you about what’s been supporting junior sporting clubs or sponsoring a It’s a pity that the community work being done happening at your dealership that you think charity event. by Dealers is a well-kept secret. We intend to could be worth passing on to our readers. change that. AADA is determined to generate a We would like to know. greater respect for new car franchise Dealers It can be anything from a unique sale, a fleet as compassionate business people. Part of our deal or a story about a member of your staff who Whatever the story you have, it will be good strategy is to remind the media, politicians and recently accomplished a notable feat. reading. Send us the information and key contact details and we will follow it up. If you opinion makers that, by employing over 66,000 It could be a ‘feel good’ community initiative have photographs of the endeavour so much people, AADA members make a substantial you have undertaken involving local schools, the better. contribution to the Australian economy. WELCOME Australian Automotive Dealer Association

FROM THE AADA CHAIRMAN

Terry Keating AADA Chairman

hen David Blackhall stepped into After four long years, unimaginable We expect all current agreements on foot as the role of CEO of AADA in 2016, roadblocks, and in some cases disingenuous at 30 June 2021 will be covered by the new Whe worked with the Board to map support, we have had a code of principles regulations. out a plan to address our greatest weakness as announced by our Prime Minister and the new automotive Dealers, that was our lack of scale Minister who took control of the particular Sadly, of course, this all came too late for nearly against the power of some recalcitrant auto ministerial portfolio just a few weeks ago, the 200 Holden Dealers and their staff. However, makers. Hon Michaela Cash. this Code should ensure that if a Holden Mark II occurs in the future, reasonable protections It seemed at the time a reasonable proposition The Code is mandatory, embraces any are mandated. that poor behaviour on both sides should arrangements which seek to circumvent the be subject to redress. Internally, we felt that Code (e.g. the so-called agency model), carries On behalf of all of our members I congratulate if we achieved nothing else we had to have heavy penalties for non-compliance and will our Secretariat, both current and past an insurance policy for dealership balance become law on 1 July this year. members on achieving this outcome. sheets, most of which have been built up over Well may we say on 1 July - ‘Happy New Year’. decades. Our blueprint for a code required that outcome.

FROM THE AADA CEO

James Voortman AADA CEO

n 12 March the Prime Minister made It’s worth making special mention of the Dealer councils. Some put in submissions, an incredibly important announcement AADA Board who about four years ago (well came to Canberra to visit Ministers or Ofor new car Dealers across Australia. before the Holden withdrawal and the moves participated in Senate inquiries. Members The announcement centred around the by Mercedes and Honda to agency) directed from large, medium and small dealerships all franchising protections Dealers had been the secretariat to make this the number one played their part. Members from our capital calling for over many years, but particularly advocacy priority. We also need to mention cities and our country towns got stuck in. over the past five years. my predecessor David Blackhall who took the initial lead on pursuing this matter and used It was a combined effort by so many. The details of the announcement can be his exceptional skills of persuasion to put this In the end the message got through to the examined in more detail here, but in a nutshell squarely on the agenda of both major parties decision makers in Canberra. Our industry they represent the most important regulatory and the ACCC. changes affecting the relationship between and the social and economic contribution Dealers and OEMs. Most importantly though I need to it makes is valued. We should fight hard acknowledge the Dealers who took the time to for fairness for this industry and the many The fact that they were announced by our fight for their industry. Some spoke or wrote Australians that make their living through it. Prime Minister is a testament to the value to their local members of Parliament. Some the Government places on our part of the contributed through their membership on industry. These changes are the result of hard work by many people.

4 | APRIL 2021 | automotivedealer.com.au POLICY Australian Automotive Dealer Association

AADA ACHIEVES MOMENTOUS FRANCHISING REFORMS

ADA welcomes the Morrison The AADA and Dealer members have been changes to business practice by explicitly Government’s landmark reforms to working for several years on regulations which recognising that Dealers operating as a Athe automotive franchising landscape. compel Manufacturers to treat Dealers fairly, Manufacturer’s Agent in relation to new On 12 March, the Government announced provide a system for mandatory and binding vehicle sales are still protected by the momentous reforms for the automotive arbitration and appropriately penalise those Franchising Code; and industry, which will protect Dealers against Manufacturers who fail to comply. the worst abuses by some car companies and • appropriate fines. Increase available bring a degree of balance to the relationships These new regulations are a welcome response penalties under the Franchising between Dealers and Manufacturers. by outgoing Minister for Employment, Skills, Code to up to $10 million. This Small and Family Business, Michaelia Cash, will strengthen penalties for wilful, AADA CEO James Voortman said the and the Australian Government. Dealers, their egregious and systemic breaches of the announcement would be welcomed by employees, and all of those other businesses Franchising Code by large and profitable automotive Dealers and their 60,000 who depend on dealerships for their welfare multinational companies. employees all across Australia. can now have confidence that they are protected from the devastating effects of those The Government will also explore the merits “These changes will bring a degree of balance Manufacturers who seek to exploit their power of a stand-alone Automotive code of conduct to the relationships between new car Dealers and size advantage at the expense of their and mandatory binding arbitration provisions and the Manufacturers to which they are franchisees. within this new code, similar to those in franchised. The reforms are sensible and fair the Media Bargaining Code, which were and will bring all Manufacturers up to the These changes include: developed to curtail the power of the Big Tech standard already being employed by ethically- platforms. minded car brands operating in Australia,” he • mandatory principles for new Dealer said. agreements. Establish best practice In a letter to Dealers, Senator Cash said the by transforming existing voluntary Australian Government was committed to “Mandating the principles for new Dealer principles into mandatory obligations delivering practical reforms for Australia’s agreements, ensuring agency agreements under the Franchising Code. This automotive sector. are captured by these regulations and will address concerns multi-national setting appropriate fines for breaches of manufacturers won’t follow voluntary “As many of you would be aware, my office the Franchising Code are all very welcome principles; has recently held a number of round-tables measures. Only Manufacturers who ride and discussions with Australia’s automotive roughshod over Australian Dealers will • ensure Agency agreements are captured Dealers. We have heard the calls for stronger have anything to fear from what has been by franchising regulations. Ensure that government action, and are making some announced.” the Franchising Code keeps pace with significant changes in response,” she wrote.

automotivedealer.com.au | APRIL 2021 | 5 POLICY Australian Automotive Dealer Association

“The best practice principles that the strengthening dispute resolution and turnover of $10 million or less; government released on 11 December 2020 as increasing penalties to deter poor conduct in • removing the contract value threshold, a voluntary set of guidance measures will be the sector,” Senator Cash wrote. which will apply the protections to more transformed into mandatory obligations under contracts; and the Code. These will assist in providing clarity “In addition, the Government is committed • providing more flexible remedies to a on compensation payable in the event that a to working further with the automotive court when it declares a contract term manufacturer decides to withdraw or change franchising sector. The Government will unfair. business model part way in the future through consider a new mandatory stand-alone automotive code and will consult the sector the term of an agreement. Mr Voortman said AADA looked forward to further on this in coming months. The participating in the further work flagged by “The Government will also ensure that the Government will also explore mandatory the Government on the merits of a standalone Franchising Code keeps pace with changes to binding arbitration provisions within this new automotive code, binding arbitration and business practice by explicitly recognising that code, similar to those in the Media Bargaining unfair contract terms. Dealers operating as a manufacturer’s agent in Code, which were developed to curtail the relation to new vehicle sales are still protected power of the Big Tech platforms.” “It has been a difficult 12 months for by the Franchising Code.” automotive Dealers with General Motors’ The ACCC announced on 22 October 2020, a termination of 185 Holden Dealers and Senator Cash said she expected the changes change to collective bargaining requirements significant changes flagged by a number would be implemented by the middle of this to allow franchisees to collectively negotiate of other Manufacturers. The industry is in year, and would build on the automotive with their franchisors without first having a state of rapid change and all Dealers ask specific provisions of the mandatory to seek ACCC approval. By joining together, is that major changes see Manufacturers Franchising Code that took effect on 1 June small Dealers may have a better opportunity to engage in a fair process and provide adequate 2020. have input into negotiations than if they were compensation,” he said. to negotiate on their own. These are being These previous reforms included: increasing presently worked through the Parliament. “Dealers in regional towns and cities all across End of Term notification periods; improving the country will be thanking the Morrison transparency for capital expenditure On 6 November 2020, the Legislative and Government. In particular we would like to requirements; and clarifying options for Governance Forum on Consumer Affairs thank the outgoing Minister for Employment, dispute resolution. These changes, which agreed on changes to strengthen protections Skills, Small and Family Business and new were the first time that a sector-specific part against Unfair Contract Terms (UCTs) in the Attorney General, Michaelia Cash, for sticking of regulations have been included in the Australian Consumer Law, including: up for Australia’s Dealers and working closely Franchising Code, provided the foundation for • making UCTs unlawful and giving with the industry.” the most recent announcements. courts and tribunals the power to impose civil penalties; The AADA encourages members to write “The new commitments also build on the to the key members of the Morrison Government’s response to the Parliamentary • changing the definition of a ‘small Government, thanking them for these reforms. Fairness in Franchising report, which included business contract’ by increasing the We will provide members with further detail improvements to disclosure requirements, threshold to less than 100 employees and as the changes occur. preventing retrospective contract variation, using either this or a business’ annual

6 | APRIL 2021 | automotivedealer.com.au POLICY Australian Automotive Dealer Association SENATE COMMITTEE URGES ACCC TO EXPEDITE HOLDEN PROBE

he Senate Committee for Education arbitration to resolve disputes a degree of balance to these relationships,” and Employment has urged the during contracted negotiation in the Mr Voortman said. TAustralian Competition and automotive industry which are not Consumer Commission (ACCC) to able to be resolved by other dispute “The Inquiry has made a number of expedite its investigations into the resolution mechanisms. sensible and fair recommendations behaviour and actions of GM Holden. which will set an appropriate standard • That the Australian Government for Manufacturers in their commercial On 19 March, the Committee released its appoint a senior officer in the Office relationships with Dealers. Australian final report into the Relationship Between of the Australian Small Business and car Dealers desperately want strong Car Manufacturers and Car Dealers Family Enterprise Ombudsman to and respectful relationships with their in Australia, making a total of seven investigate and coordinate dispute Manufacturers, but they also need recommendations. resolution investigations and facilitate assurances that the massive investments mediation and arbitration arising they have been required to make will be The Committee said the ACCC should from the transformation of the protected. commit to providing regular public updates voluntary best practice principles into on the Holden investigation and similar mandatory obligations. “We sincerely hope that this Inquiry, investigations into the relationship between its recommendations and the reforms Manufacturers and Dealers in the future. • That the Australian Government announced by the Prime Minister and undertake a review into effectively outgoing Minister for Small and Family It also recommended that the ACCC enforcing alleged contraventions of Business, Michaelia Cash, will foster proactively ensured that General Motors the Competition and Consumer Act better relations between Dealers and all Australia and New Zealand was meeting 2010 as it relates to the regulation Manufacturers.” its Australian Consumer Law obligations of the relationship between car to Holden vehicle owners in relation to Manufacturers and car Dealers. On behalf of the retail automotive industry, warranty and recalls, technical support and Mr Voortman commended both sides of access to parts. The inquiry was a comprehensive review Parliament for coming together to launch into Manufacturer/Dealer relations the Inquiry. The other recommendations were: and received over 70 submissions from interested parties as well as hearing public “It is so important that we have managed • That the Australian Government testimonies from several franchised new to reach a bi-partisan report and we prioritise the new automotive car Dealers. would like to extend a special thanks the reforms announced on 12 March Committee Chair Senator Louise Pratt, as 2021 and implement the increased The inquiry proved to be a very important well as the work done by Senator Deborah fines, mandatory principles and platform from which the AADA and O’Neill and Senator James McGrath,” he protection of Dealers operating as a Dealers were able to demonstrate the said. Manufacturer's agent by 1 July 2021. effects of the power imbalance that exists between Manufacturers and Dealers. “We would also like to thank the Morrison • That the mandatory best practice Government for listening to Dealers and principles include a provision for the AADA CEO James Voortman welcomed their concerns and announcing landmark reimbursement for all reasonable the bi-partisan report, which was the result reforms. It is also important to thank all expenses incurred in relation to of an Inquiry that ran over 12 months and of the Dealers who participated in this warranty and recall work, including shone a light onto serious issues within process. Speaking out is never easy due to expenses associated with diagnosis, the industry following General Motors’ the potential for retribution. A number administration of claims and claim withdrawal of Holden from Australia. of Dealers appeared publicly, delivering audits. powerful and heart felt accounts. Dozens “This Inquiry has reaffirmed the existence more lodged confidential submissions.” • That the Australian Government of a power imbalance between car introduce mandatory binding Manufacturers and the Dealers and made The full report is available for download a number of recommendations to provide from the Senate Inquiry’s website.

automotivedealer.com.au | APRIL 2021 | 7 POLICY Australian Automotive Dealer Association SERVICE AND REPAIR SHARING LEGISLATION INTRODUCED

n 24 March, the Morrison Government for their customers and are suitably qualified “Currently, around one in ten vehicles taken introduced legislation into the should be entitled to compete with Dealers on to repair workshops in Australia are affected OParliament to establish a mandatory fair and reasonable grounds and this legislation by a lack of access to service and repair scheme for the sharing of motor vehicle will give them the chance to do that.” information. In Europe and the United States, service and repair information. similar schemes are delivering lower repair The scheme is due to come into effect on 1 July and maintenance costs for consumers.” The scheme will, for the first time, require car 2022 and work on the underlying rules will Manufacturers to make information about commence soon. The legislation foreshadows Mr Sukkar said the Government recognised service and repair of their vehicles available the appointment of a scheme adviser who the important role industry would play in for purchase by independent repairers and will oversee operations and report back to ensuring the success and effectiveness of the registered training organisations at a fair Government on progress and if necessary, scheme. It was the Government’s intent to market price. work with the ACCC to enforce scheme rules confer the adviser role on a joint industry- and manage any disputes that may arise. led organisation that will have the technical AADA CEO James Voortman welcomed the expertise, experience and relationships within news and said AADA would continue to work The scheme has been in development for many the automotive industry to support the with the Government and Industry on the years and the legislation is the culmination of scheme. important underlying detail. a lengthy consultation and negotiation process between the AADA, other peak automotive “We all want the same thing – consumers to “Dealers recognise that independent repairers industry associations and the Government. be able to access servicing and repairs in a have an important role to play in servicing and fair, competitive market, and we’re working repairing the tens of millions of motor vehicles One of the central principles of the scheme is with the five peak bodies and other industry on our roads,” he said. that information is shared on commercially representatives to make it happen.” Mr Sukkar fair and reasonable terms. AADA is supportive said. “This information will be shared on fair and of the legislation, which adheres to this reasonable commercial terms and sensitive commitment and sets restrictions on sensitive Subject to passage of the legislation through information will only be made available to information regarding safety and security. the Parliament, the scheme will come into suitably vetted and qualified technicians. effect on 1 July 2022. Assistant Treasurer Michael Sukkar said “Franchised Dealers take great pride in Australia needed a strong service and repair The AADA will continue to work with the quality of service they provide to their industry to keep the nation’s 19.8 million the Government and other associations to customers. Dealers make huge investments in vehicles on the road. structure the scheme such that it meets its factory training of their qualified technicians intent and treats all businesses involved in along with having the latest tools, equipment “There are nearly 35,000 automotive service automotive repairs fairly and equitably. and facilities. Independent repairers who and repair businesses in Australia, employing choose to commit to similar levels investment over 106,000 Australians,” he said. POLICY Australian Automotive Dealer Association

CAR BUYERS STILL FAVOUR DEALER MODEL: SURVEY

ew car buyers still overwhelmingly Key Findings with 52% of those suggested that such a model favour interacting with Dealers, and would lead to higher prices for new cars in • 94% are confident in the process of are confident in the process of finding the market. Consumers noted the simplicity N finding and buying a new car; and buying a new car, according to new and potential ‘fairness’ of the agency model, research undertaken on behalf of the AADA. • 87% are confident in interacting with a although there was a high level of concern that new car Dealer; and this would drive prices up. Zing! Insights conducted an online survey of 500 Australian new car buyers/intenders in • 90% say that the ability to negotiate price Confidence in Car Buying Process order to gain an insight into the perspectives of a vehicle is ‘very or quite’ important to and preferences of the new car market them in context of the purchase process In total, 94% of the new car market claimed consumer, with relation to interacting with overall. that, when it came to navigating the purchase new car Dealers. process and finding the best car for their The report concluded that consumers like the needs, they were ‘very’ or ‘quite’ confident. The research sought to canvas views of chance to ‘get the best price’ and the ability At the other end of the scale, just 1% Australian new car buyers and intenders across to negotiate can empower them. The sense suggested that they were ‘not very confident’, some particular areas relating to their vehicle was that there should ‘always be room’ for suggesting the car buying process is familiar purchase behaviours, including: negotiation. and considered easily navigable for the vast majority of consumers. • confidence in participating in the new car purchase process and specifically Reflecting levels of confidence in the overall interacting with Dealers; new car buying process, very high proportions • priorities in the vehicle purchase process; of the new car market say that they are either ‘very’ or ‘quite’ confident in interacting with • perspectives on the manufacturer-driven new car Dealers (87%). Just 2% suggest that agency model and perceived fit for the they’re ‘not very confident’. From this, it’s clear market; and that the new car Dealer experience isn’t seen as • testing planned engagement with electric a significant barrier to purchasing a vehicle. vehicles/hybrid vehicles, and measuring In total, 13% of the new car market rate their barriers to engagement. confidence as either ‘neutral’ or say they’re The goal of this research was to assist the CONFIDENT IN CAR not very confident with interacting with new AADA with understanding the current needs 94% BUYING PROCESS car Dealers. While not statistically significant, and priorities of the new car market buyer, and women are slightly more likely than men to specifically to understand the potential impact be less confident in interacting with new car on consumers of the agency model of buying a A significant proportion (32%) found the idea Dealers. Overall, no particular demographic vehicle (as opposed to a Dealer-led model). of no longer being able to negotiate on price stands out as being significantly less confident to be unappealing (30% found it appealing), than others, highlighting that experiences with Dealers are generally consistent.

automotivedealer.com.au | APRIL 2021 | 9 POLICY Australian Automotive Dealer Association

FACTORS RATED AS IMPORTANT WHEN BUYING A CAR... FACTORS RATED AS IMPORTANT WHEN BUYING A CAR...

TEST DRIVE NEGOTIATE NEGOTIATE ADVICE BY PRICE ADD-ONS SALES STAFF TEST DRIVE NEGOTIATE NEGOTIATE ADVICE BY PRICE ADD-ONS SALES STAFF

91% 90% 85% 79% 91% 90% 85% 79%

Very important Quite important

Buying Verya Car important Online Quite important highlighting a positive emotional outcome for LIKELIHOOD OF BUYING the consumer. When it comes to the notion of buying a new A NEW CAR ONLINE car online instead of at a physical dealership, New car.. “Although I know they have ‘negotiable’ the market is divided. Around one in three discounts built into their bottom line it still (29%) say that they’d consider buying online, 24% feels like you have a little win if you can get a although almost half (46%) suggest that they’d discount or something thrown in,” said one 29% 46% not be willing to do so. This highlights that LIKELY UNLIKELY respondent. – at this stage – the opportunity for online interactions within the new car market would “As a single female, I feel like I need these be niche, with the majority preferring instead skills for myself, and so I enjoy practising and to navigate existing purchase channels. building my confidence,” said another.

Importance of Car Buying Factors Around half of those who said they don’t Very likely Quite likely Very likely Quite likely Neutral particularly value the ability to negotiate on the In total, 91% consider it important to be price of a new vehicle didn’t give any particular able to test drive a car before buying (63% Value of Car Buying Factors reason for this. Another 15% highlighted a consider it ‘very important’ to do so). Similarly, sense that the Dealers should just be giving 90% agree that the ability to negotiate on Over nine in ten (93%) specifically say that the best price to the consumer up-front, while the vehicle’s price is important as part of the they value the ability to negotiate the price 10% feel that the process of negotiating can be process of buying a new car. This includes of a new car before they buy it. This, taken stressful/difficult. 57% who say that it’s a ‘very important’ part alongside the levels of confidence across the of the process. Consumers also value the market in interacting with new car Dealers “I would prefer to have an honest interaction ability to negotiate on add-ons/optional extras and the value placed on negotiating price where I am told a price upfront, then I can and the advice provided by sales staff. From at a dealership, suggests that discussing and compare between brands and Dealers before this, it’s clear that many aspects of the Dealer negotiating price in-person at a dealership is I arrive in person. Haggling over price is experience are highly valued by consumers. an accepted and valued part of the overall new demeaning and tedious,” one person said. car buying process. The ability to negotiate on the price of a new Agency Model car in the dealership is something that is For the most part, customers who value the When the idea of set pricing/no longer being highly valued by all consumers, regardless of ability to negotiate on the price of a new car able to negotiate on the price of a new car is age, gender or brand of vehicle purchased, say that this simply helps them to keep the tested, around one in three suggest that this with over 90% of every demographic group price down/get access to a better deal (51%). idea appeals to them (30%), leaving 70% who based on age, gender, life stage, and type of There’s a sense that negotiating is a part of are either uncertain (38%) or who find the brand bought saying they valued the ability to the process and that customers should have idea unappealing (32%). This presents as being negotiate. a right to negotiate, while past experience with haggling has been successful. Around a relatively contentious model, with similar one in ten believe that the ability to negotiate proportions engaged and disengaged by it as a gives them confidence and empowers them, principle.

10 | APRIL 2021 | automotivedealer.com.au POLICY Australian Automotive Dealer Association

against it were worried it would put them at a Men are significantly more likely than women APPEAL OF FIXED-PRICE MODEL disadvantage and lead to higher prices. (58% vs. 48%) to be open to EVs, while they are more appealing to those who are buyers Over half (52%) of new car buyers believe that of premium vehicle brands (70% vs. 51% for APPEALING 30% a shift to a non-negotiable ‘agency model’ of mainstream brand buyers). There’s also a skew selling vehicles would lead to increased pricing based on age – younger drivers are more likely for new cars, with one quarter suggesting to be open to buying an electric vehicle. UNCERTAIN 38% pricing would actually be lowered (25%). This highlights the extent of concern that The most common reason for being consumers in the market have with respects to unlikely to consider an electric vehicle is a what fixed pricing would mean for them in the concern around a lack of charging stations/ UNAPPEALING 32% longer-term. infrastructure (69%). Linked to this, 55% have a concern that EVs don’t have sufficient Very appealing Very unappealing Hybrid & Electric driving range before requiring a recharge. Just Quite appealing Quite unappealing Neutral under half (49%) believe that higher purchase Just over half of the market (53%) say they’re prices for electric vehicles is their primary likely to consider buying an electric vehicle barrier to purchasing an electric vehicle. The appeal of the agency model/no negotiating or a hybrid vehicle (57%) in future. In both is relatively consistent across demographics, cases, around one in four are uncertain, and Impact of Brand Discontinuation although there are tendencies for it to have the remaining 15-20% are unlikely to consider greater support among younger consumers, such vehicles. Overall, it implies that there’s an When presented with the hypothetical that the premium brand buyers, and men. openness to alternative fuel sources within the manufacturer of their intended vehicle were market – whether this converts to behaviour planning to pull out of the Australian market Reasons given by those who found the agency change straight away is another matter. five years post-purchase, 45% of consumers model appealing centred around fairness say they’d still likely buy that vehicle while 55% and the same price for everyone, while those There are some significant demographic skews would not. when it comes to considering electric vehicles.

Royal Automobile Club of Australia Incorporating Imperial Service Club Contact us to discuss how partnering with RACA can benefit your business and add value for your customers 89 Macquarie Street Sydney www.raca.com.au | [email protected] | 02 8273 2318 POLICY Australian Automotive Dealer Association

ASIC RELEASES DEFERRED SALES MODEL GUIDE

he Australian Securities and Investments prescribed by ASIC (the prescribed six weeks after the beginning of the add-on Commission (ASIC) has released a draft information). insurance deferral period, add-on insurance Tof its regulatory guide to the deferred products may be sold to consumers. sales model of add-on insurance. A series of prohibitions would be in place Communication with the consumer in forms during the DSM, which would apply to the other than writing is restricted. It is not yet the completed article, but does principal provider and related third parties. The provide an insight into the requirements that are prohibitions relate to: At the end of the six-week period, any likely to apply to providers of add-on insurance • The third party or principal provider communications with consumers will be subject when complying with the deferred sales model, sells an add-on insurance product to the to anti-hawking legislation. and communicate how ASIC will approach consumer, except after the end of the The period before the DSM occurs is called the applications for exemption from the deferred add-on insurance deferral period. sales model (DSM). pre-deferral period. The pre-deferral period • It is an offence to offer an add-on begins when: insurance product for issue or sale to The Australian Government decided to develop • The consumer indicates an intention to the consumer, or request or invite the the deferred sales model after the Royal acquire the principal product or service. Commission into Misconduct in the Banking, consumer to ask for, apply for, or purchase • If there is an add-on insurance deferral Superannuation and Financial Services Industry an add-on insurance product, where: period in relation to the add-on insurance recommended an industry-wide deferred sales - the offer, request or invitation is not product, ends immediately before the start model for add-on insurance. in writing, except during the add- of the deferral period, or otherwise does on insurance pre-deferral period or not end. The intent is to separate the sale of any add-on after the end of the add-on insurance insurance from that of the sale of the principal deferral period; During pre-deferral, the consumer can be product or service. It would apply across all communicated with but selling an add-on sales channels, in person and online, with - the offer, request or invitation is product is prohibited. a deferral period of four clear days. It is not not in writing, except if the offer or intended to apply to: request is during the add-on insurance Consumers can be communicated with at • products that are the subject of an ASIC pre-deferral period or after the end of any stage during the deferral periods if that product intervention order which imposes the period of six weeks beginning on communication is in response to consumer a deferred sales period; the first day of the add-on insurance queries, having received the prescribed deferral period. • comprehensive car insurance; information. • products that the Minister exempts by - the offer, request or invitation is not in At any stage during the deferred sales model regulations; writing, and is made during the add-on periods, a consumer can inform either the • products and entities that ASIC exempts insurance deferral period. principal provider or a related third party that by notifiable or legislative instrument; and they no longer wish to receive offers, requests or - the offer, request or invitation is not in invitations to purchase or apply for an add-on • products recommended by financial writing, and is made during the period insurance product. Once a consumer has made advisers. of six weeks beginning on the first day such a request, it is an offence for the principal of the add-on insurance deferral. The draft suggests the four-day period provider or a third party to offer, request or commences at the later of: - before the offer, request or invitation is invite a consumer to purchase or apply for an • the time the consumer enters into the made, the consumer informs the third add-on insurance product. commitment to acquire the principal party or principal provider that they do It is important to stress that this is just a draft product or service to which the add-on not want to receive such offers, requests document at this point. The AADA will insurance product relates; or or invitations. continue to work with ASIC, and keep members • the time the consumer is given In the period after the add-on insurance informed as to the progress of this model. information about the product as deferral period, but before the date that is

12 | APRIL 2021 | automotivedealer.com.au POLICY Australian Automotive Dealer Association THE YEAR OF REFORM FOR THE AUTOMOTIVE INDUSTRY

concerns raised by Dealers for a 'more level unilaterally changing contracts, Evan Stents playing field' were real and not just part of poor compensation and reneging on Lead Partner, an ambit push for more favourable industry warranties. The Government indicated Automotive Industry trading conditions in what is otherwise a that strengthening penalties for wilful, Group, HWL Ebsworth highly competitive industry sector. egregious and systemic breaches of the Lawyers Franchising Code by large and profitable This year has already seen the registration multinational companies will act as a on 12 January 2021 of an amended strong deterrent to this kind of conduct; 021 is looking set to see an Franchising Code of Conduct containing a unprecedented level of regulatory new 'Part 5' that deals exclusively with new 2. introducing a new mandatory 2reform to the Australian automotive vehicle Dealer agreements. In summary, the automotive code to establish best practice new vehicle industry which will benefit key amendments to the Dealer Code include and address concerns multi-national new vehicle Dealers. These reforms have amendments to: manufacturers won’t follow the six largely come about due to the advocacy and voluntary principles launched by the lobbying carried out at an industry level 1. End of term arrangements requiring: Federal Government on 11 December to give better protections to automotive a. manufacturers to give 12 months’ 2020 to guide agreements between Dealers under the Franchising Code of notice in writing of their intention to car Dealers and manufacturers. The Conduct. (or not to) extend or enter into a new principles were designed to help steer agreement at the expiry of an existing contract negotiations and build on the Momentum for regulatory reform started term (replacing the previous clause introduction of a separate schedule to gaining traction when on 27 February requiring 6 months’ notice); the Franchising Code of Conduct for the 2020, the Senate referred the inquiry into b. manufacturers to give the reasons for auto industry on 1 June 2020; the announcement by General Motors their decision if it is to not to renew 3. ensuring the Franchising Code remains Holden on 17 February 2020 to withdraw or extend a Dealer agreement upon its relevant and keeps pace with changes the Holden brand and operations from expiry; and to business practice by explicitly Australia, to the Education and Employment recognising that Dealers operating as References Committee (Senate Committee). c. manufacturers and Dealers a agree to a manufacturer’s agent in relation to Originally the Senate Committee was to a 'wind down plan' for managing the new vehicle sales would still gain the meet and report back to the Senate by May winding down of the dealership if the protections afforded by the Franchising 2020. However, subsequent extensions were manufacturer decides not to renew or Code. This reform is targeted at granted to allow the Senate Committee extend a Dealer agreement. manufacturers such as Honda and to hear evidence from stakeholders in 2. The prohibition on imposing significant Mercedes who have announced moving the automotive sector and examine the capital expenditure by manufacturers on to an 'agency' distribution model. regulation of the relationship between car Dealers. manufacturers and car Dealers in Australia 3. Allowing multi-party dispute resolution The Federal Government also announced more generally. between Dealers and a manufacturers. that it is committed to working further with the automotive franchising sector to consult During the period of the Senate Without even waiting for the Senate on: Committee's terms of reference, Honda Committee to table its report, the Federal • ensuring appropriate protections for Australia announced that it was terminating Government announced on 12 March 2021 automotive dealerships from unfair a large percentage of its Dealer network in that it intended to make further significant contract terms in their agreements with Australia so that can move to an 'agency' reforms for the automotive industry aimed manufacturers; retail model. Whilst some sectors of the to address the significant power imbalance automotive industry have denied any between Dealers and multi-national car • options to achieve mandatory binding regulatory reform is necessary, the decision companies. These changes include: arbitration for automotive franchisees, by Holden to exit the Australian market to address power imbalance when there 1. increasing penalties under the and Honda's decision to move to an agency is a dispute; and model had a profound impact on the minds Franchising Code to up to $10 million of the Senate Committee and the Federal to international car companies that • the merits of a standalone automotive Government. What the 'Holden' and 'Honda' undertake systemic breaches under code. restructures have demonstrated is that the the Franchising Code, including

automotivedealer.com.au | APRIL 2021 | 13 POLICY Australian Automotive Dealer Association

Along with the reforms to the Franchising payment of bonuses. Often these negotiations Consumer Law. One of the factors that has Code, on 22 October 2020, the ACCC are constrained by the concern not to prevented Dealers to date from seeking announced a class exemption that, from early contravene provisions in the Competition protection under the unfair contract regime 2021, will provide new vehicle Dealers (as and Consumer Act 2010 (CCA). This has was a requirement that the applicant was franchisees) with an exemption from normal sometimes led to Dealer Councils applying to a 'small business' employing less than 20 competition laws to allow them to form the ACCC for an ‘authorisation’ to engage in employees. One of the key reforms is to change bargaining groups and collectively negotiate collective bargaining. The ACCC authorisation the eligibility to less than 100 employees - with their manufacturers without needing to process can be slow and costly. The new class which will capture many more Dealers. apply for ACCC approval. exemption means that Dealer Councils can now collectively negotiate terms of Dealer Much of the detail of these new regulatory Dealers for many years now have formed agreements, KPIs and bonuses ‘without reforms will be known once legislated during Dealer Councils to, amongst other things, needing to worry about a possible competition the course of this year. What is clear is that represent them in their dealings and law breach.’ these reforms will go a long way in levelling negotiations with manufacturers. These the power imbalance between Dealers dealings and negotiations particularly arise Finally, On 6 November 2020, the State, and manufacturers and better protect the when a manufacturer wishes to propose a Territory and Federal Consumer Affairs significant investments Dealers make in their new Dealer agreement, amend the terms of Ministers agreed to strengthen and extend dealership businesses. a Dealer agreement or amend KPIs or the the unfair contract regime in the Australian GOVERNMENT REFORMS DRIVE DEALERS TOWARDS A FAIRER FUTURE

3. Explicitly recognising that Dealers Principles 1 and 3 relate to the provision of Vinesh George operating under an agency agreement are “fair and reasonable compensation” for Dealers Company Secretary protected under the Franchising Code. that have had an early termination as a result and Legal Counsel, of their distributor withdrawing from the AADA | Principal, The specifics of implementation of those Australian market, rationalising their network VS George Lawyers reforms are yet to be released by the or changing their distribution model. Government. Principle 5 requires that “reasonable n 12 March 2021, the Morrison Mandatory Principles provisions” be included in Dealer agreements Government announced that it would so that distributors can compensate Dealers The recent example of General Motors’ Obe making landmark reforms to the or “...buy back new vehicle inventory, parts abrupt withdrawal of the Holden brand from automotive industry in response to “the and special tools” in the event of non-renewal, Australia and their subsequent failure to growing power imbalance” between Dealers market withdrawal, network rationalisation or work in a cooperative manner with Dealers and distributors. changes to the distribution model. is illustrative of the general inadequacy The Government committed to making the of reliance on distributors’ good faith and Principle 2 explicitly precludes distributors following reforms to the Franchising Code: voluntary principles. Voluntary principles from including provisions that exclude 1. Making the voluntary best practice can sometimes have the positive effect compensation in new dealership agreements. principles (listed in the table on page of promoting ethical business practices, 15) for new car dealership agreements however, they are significantly inhibited by The necessity and rationale for mandating mandatory. their inability to create an environment of “fair and reasonable” compensation for Dealers compliance and accountability. was evident in the unfair compensation 2. Increasing penalties under the Franchising offered by GM Holden to its 185 Dealers. Code to up to $10 million for “wilful, Dealer Compensation The recently released Senate report on the egregious and systemic breaches” of the Regulation of the relationship between car Code, such as unilateral contract changes, Principles 1, 2, 3 and 5 of the mandatory manufacturers and car Dealers in Australia poor compensation and reneging on principles relate to the inclusion of provisions provided countless examples of submissions warranties. for compensation in Dealer agreements. that were concerned about the adequacy of

14 | APRIL 2021 | automotivedealer.com.au POLICY Australian Automotive Dealer Association

Mandatory Principles for New Car Dealership Agreements

Franchisors should include provisions in new dealership agreements that provide for fair and reasonable compensation for franchisees in the event of early termination resulting from: Principle 1 • withdrawal from the Australian market; • rationalisation of their networks; or • changes to their distribution models.

Priciple 2 Franchisors should not include provisions that exclude compensation in new dealership agreements.

The‘fair and reasonable compensation’ as referred to in Principle 1 should include appropriate allowances for the loss a franchisee may incur, which can include: Priciple 3 • lost profit from direct and indirect revenue; • unrecovered expenditure and unamortised capital expenditure when requested by the franchisor; • loss of opportunity in selling established goodwill; • wind up costs. When an agreement is entered into it should provide franchisees a fair and reasonable time to secure a return on investments that have been Priciple 4 required by franchisors as part of the agreement. Agreements should include reasonable provisions for franchisors to compensate or buy back new vehicle inventory, parts and special tools, in the event of: Priciple 5 • non-renewal; • withdrawal from the Australian market; • rationalisation of their networks; or • changes to their distribution models. Priciple 6 Agreements should include provision for timely commercial settlement and dispute resolution. compensation offered by GM Holden. Of facility requirements, it can take many years Increased Financial Penalties particular concern was the submission by for them to recoup their investment. Short an anonymous Dealer, who noted the wide term Dealer agreements place enormous The decision to increase penalties for a breach disparity between the compensation offered pressure on Dealers to meet what are often of the Franchising Code to a maximum of $10 by GM Holden, and the value of KPMG’s unreasonable demands from distributors, million is a welcome and necessary change. independently determined compensation or else face the ever-present threat of non- In its response to the Fairness in Franchising of the true amount owed to Dealers. The renewal. Principle 4 provides an important Report released in 2019, the Government had concept of “fair and reasonable” compensation safeguard against Dealer exploitation and will previously committed to doubling penalties creates an independent standard with which require distributors to reconsider the length of from 300 penalty units ($66,600 from 1 July to evaluate the compensation being offered the terms they set for their Dealer agreements. 2020) to 600 penalty units ($133,200) for by distributors. While determining what is breaches of the Franchising Code. However, “fair and reasonable” may present practical Provisions for timely commercial settlement given the substantial wealth and revenue of difficulty, having this enforceable standard can and dispute resolution overseas multinational distributors, such help prevent the excess abuses of distributors penalties were deemed too small to have a Principle 6 states that agreements should who significantly and unfairly under- deterring effect on poor corporate practices. It include provisions for timely commercial compensate Dealers. is hoped that the radical increase in financial settlement and dispute resolution. Given the penalties is sufficient to deter distributors from Fair and reasonable time to secure a return on difficulty that Dealers and distributors have in engaging in unethical practices. investment resolving disputes and settling matters in an efficient manner, having provisions in place in Conclusion Principle 4 requires distributors to provide a Dealer agreement will assist in helping both Dealers with “fair and reasonable” time to parties cooperate in finding a solution without The Government’s reforms of the automotive secure a return on the investments they resorting to litigation. Nevertheless, given that franchising sector are welcome as they have made in accordance with their Dealer principle 6 has only vague specifications, it is continue to level the playing field. Dealers can agreement. As Dealers expend significant unclear how current practice will evolve as a look forward to future reforms, which will sums of money complying with dealership result of the need to have “timely commercial continue to foster healthy business relations settlement”. between distributors and Dealers.

There's a new player on ground.

automotivedealer.com.au | APRIL 2021 | 15 FEATURES Australian Automotive Dealer Association

DIGITAL FOCUS OF NADA SHOW

he National Automobile Dealers reported in their recently released Motor Ford CEO Jim Farley said that he sees that the Association (NADA) held its 2021 Show 150 report. “It was encouraging to hear that biggest impact for Ford in the future will be Tonline in February, and unsurprisingly, multiples have not changed significantly in connectivity, rather than the electrification of the focus was heavily tilted towards digital the US and as always the franchise is the key vehicles. marketing and online activity. driver for the multiple valuation,” the BDO report says. “It was also interesting to hear that COVID-19’s Effect On Franchise Value and BDO’s Steve Le Bas, Partner – Head of Motor only 12% of businesses transition to the third the Buy/Sell Market Retail, and Malcolm Thixton, Partner – Motor generation in family ownership and in the US Erin and Ryan Kerrigan of Kerrigan Advisors Retail, ‘attended’ the Show and produced a this could increase M&A activity.” comprehensive report. delivered a presentation highlighting that Glenn Mercer delivered his updated review dealerships profits had rebounded since the One of the key takeouts was that like the UK on the 'Dealership Of Tomorrow', concluding lows of March 2020 to record levels during the motor retail industry, the US has rebounded that the dealership model is in good health, US Summer, indicating that the industry was very strongly since Spring 2020 and like the remains profitable and will continue to develop both resilient and nimble. UK, Dealers have adapted well to the new way via evolution rather than revolution. Glenn The record level was achieved through of working and interacting with customers. will continue to update his review and deliver increased margins and reduced expenses, it to the AADA 2021 National Convention & As in the UK the turnover of staff in the rather than greater volume. The average used Expo in Brisbane in September. industry remains too high and the Dealers to new ratio increased to 1.15:1 compared to a that are the most successful are the ones that Likewise, Jared Hamilton of Driving Sales will five year average of 0.8:1. However, Erin stated have cracked the employment proposition by bring his presentation “Build Millennials and the P&L is still in a state of flux and questioned offering a career path, investing in the right Gen Zs into Your Highest Performers” to this whether these increases in profits were training for the staff and provide timely and year's Convention. As he did at the NADA sustainable and could then increase future constructive feedback to allow continued Show, Jared will explain why without the right value. She concluded that they probably were development. skilled people Dealers will never be able to not and were being led by lower headcount. access the full value of their business. You need In the US in September 2020, only 56% of In the US they are forecasting increased M&A to optimise your greatest asset – your people Dealers were fully staffed and the average units activity in 2021. This is in line with what BDO and in particular the Millennials. sold per month per sales person had increased by 60% from 2019 to 16 per month.

16 | APRIL 2021 | automotivedealer.com.au FEATURES Australian Automotive Dealer Association

This together with online sales activity up by assessments, cross dept interviews and have a number one issue and prevents higher first 50% has led to online sales being 20% of total clear on-boarding process. They should reduce time off shelf fill rates. One commentator sales in US dealerships. repetitive and morale draining tasks, equip noted that if there had been no sales in six staff with tools to be productive, including months there was a 49% chance of no future Therefore, when looking at profits on a cutting edge technology, improve use of AI sales, and no sales in nine months meant a sale or purchase transaction it should be and ensure all processes are up to date. 67% chance of no future sales. If a part does considered whether the profits are sustainable not sell for 12 months of more there is a 98% and multiples should be applied to adjusted He said Dealers should enable flexibility for chance that it will not be sold. earnings pre-COVID-19 and expected future digital sales as there is a 30% higher close rate performance as the economy reopens. for digital retailing leads and a 26% higher The simple fact is that all parts will eventually gross profit. They need to cater for every become obsolete, current parts obsolescence As in the UK, Ryan expects transactions type of customer, with different processes exceeds industry guidelines and obsolescence to pick up in 2021, meaning further for online, walk-in and hybrid experiences, needs to be managed before it happens. consolidation and expectations as the large and staff need to understand which type of groups will become more powerful in the customer they are dealing with. Ensuring you have the right part at the right sector. Only 3% of family enterprises transition time and that parts stock is reconciled on a to the 4th generation, compared to 30% to the Other suggestions were a need for greater monthly basis means there are no year-end second generation, and 12% to the third. coaching and career progression opportunities. surprises – either up or down.

Improve Employee Experience to Improve Business outcomes of highly engaged teams: In most dealerships the service department Customer Experience generates around 70% of the parts gross profit. • 18% more sales productivity; But if the part is not there service profitability In his session, Chase Abbott of Cox will drop. The average service department • 23% more profitability; and Automotive argued that the best way to loses a minimum of 10%-15% of productivity improve customers’ experiences was to • 18% less turnover for high-turnover due to low parts first time off shelf fill rates. improve the experience of employees. He organisations. said that with dealership staff turnover at Cracking the Code to Remote Selling an all-time high, the traditional method Future of the Auto Industry of employing staff is not a sustainable Joe St John of Autofi said consumer behaviour employment proposition for the industry. In this session, Ford CEO Jim Farley and has definitely changed and COVID-19 only NADA chairman Rhett Ricart focused on served to accelerate this change. Some stats: Dealer/OEM relations, which have never been To ‘crack the code’ to remote selling, Dealers more important. • 80% of dealership sales people turnover must rethink their traditional methodology annually; Mr Farley acknowledged the continuing and adjust to new customer expectations and changes facing the industry from electric buyer journeys. They must influence customer • 20% of dealership staff are likely to look vehicles, with 10% of all cars sold in Europe decisions by adopting a “buy anywhere” for another job in the next six months; now electric. Customers are demanding approach and embracing transparency. increased range of these vehicles and the • 1/3 of non-management employees do The digital experience must eliminate friction. number of EV models is now approaching not feel engaged or excited about their Convenience is the key to this. The traditional 150. jobs; brand promise does not match modern customer expectations. Customers come to • 54% of employees say it is harder to do Used Cars a Dealer’s website to learn more or to buy a their job effectively now than before the Tommy Gibbs outlined his “Six strategies to vehicle, so Dealers must eliminate clutter and coronavirus outbreak; improve gross and volume in your used car misleading call to action buttons. A website • sales staff are the top driver of customer department”, saying that the focus must be on should only have two or three call to action satisfaction according to surveyed turning stock as quickly as possible from the buttons and Dealers should look to continually consumers; and day it is purchased through the time to get streamline the user experience and create a it ready for sale. He urged Dealers to report purchase-focused buying journey, making it • top performing Dealers have turnover profit per unit split between vehicles held for easy to obtain pricing and other information rates that are 17% lower than Dealers in under and over 30 days to demonstrate to their transparently. the bottom quartile and are three times teams the difference in profit which is always more profitable than the average. significantly higher for faster moving stock. BDO invites Dealers wishing to discuss any aspects of the NADA Show in greater depth to Mr Abbott said that in order to recruit and Parts Inventory contact Mr Le Bas or Mr Thixton. hire effectively, Dealers need to consider their sourcing processes, pre-employment Dave Pieuch of Automotive Consultants Group Inc, said obsolescence control was the automotivedealer.com.au | APRIL 2021 | 17 FEATURES Australian Automotive Dealer Association DEALERSHIP OF TOMORROW (DOT): 2021 UPDATE

Glenn Mercer Automotive Industry Consultant

“For everything to stay the same, everything must change.” - from The Leopard by G. T. di Lampedusa.

ampedusa was writing about Italian politics in the 1800s, but his epigram Lalso applies to the American dealership scene today. His meaning was that, in order to retain their dominant position in Italian society, the aristocratic families of Sicily would have to completely change their political stance, from monarchist to democratic. In this way, even as everything changed around As you can see, the report’s conclusions are 2000s. That also hasn’t happened, as them, their fortunes would be assured. And fairly upbeat. And indeed, since our first Dealers and OEMs adopted digital in the American dealership landscape today, edition came out in early 2017, we have been technologies themselves, and reduced everything is indeed changing, but the upbeat, despite a constant refrain in the press, disintermediators mostly just to lead position of Dealers themselves seems to be as and in the blogo- and Twitter-sphere that the generators. strong as ever, if not stronger. dealership model is “broken” (whatever that means). We just don’t see that, and indeed our • And there was the threat of forward This is one finding of the 2021 update of industry ended “The Plague Year” of 2020 with integration by the OEMs (we’re looking the NADA (National Automobile Dealers near-record profitability, and with record high at you, Ford and GM, and Daewoo before Association) ongoing DOT project, begun share prices for the publicly-traded chains you!) – which was then abandoned (with back in 2016. DOT was and is intended to such as AutoNation. The demand for cars the exception of Tesla, of course). remains high (by the end of the year only fleet provide new-car Dealers with information In summary, this brief history of repelling, let’s sales were still weak, with retail sales mostly and insights regarding the evolving world of call them, “the barbarians at the gate” does give recovered), and Dealers’ ability to serve that automotive retailing. us confidence we can handle future challenges. demand with ever-higher levels of efficiency But of course no businessperson can ever Before looking more closely at the report, two and customer satisfaction became clear. disclaimers are in order. First, our focus is become complacent. Some of the issues that wholly on America: how useful our report is This is not to say there are not challenges. It is worry us: a truism that there always are challenges. But it for the Australian environment is for you to • Increasing OEM control. The average is also a truism that Dealers have always risen decide. Second, the report is an arm’s-length Dealer in the USA is now receiving some to the challenges. For examples: research paper, such that the views expressed $1 million (USD) annually from the are my own, not those of NADA. • There was the challenge of the new public OEM, in the form of performance-based As before, the report covers two main strands dealership chains, which in the 1990s incentives or bonuses. For most Dealers of developments: “inside” the store (e.g. some thought would sweep the board of this is an amount equivalent to their total digitisation) and “outside” the store (e.g. EVs private ownership. That hasn’t happened, bottom-line profit! This is of and AVs). And as before, the report looks out as after a quarter century of existence course meant to offset the decline in over the next decade: not next month or even these firms (combined) still have no more front-end margin. But the Good Old Days next year – thus we make no comment on than a 10% share of the US car market. of making one’s living from customer whether Dealer chain X will buy chain Y in margin have transformed into the Brave April, or whether OEM Z will launch a new • There was the threat of online New World of satisfying the OEM, as image program in May. disintermediation in the early your most important constituent.

18 | APRIL 2021 | automotivedealer.com.au FEATURES Australian Automotive Dealer Association

at least – meet enough of our mobility needs that we would shed our cars for them? In the USA at least, no. (But travel to downtown Oslo and its vehicle-free zones and $7-per-gallon gasoline, and you do indeed get a different answer!)

One last thing to mention. And it is early days for this, and the nature of the challenge is not yet clear, but there is a development that bears watching. And that is the equating of EVs with OEM-direct sales. Probably inspired by Tesla, there seems to be an emerging sentiment (not as far as we know based on any real data) that somehow electric vehicles are better marketed and sold by company-owned stores (physical or digital) than by franchised Dealers. It eludes me how changing the powertrain changes the • Dropping the ball on the EV transition. to some extent dissipated. Let’s review two of buying process (do we sell hardback books More EVs on the road in the USA is these. only in stores and paperback books only not a matter of “if” but of “when.” Yet online?), but the sentiment is there. Some consumer demand for EVs – to date First, if we look at autonomous vehicles (AVs), new-entrant OEMs are committed: Rivian for – has been sluggish (see chart above). we see that, while they are still on their way example will follow Tesla in going direct to Thus many Dealers have been reluctant to our roads, their arrival is both delayed and customers. But incumbent OEMs are making to invest in EVs, whether in the form narrowed, so that the vision of hordes of so- feints in this direction as well. of expensive service equipment or in called “robotaxis” displacing privately-owned the form of salesforce retraining. If EV cars en masse has receded. The delay is due This will bear close watching, not only for sales grow as we do expect, Dealers with to the realisation that autonomous driving is the obvious risks of disintermediation and struggling sales staff will miss out on an extremely hard problem to solve – though asset-stranding, but also because in some revenue, and Dealers with lagging service it will be solved, we have no doubt. The situations perhaps there is a compromise that departments will find their customers narrowing of scope is part and parcel of the can make everyone happy. This compromise turning to the aftermarket for EV delay: if generalised drive-anywhere-anytime is the agency model, wherein the OEM keeps maintenance. autonomy is just too hard to execute right now, title to the inventory and so gets to set the then it makes sense to go after lower-hanging selling price, while the Dealer steps back to just • Giving back the gains made in 2020, in fruit: maybe low-speed sidewalk delivery supporting the sale, on a commission or fee terms of new-vehicle sales processes. The robots, or highway-only heavy-duty truck basis. Dealers on the one hand might hate the pandemic has been terrible, there is no driver assistance, or yes even robotaxis – but idea of giving up margin control, but on the doubt about that. But as a result of the robotaxis limited to clearly-delineated urban other hand if margins are already compressed pandemic we have moved to socially- zones. And increasingly there is thinking that and prices are already set by the internet, there distanced digital sales processes that AVs might eventually be sold not just as fleet is something to be said for letting the OEM have dramatically cut selling costs (by vehicles but also as personally-owned cars shoulder the burdens of setting prices and boosting employee productivity), and to … and Dealers of course will be eager to sell funding inventory. lower inventory levels (due to virus- them! driven OEM shutdowns), which have But then again, direct sales work best when boosted front-end grosses to near-record If we look at the other big scare of the mid- demand is greater than supply. And as more levels. Higher grosses + lower expenses 2010s, mobility services (specifically ride-hail EV models are launched, surely demand will = profit levels that we have not seen in systems like Uber or Didi), we recall that some not exceed supply for all of them, and here is many years. But will we be able to hold pundits believed we’d all give up our own cars where we expect OEMs will quickly turn back these levels, or will our newly-found for “permanent rental” – why bother with your to Dealers. Back to Dealers who, in country efficiencies be eroded by the return of bad own car when you could Uber everywhere? after country and for decade after decade, have habits, and our newly-elevated margin This concern has also ebbed, as in the USA proven that it is indeed they who can best… levels be chopped as OEMs return to we see literally zero impact from ride-hail on “move the metal.” undisciplined overproduction? owning or driving personal cars. Do ride-hail and its younger sibling, micro-mobility (think Glenn is an independent automotive researcher But other storm clouds that seemed so scooters and e-bikes) offer more ways for based in the USA. You can contact him with any threatening in earlier editions of DOT have people to get around? Yes. Do they – so far questions at [email protected].

automotivedealer.com.au | APRIL 2021 | 19 2021 NATIONAL CONVENTION & EXPO

LIVE & ON-DEMAND

AADA CONVENTION 2021: BACK & BIGGER THAN EVER

The AADA Convention & Expo returns in September with an all new format.

This year, Australia's Largest Automotive Event will be live onsite at The Brisbane Convention & Exhibition Centre, plus, every session will be available online, both live and on-demand.

With the extra ease of attending this new format provides, AADA 2021 is set to be the biggest AADA Convention & Expo in its history.

BRISBANE CONVENTION & EXHIBITION CENTRE 14-15 SEPTEMBER 2021 www.aadaconvention.com.au AADA 2021 CONVENTION: ONSITE, LIVE AND ON-DEMAND Australian Automotive Dealer Association JOIN US IN BRISBANE FOR AADA2021 FUTURE FOCUSED

Featuring 28 workshops, four super sessions, • Service Management Structures and five feature functions, AADA2021 Future • The Value of Managed Customer Data Focused - “live & on-demand” will address: • leadership & management teams; Wednesday 15 September • service management structures; • Sales in a Hybrid Consumer Environment • sales in the hybrid consumer environment; • The Digital Dealer Landscape • a new world in car financing; • Service & Parts in an Online World • the value of managed customer data; and • A New World in Car Financing • Dealer marketing 2021 – what delivers, • Leadership & Management Teams what doesn’t. • Sales Management he AADA National Dealer Convention & Expo is excited to announce For nearly fifty years the annual AADA Convention features across two action packed TAADA2021 Future Focused, a welcome Convention & Expo has been a highlight of days: return to our traditional Convention in the the retail automotive calendar, delivering • Dealer Marketing 2021 – What Delivers, vibrant city of Brisbane this September. countless learning and networking What Doesn’t opportunities, motivation, inspiration and AADA2021 Future Focused will present an ideas. AADA2021 Future Focused will do • Live & On-Demand Management action-packed onsite program and also include all that, in a two-day elective program in Workshops a completely virtual experience for Dealer which franchised automotive leaders and • AGM & Keynote Address management teams. Every workshop and their management teams can engage in the our famous AADA Expo will be “online and • Key Networking Events pressing matters of this dynamic $56 billion on-demand”, delivering our engaging content industry. right into dealership meeting rooms. Something for Everyone at the Expo Designed to meet the challenges of today’s This unique and important industry event The AADA2021 Expo is a one-stop shop business and market circumstances, the will be held on Tuesday 14 & Wednesday 15 exposing dealership leaders to the wide range AADA2021 Future Focused schedule covers September 2021, hosted by Walkley Award- of solutions on offer for every aspect of their the operations of the franchised Dealer’s winning journalist David Speers. We look operations. Using the many new features of the business and the important advocacy issues forward to our industry coming together again AADA2021 virtual Expo platform, exhibitors facing our industry. in the flesh, while also ensuring those unable can present those solutions onsite and virtually in a unique and engaging way. to attend in person receive the benefits of our The event schedule ensures that dealership program. leaders are able to select the content and Management Workshop Program sessions that cover their area of responsibility As you know, because of COVID-19, our and interest. The live program will be The AADA National Dealer Convention & AADA 2020 Moving Forward Convention conducted over two mornings and will Expo management workshop program is & Expo was a 100% virtual event for the first include the Annual General Meeting of the designed to educate and inform and will be time in our history, but it was a resounding Australian Automotive Dealer Association. powered by dealership industry partners success. Our attendee satisfaction ratings delivering relevant content for leadership averaged 4.9 out of 5, which is a great score in Program inside dealerships. anyone’s language. Tuesday 14 September It has been a long time since our industry AADA2021 Future Focused will deliver a • The Work of Your AADA gathered together in person. Whether you comprehensive program over two days for the can make it to Brisbane in person, or you join franchised Dealer. Our program will deliver • Government Policy Affecting Dealers us via our online portal, we look forward to for the invested Dealer Principal through to • The Dealership of Tomorrow seeing you at AADA2021 Future focused in the salesperson on the floor, all live and onsite • Franchise Arrangements September. at the AADA2021 Convention & Expo, and then on-demand for all virtual attendees.

automotivedealer.com.au | APRIL 2021 | 21 AADA 2021 CONVENTION: ONSITE, LIVE AND ON-DEMAND Australian Automotive Dealer Association

MEET YOUR NEW CONVENTION HOST DAVID SPEERS

AADA is thrilled to have David Speers, one being the minister in charge of proposed new and Tony Abbott in 2010, and between of Australia’s most recognisable and respected laws surrounding the storage and police access Kevin Rudd and Tony Abbott in 2013. His journalists, as host of the AADA2021 Future of metadata. knowledge of the political landscape and Focused National Convention & Expo. experience in dealing with politicians meshes He won the same award at the 2015 event perfectly with AADA’s consistent advocacy A two-time Walkley Award-winner, Mr Speers (which he also hosted) for his notable 'The efforts and regular engagement with Members is the host of ABC TV’s ‘Insiders’ political Fixer' interview with Christopher Pyne on PM of Parliament and government ministers. panel program on Sunday mornings. His move Agenda. His interviewing skill and familiarity with to the ABC in 2020 followed two decades our political guests will be a major asset for In 2016, Mr Speers was named one of the with Sky News as political editor and host of AADA2021 Future Focused and will make his 50 most powerful people in Australian a number of programs, including the station’s sessions essential viewing for anyone with a television by News Corp Australia. He won the flagship ‘PM Agenda’, ‘The Nation with David stake in the policies and legislation influencing Subscription Television Award for Best Male Speers’, and ‘Speers Tonight’. the future of our industry. Presenter at the 2017 AACTA Awards. Mr Speers won his first Walkley Award in It is a real feather in AADA’s cap to secure Mr Speers has moderated televised federal 2014 for his interview with Attorney General Mr Speers’ participation, and we look forward election debates between John Howard and George Brandis, in which Mr Brandis to him bringing his experience and expertise Kevin Rudd in 2007, between Julia Gillard struggled to explain what metadata was despite to our Convention in September.

22 | APRIL 2021 | automotivedealer.com.au AADA 2021 CONVENTION: ONSITE, LIVE AND ON-DEMAND Australian Automotive Dealer Association DEALERSHIP OF TOMORROW UPDATE

S automotive researcher and friend One thing Mr Mercer found in the American of developments: “inside” the store (e.g. of AADA, Glenn Mercer, returns to dealership landscape was that although digitisation) and “outside” the store (e.g. EVs UAADA 2021 Future Focused to present everything is changing, the position of Dealers and AVs), and share his insight into likely an update of his ongoing Dealership of themselves seems to be as strong as ever, if not developments over the next decade. That Tomorrow research. stronger. makes this session one that any forward- thinking Dealer cannot afford to miss. Make Attendees at the 2018 AADA National Dealer Mr Mercer will share his thoughts on the likely sure you don’t. Convention & Expo rated ‘The Dealership of future of factors including: Tomorrow’ as the top session of the event. • Volume With three decades of automotive industry • Channels experience, the independent analyst was • Online interactions and penetration commissioned by NADA in 2015 to undertake • Physical facilities the Dealership of Tomorrow project, in order • Rooftop totals to provide insights into the developments that will likely alter the vehicle-retailing business • Economics over the next decade and stimulate long-term • Connected cars planning among US Dealers. • Electric vehicles and pace of uptake Mr Mercer shared an overview of his most • Autonomous vehicles recent findings at the 2021 NADA Show. • Mobility services Although his research is focused entirely on • The overall health of the industry and the the US, much of it should be applicable to coming challenges it faces. Australia – although of course that will be up Dealers to decide. (see feature article on page Mr Mercer will cover two main strands 18 of this edition for more detail) BUILD YOUR MILLENNIAL WORKFORCE WITH JARED HAMILTON

ared Hamilton, the award-winning Having shared his insights into the habits and Jared will teach you and your managers to entrepreneur and technology leader, was preferences of buyers, and the impact of social construct an attractive sales career path that Jsuch a hot ticket at the 2015 and 2017 media, in his previous AADA presentations, provides specific value to this demographic AADA National Dealer Conventions that we Mr Hamilton has now turned his extensive to recruit and retain them. Through data have invited him back to conduct this must- research skills to the issue of employees, collected by his company, DrivingSales, he see session. focusing on the needs, wants and aspirations will demonstrate what training to provide the of Millennials and Generation Z. employees at each level in their career path, which daily/weekly and monthly habits must be Millennial and Generation Z employees are mastered to progress, and which performance a significant part of our workforce, yet their quotas should be obtained at each time frame to employment values do not match the values keep your employees performing and growing. most sales managers believe they need to provide. Jared will address this gap and give If you want to recruit the right talent and build all attendees the process and competencies a team of high-performing Millennial and to build a high performing workforce of the Generation Zs, don’t miss this essential feature Millennial and Generation Z demographic. presentation. Stay tuned on our website for schedule and registration updates.

automotivedealer.com.au | APRIL 2021 | 23 AADA 2021 CONVENTION: ONSITE, LIVE AND ON-DEMAND Australian Automotive Dealer Association DELOITTE’S INDUSTRY OVERVIEW & ECONOMIC OUTLOOK

ee Peters and Dale McCauley, Partners, privately owned and operated motor Dealers Audit & Assurance, Deloitte, will present and related family investments. His specialties La mid-year overview of the state of the include Dealer profitability and performance industry in this feature presentation. coaching. He recently designed an automotive executive leadership program, Academy of Dale leads Deloitte’s National Motor Industry Leadership, which enlists top talent from Services practice and has over 21 years’ across Deloitte and an AFL premiership experience within the automotive industry. winning coach. He works alongside retail motor Dealers, manufacturers, financiers and legal advisors Both have long-standing associations with within the motor industry to provide specialist AADA, such as Lee’s feature session partnered services ranging from benchmarking, to with carsales at the AADA2020 Virtual performance improvement, to specialist Event, and Dale’s Special Presentation Panel coaching and talent development programs. discussion on ROI at His key achievements include the development AADA 2019 in Melbourne. of Profit Focus industry benchmarks and the first motor industry CRM benchmarks.

Lee is a Partner in Deloitte Private’s Motor Industry Services team. Working within the dealership space, Lee specialises in servicing SERVICE MANAGEMENT STRUCTURES THAT INCREASE RETURNS

e’re all familiar with the saying Jeff is the author of two books: "Write “the best customer is the one you Service and Write Your Own Paycheck: The Walready have”, and understand that Path to Making Over $100,000 a Year in the customer retention is one of the key pillars Automotive Business" and "What I Have of profitability. But with consumers these Learned From Attending Over 35 Indy 500's days having so much choice, understanding – Lessons in Sales, Motivation, Leadership, the importance of customer retention and Management, and Life in General", with two actually achieving it can be two different more: "The Forgotten Rules of Professional things. Salesmanship", and "The Service Advisors Bible for Closing More Sales" in the pipeline. After having visited and worked on over 3,500 service drives, Jeff Cowan has developed a very Jeff has had hundreds of articles published in simple process that will not only get you above various industry magazines and was host of 80% customer retention within twelve months an automotive service show on CBT News. He but will also maximise your sales and deliver currently hosts a podcast called "Write Service, the highest survey scores possible. Write Your Own Paycheck" that is listened to and watched by over 25,000 people weekly.

24 | APRIL 2021 | automotivedealer.com.au AADA 2021 CONVENTION: ONSITE, LIVE AND ON-DEMAND Australian Automotive Dealer Association BE PART OF OUR ONSITE AND VIRTUAL EXPO AND WORKSHOPS

he AADA2021 Future Focused Expo specifically designed to improve the operations • Dealer Principals will return to an onsite environment and bottom line of dealerships and their • Dealership General Managers Tand will also include a comprehensive various departments. • Dealership Financial Controllers “Virtual Expo” offering for all our exhibitors. This provides the best of both worlds that AADA is expecting a record attendance for • Sales Managers will deliver exhibitors expanded audience this first mass gathering of our industry in • Sales Executives reach. Our workshop program will cover a two years. There are limited Expo spaces • Service Managers comprehensive suite of issues facing every remaining, so contact us as soon as possible • Fixed Operations Managers department in the modern dealership. to reserve your place. If you have a product or service that you want to get in front of Dealers • Dealership Marketing Managers For exhibitors, the AADA 2021 Virtual Expo from all around Australia, you will not find a • Dealership F&I Managers will provide access for interactive presentations better chance than this. • Customer Relations Managers with onsite and virtual attendees in real time. • Vehicle Manufacturers Management Workshop Program Our AADA 2021 Virtual Expo software • Motor Vehicle Finance Lenders solution provides exhibitors with greater access The AADA National Dealer Convention & • Motor Vehicle Insurance Providers to dealership leaders and decision makers. Expo management workshop program is • Service Equipment Manufacturers An integral component of any AADA designed to educate and inform and will be • Media Companies powered by dealership industry partners National Dealer Convention, the AADA Expo • Software Solutions Providers showcases new products and services designed delivering relevant content for leadership • Allied Industries to New Car Dealerships to improve Dealers’ bottom lines. Dealers, inside dealerships. managers, staff, allied industry professionals, • Policy Makers & Regulators. Our workshop program assembles some and anyone else associated with the retail of the finest minds and leaders in the retail All of the above will be in attendance, so automotive industry are sure to find much to automotive industry, delivering solutions whether you want to engage with them, or you take away. The Virtual Expo grants them the and strategies for every facet of dealership are one of them, you can’t afford to miss this chance to share the experience with more of operations. Our speakers inspire, entertain, event. See you in September. their staff than ever before. educate, and equip attendees with the Contact Patrick Tessier OAM for Sponsorship The Expo is always the hub of activity at knowledge to return to their dealerships and and Expo availability. any AADA Convention, with displays, improve operations. Email: [email protected] demonstrations and explanations of new and There’s something for everyone at the AADA Tel: +61 412 685 857 innovative products, services and technology, 2021 Expo and Workshops.

automotivedealer.com.au | APRIL 2021 | 25 2021 NATIONAL CONVENTION & EXPO

LIVE & ON-DEMAND

BRISBANE CONVENTION & EXHIBITION CENTRE 14-15 SEPTEMBER 2021 www.aadaconvention.com.au

26 | APRIL 2021 | automotivedealer.com.au FEATURES Australian Automotive Dealer Association DELOITTE RELEASES CONSUMER STUDY FINDINGS

eloitte’s 2021 Global Automotive difficult to digitise, so the in-person experience number of people across these focus countries Consumer Study provides insights will remain with us for some time. People who remain concerned about the security of Dthat can help companies prioritise and still want to see, touch, and smell, and drive a a connected vehicle. Two-thirds of Australian better position their business strategies and vehicle before they buy it,” Mr Peters said. consumers said they feared someone hacking investments in the year to come. into their connected car and risking their Key Australian insights: personal safety,” the report reads. The data and insights from the study will provide insight into the consumer trends and • 70% expect to focus in petrol/diesel for Overall, safety continues to be most important disruptive technologies that will have the most their next vehicle, compared to 18% when people are thinking about their next impact on the automotive industry in the year for hybrid electric, and 4% for battery vehicle. ahead. electric; The report says that building value in both According to the authors, although the • a cost/price premium (28%) and a lack EVs and connected technology will be key for longer-term trend toward EVs appears to be of charging infrastructure (22%) are the OEMs looking to generate ROI on massive solidifying, consumers may be looking for greatest concerns regarding all-battery- R&D investments. Most consumers were more familiarity and affordability in the face of powered electric vehicles; unwilling to pay more than about US$500 near-term uncertainty. more for a vehicle with advanced technologies • 79% still expect to purchase their next (including those that would not pay any vehicle the ‘traditional’ way – in-person, “Awareness among Australian consumers of, more). and interest in, all-electric, or at the very least compared to virtually; hybrid, is certainly there, and is growing,” said The vast majority (79%) of Australians still • 61% would still prefer to interact with an one of the report’s authors, Lee Peters, Partner, want the in-person experience of buying a authorised Dealer; and Deloitte Motor Industry Services. car, with just 13% saying they’d prefer their • 60% are also open to virtual servicing, (as next vehicle purchase to be fully virtual, and “In a country where we often need to travel long as it free). only 8% saying they’d prefer a partially virtual long distances, we shouldn’t be surprised process. that issues such as range, price and charging Vehicle Electrification and Connectivity opportunities are front of mind, and Even those consumers who want a virtual influencing purchasing choices to largely stay “Intention to buy a gasoline or diesel vehicle buying process for their next vehicle would with the technology we all know.” jumps back up, as consumers may be looking still most prefer to interact with an authorised for the comfort of affordable, tried, and tested Dealer, with 61% of Australians favouring that The percentage of younger consumers in the technology in uncertain times,” the report option, compared with 31% preferring to deal US and Germany that have requested a vehicle notes. with the manufacturer. payment deferment this year is well above their older counterparts, raising questions Range anxiety and a lack of charging The report found that 45% of Australians did about their ability to support a sustained infrastructure are top concerns in most no research on financing options prior to demand recovery. countries, but safety is top of mind for people purchase, while 10% spent less than an hour in China and cost concerns for consumers in researching. Another 18% spent 1-3 hours, As a result of the pandemic, a significant Australia. 13% spent 3-5 hours, and 14% more than 5 number of consumers in China, India, and the hours. One-third listed convenience as the Republic of Korea have altered their timeline Most consumers intending to acquire an most important factor in choosing finance, for acquiring their next vehicle with some EV expect to charge it at home, but the followed by an easy pay process (29%), people planning to delay it as they consider importance of charging networks is high in the flexibility (28%) and the lowest rate for credit more affordable options. Republic of Korea and China. rating (28%).

Even though virtual vehicle sales may be here A positive consumer perception of connected From September through October 2020, to stay, a majority of consumers would still vehicles appears to be edging up in some Deloitte surveyed more than 24,000 prefer to acquire their next vehicle in person at markets, including China, Japan, Australia, consumers in 23 countries to explore an authorised Dealer. and the Republic of Korea. opinions regarding a variety of critical issues affecting the automotive sector, including the “Certain aspects of the buying process remain “Having said that, there are a significant development of advanced technologies.

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PH: 1300 880 057 • www.snap21.com.au FEATURES Australian Automotive Dealer Association “I SHALL BE RELEASED..."

David Blackhall The lyric seemed to epitomise the sentiments As encouraging as that March quarter was, of the many key players in the new car here’s cause for pause: Industry Consultant, business that I spoke to as the March quarter Raglan Ridge VFACTS numbers printed out on the Advisory VFACTS Q1 PRIOR FIVE YEARS computer. Q1 2020 233,361 March month finished at 100,005 units, some Shall Be Released, is a gospel-based song 22.4% ahead of the same month last year. The Q1 2019 268,538 written by Bob Dylan in 1967 and recorded March quarter finished at 263,648, a full 13% Iby him and literally dozens of other up on the dreary 2020 March quarter. Q1 2018 291,538 performers over the last four decades. The Q1 2017 388,870 most famous version is featured in Martin Halleluiah! I shall be released! Scorsese’s movie The Last Waltz. In that gritty March was indeed great news, even if many Q1 2016 285,328 documentary Scorsese expertly showcases Dealers were faced with persistent supply the final performances of the legendary issues that forced up order banks to worryingly If we discount the terrible COVID-impacted Canadian-American trail-blazing rock group high levels – consumers are definitely into result in Q1 CY2020, the 2021 March quarter The Band - Dylan’s frequent collaborators. immediate gratification post-lockdown. And was actually lower than the four prior ‘normal’ (Here’s the link for the few true believers out whoever burned down that computer chip March quarters (whatever ‘normal’ means). there – I know all three of you!). factory in Japan didn’t do us any favours – but hey, you know the old story about one truck A question that comes to mind is whether (You can see Sir Bob at his shambolic best load too many. or not we are going to experience a period performing live with Robbie Robertson, Levon of persistently lower sales post-COVID than Helm, Rick Danko, et al) Enjoy! we’ve been accustomed to in prior years.

TOP 20 Brands & Models YTD - March 2021

Brand Volume YTD % Variance YTD MARKET SHARE Model Volume YTD % Variance YTD 1 Toyota 56,513 12.9% WINNERS & LOSERS Toyota Hilux 4X4 10,876 39.8%

2 Mazda 27,615 33.1% Toyota RAV4 9,338 7.9%

3 Hyundai 19,055 14.1% Ford Ranger 4X4 9,115 8.6%

4 Mitsubishi 17,811 7.1% Toyota Corolla 7,381 -4.2% GWM MG ZS 5 Kia 17,173 10.9% Mazda CX-5 7,151 28.6%

6 Ford 15,788 13.7% MG MG3 Hyundai i30 6,676 10.4% 7 Nissan 12,139 12.9% Mitsubishi Triton 4X4 5,506 13.1% LDV Isuzu Ute D-Max 4X4 8 Subaru 10,074 27.9% Toyota Landcruiser Wagon 5,069 60.7%

9 Volkswagen 9,089 -6.8% Nissan X-Trail 4,676 10.6%

10 MG 8,728 163.2% Mazda CX-3 4,467 20.3%

11 Mercedes-Benz 8,134 13.5% Kia Cerato 4,466 -14.3%

12 Isuzu Ute 8,046 68.2% Mazda3 4,451 11.2%

13 Honda 6,683 -33.8% MG ZS 4,065 302.5% Volkswagen Mitsubishi Outlander 14 BMW 6,170 11.0% Isuzu Ute D-Max 4X4 4,034 80.6%

15 Suzuki 4,503 11.7% Honda Kia Cerato Toyota Prado 3,977 0.6%

16 Audi 4,402 18.9% Hyundai Kona 3,876 31.6% Mitsubishi ASX 17 LDV 3,150 117.7% Subaru Forester 3,679 19.4%

18 Skoda 2,768 79.0% Mitsubishi ASX 3,602 -15.2%

19 GWM 2,658 171.2% MG MG3 3,410 95.3%

20 Volvo 2,617 66.7% Mitsubishi Outlander 3,242 -4.6%

automotivedealer.com.au | APRIL 2021 | 29 FEATURES Australian Automotive Dealer Association

Humm…let’s hope this doesn’t signal COVID- (11th at 8,134), the percentage climbs to anywhere in the world to count his sales normal. Especially with JobKeeper ending. 78.6%. So this tells us that those brands now except …. well, Elon of course. However, consistently take over three quarters of all Elon’s acolytes at the Electric Vehicle Council Perhaps keep the Bollinger on ice for now? sales, and on present trends, it’s growing. reckon that the run rate for pure BEVs in Oz is about 0.6% of the TIV – and we believe them But let’s look at the Top 10 brands and Top 20 And some in the industry debate have tried to because they are in the inner sanctum of the nameplates (previous page). tell us there’s no power imbalance here? Church of Electricity (motto: Feel The Power). Let’s be generous and suggest that Q1CY2021 Some obvious highlights: Pleeeese…! BEV sales were indeed around 1,530 including • Toyota outsold #2 Mazda by over 10 Elon’s special babies. thousand units last month. So, if you don’t have a top ten franchise you’re kinda swimming in the shallow end of the • In fact, Toyota handily outsold #2 At that rate the year might top out at 7-8 pool. Not to say there’s no profit to be made in (Mazda) and #3 (Hyundai) combined thousand BEVs. There are about 19 million that end and a pure prestige/luxury business by 3,682 units – that’s what I call a fossil fuel vehicles operating in Australia. strategy might work if the costs can be aligned. powerhouse brand. All I’ll say is that even with Albo’s generous Composite results seem to suggest to me that assistance it’s a long way to the nirvana of net • And, in Q1 CY2021 Toyota sold 56,513; having a couple of top ten volume franchises zero carbon by 2030 – or 2050 for that matter. the next three brands - Mazda, Hyundai in your portfolio might lead to more relaxing and Mitsubishi sold 64,481. That’s over Friday nights. No one, including Elon the Great, has 121 thousand units for the top four yet solved the persistent issues of lack of brands or just under half (47%) of the Fish where the fish are - right? And obviously, EV charging infrastructure, lack of price total light passenger market - more on you need to pay attention to trends. competitiveness and lack of reliable range. this later. MG franchise anyone? Before you throw your vegan falafels at me, And here’s a couple of other notables that pop I love green and so do our AADA Dealers. on that top ten list… There’s actually 15 bands that sold less than 200 cars last year. Even allowing for the But we only make money if we can sell • MG again made it into 10th position with exotics, that’s an awful lot of clutter chasing a something to someone who wants to buy it. 3,303 sales for the month, just 55 units low number of opportunities. And many of The anguished consistent rent-seeking from behind VW. these brands want the full enchilada in terms the EV lobby is understandable. The real • MG is also in 10th position YTD and of facilities. solution however is to manufacture BEVs that looks set to climb further up the honour consumers can love and can afford. They’re board with its compelling combination of Income statement…? In many cases there isn’t coming but we’re not there yet. quality and value. one. If doling out globs of tax money to wealthy • Ford had a great month and came in 5th Given that every erudite car guru in the media buyers of BEVs seems like absurd extreme with 5,977 units, up 23.1% on February. (as well as some complete drips) appear to reverse socialism to you, then well done! Ranger accounted for just over 62% of have decided that plug-in electric vehicles are Because it is. And bear in mind that Australia’s Ford’s sales for the month. I guess a few needed to save the human species, allow me to public debt is forecast to grow (post-COVID) ships arrived …? share a couple of BEV numbers with you. We’ll as a percentage of GDP at the fastest rate of • Some regular top ten performers are ignore hybrids because, well…they’re just not any of the 35 developed nations tracked by the MIA and likely will never return to that green enough. IMF. league – we all know who they are and so do they. Last year, plug-in BEV sales in Australia It’s. Not. Sustainable. – Get it? totalled 1,769. In 2019 the total was 1,523. What about overall market structure? I know, I know - range anxiety, cost, So, do we have a genuine long-term infrastructure, battery life, energy density automotive industry recovery on our hands? Well, consider these numbers – and evil governments that won’t dole out I haven’t got a clue. The best we can say is we buckets of tax money to the trail-blazers. have to wait in breathless anticipation for a few Total Index more months of data to draw meaningful long Top Ten Volume Top Ten % of Volume (excl. hvy. But – BEV sales for Q1CY2021 totalled 969, trajectory conclusions – but the signs are good. TLtV trucks) an increase of 223% over Q1 CY2020. FY 2018 810,438 1,111,685 72.9% It’s the anticipation that gets to you. It’s said the This suggests that Aussies will put a record famous American comedian Groucho Marx FY 2019 770,040 1,024,898 75.1% number BEVs on our roads this year. Not once went to a cricket match. At lunch after FY 2020 667,805 882,401 75.7% in Dubbo or Broome or Mt Isa or on the watching the morning session he said to his Q1CY 2021 193,985 257,028 75.5% Oodnadatta-Alice Springs road to Finke River English host: of course, but definitely in South Yarra and Between 2018 and Q1 2021, the top ten Toorak and Mosman and Point Piper and “This is great. When does it start?" improved their combined share of light vehicle Peppermint Grove. What he said … sales by about 2.5 percentage points. Actually, And you also need to remember that Elon if we include Mercedes Benz passenger sales Good luck and good selling. (Musk, that is) does not allow anyone

30 | APRIL 2021 | automotivedealer.com.au JANJAN  MAR MAR 2021 2021 VEHICLEVEHICLE SALES SALES TTOPOP 25 25 BRANDS BRANDS

MarketMarket Share Share VehiclesVehicles sold sold inin Q1Q1 - 2021 ChangeChange to to Q1 Q1 - 2020- 2020

+12.9% 21.4% Toyota 56,513 +12.9% 21.4% Toyota 56,513 +33.1% 10.5% Mazda 27,615 +33.1% 10.5% Mazda 27,615 +14.1% 7.2% Hyundai 19,055 +14.1% 7.2% Hyundai 19,055 +7.1% 6.8% Mitsubishi 17,811 +7.1% 6.8% Mitsubishi 17,811 +10.9% 6.5% Kia 17,173 +10.9% 6.5% Kia 17,173 +13.7% 6.0% Ford 15,788 +13.7% 6.0% Ford 15,788 +12.9% 4.6% Nissan 12,139 +12.9% 4.6% Nissan 12,139 +27.9% 3.8% Subaru 10,074 +27.9% 3.8% Subaru 10,074 -6.8% 3.4% Volkswagen 9,089 -6.8% 3.4% Volkswagen 9,089 +163.2% 3.3% MG 8,728 +163.2% 3.3% MG 8,728 +13.5% 3.1% Mercedes-Benz 8,134 +13.5% 3.1% Mercedes-Benz 8,134 +68.2% 3.1% Isuzu 8,046 +68.2% 3.1% Isuzu 8,046 -33.8% 2.5% Honda 6,683 -33.8% 2.5% Honda 6,683 +11.0% 2.3% BMW 6,170 +11.0% 2.3% BMW 6,170+11.7% 1.7% Suzuki 4,503 +11.7% 21.4% 1.7% Suzuki 4,503 +18.9% 1.7% Audi 4,402 21.4% +18.9% 1.7%1.2% Audi LDV 3,1504,402+117.7% +117.7% 10.5% 1.0%1.2% SkodaLDV 3,1502,768 +79.0% 26.5% 10.5% +79.0%+171.2% 1.0%1.0% Skoda GWM 2,7682,658 (OTHERS) 26.5% 7.2% +66.7%+171.2% 1.0%1.0% GWM Volvo 2,6582,617 (OTHERS) 7.2% +66.7%+14.6% 6.8% 1.0%0.9% Volvo Lexus 2,6172,463 6.5% +61.7+14.6% 3.3% 6.8% 0.9%0.7% Lexus Jeep 2,4631,797 6.0% 3.4% +61.7-8.8% 3.3% 3.8% 6.5% 0.7% Land Rover 1,744 4.6% 0.7% Jeep 1,797 6.0% 3.4% +18.6% 0.5% Porsche 1,367 -8.8% 3.8% 0.7% Land Rover 1,744 4.6% +11.5% 0.5% Renault 1,289+18.6% 0.5% Porsche 1,367 +11.5% 0.5% Renault 1,289 FEATURES Australian Automotive Dealer Association YOUR SERVICE DEPARTMENT IN 2030

he electric vehicle revolution might be on time and distance travelled. A Nissan while the Automotive 2030 Executive Survey turning out to be more of an evolution, Leaf will need attention once a year or every had 1,500 automotive executive respondents. Tbut it is no less inevitable for that. 30,000km, while a Porsche Taycan’s schedule Over the next decade, the national fleet is two years and 50,000km. The onboard “Fifty percent of surveyed automotive will transition, becoming more and more computer of BMW’s i3 will alert drivers as to executives say that to succeed or even survive, electrified. With that comes ramifications when maintenance is required, although the they need to reinvent their organisations with for service departments. So, what will your brand recommends a visit at least every two digital technologies. And 42 percent have service department look like in 2030? years even if the car’s service monitor does not a high sense of urgency. Even something suggest it. as sacred as the vehicle brand could lose Electric motors themselves will not require importance in the mobility as-a-service much in the way of maintenance. Petrol and 2030 Will Be Here Soon world—unless the digital experience earns diesel engines have thousands of moving parts, consumer loyalty,” the report says. whereas electric motors are fairly simple, with An IBM Institute for Business Value (IBV) most made up of 20 parts or fewer. report released last October predicted that by Automotive executives expect the industry 2030: to spend over USD 33 billion to re-skill their There will be no oil to change or filters to • every person will own 15 connected employees by 2030. Multiple businesses renew, no timing belts or water pumps to devices; are coming together, collaborating with change. Manufacturers say transmissions will technology, facilities, and expertise to design, • up to 15% of new cars sold could be fully ‘sealed for life’. build, sell, and service vehicles. For example, autonomous; the BMW Group and Daimler AG are pooling But electric vehicles (EVs) will still need to be • software will account for 90% of mobility services to create a new global outfit checked with a diagnostic machine, in order innovations in the vehicle and lines of delivering sustainable urban mobility for to detect possible fault codes. The same goes code will be a hundredfold what they are customers. for the battery which, like the motor, has no today; and moving parts. Performance checks will reveal • car-sharing could make up 26% of global More than four in five (82%) of automotive any damaged cells. High voltage electrical miles travelled. executives said vehicle diagnostics and cables will require a visual inspection. maintenance data would drive the most value The report predicts that technology for their businesses. Like traditional cars, EVs employ cooling advancements and consumer expectations will systems, which keep the battery at optimum be the constant drivers of change over the next “Being able to proactively diagnose and fix temperature. Most of these are liquid cooled 10 years. “Sustainability is driving the focus issues using insights from data is especially and will not need much more than a visual on electric cars and the need for new skills is valuable because the cognitive vehicle handles review and topping up of fluid levels if causing shortages in the workforce,” it notes. more maintenance situations on its own,” the required. report says. “Regardless of how quickly the future The rest of an EV is similar to a normal materialises, two things are certain: Splend, a company that leases vehicles to Uber internal combustion engine (ICE) vehicle. drivers in Australia and Britain, is aiming to Safety related items such as brakes, suspension, “First, digital technologies create entirely reinvent itself as a ‘green mobility’ company, steering and tyres need monitoring. new ways to foster seamless touch-points employing $40 million refinancing to provide Regenerative braking means the traditional with consumers. They provide insights passengers with the option to choose to ride in friction brakes are likely to need fewer disc that deliver personalised services and an electric vehicle. and pad changes. However, they will be asked integrate the vehicle with various aspects of to work harder due to the extra weight of an a person’s life. The company expects that by the end of EV. Brake fluid will need to be changed on a 2022, half its fleet will be made up of electric similar schedule to ICE vehicles. The greater “Second, consumers expect the digital vehicles. weight and instant torque of EVs will likely experiences they get from the vehicle to be So, change is coming – and fast. Service lead to a higher wear rate for tyres. as good or better than those they get from their other smart devices.” departments will have to adapt, retraining Heating and ventilation systems will require and up-skilling their workforces to deal with evaluation and cabin air filters changed. Air- The report states that automotive organisations the new demands of the electric age. It’s not conditioning systems’ refrigerant levels will must evolve to operate and innovate like high something Dealers should fear: their close need checking and re-charging. tech companies, focusing their businesses relationships with OEMs will give them a head around digital and data. start over independent outfits provided they Depending on the manufacturer, the look at this as an opportunity rather than an frequency of service intervals will be based The IBV Automotive 2030 Consumer Survey imposition. It’s coming, whether you like it or questioned 11,566 consumer respondents, not. Be ready.

32 | APRIL 2021 | automotivedealer.com.au IT’S TIME FOR A CHANGE. Now with millions* of potential buyers and a low monthly subscription fee. Be one of the first dealers to experience a new way to trade. Register at autotradergroup.com.au

*Nielsen Digital Content Planning, November 2020, P18+, Digital (C/M), text, Gumtree Cars, Autotrader, CarsGuide, total de-duplicated unique audience FEATURES Australian Automotive Dealer Association HOW CLOSE ARE WE TO ‘CLICK AND BUY’?

he internet has revolutionised the way “A big part of it is the customer preference shift In the nine months from May 2020, Snows we live, communicate, consume, and toward more comfort buying online, and that’s conducted over 2700 online transactions, with Tconduct business, and that has only been something we think will be here to stay,” Chief an average online purchase of £13,700 (roughly accelerated by COVID-19. While consumers Financial Officer Mark Jenkins said. AUD $25,000). The value of sales figures don’t yet buy cars online to anywhere near the quadrupled once the company introduced its same extent they do books, how close are we to The eight-year-old company sold 244,111 cars £99 (AUD $180) online reservation fee. ‘click and buy’ becoming the standard for the in 2020, up 37% on its 2019 results, and in retail automotive industry as it has for others? contrast to a 7% decline in the number of used Another key point to note is that 30% of car registrations across the US. transactions (deposits, outright cash purchase, Research covered in our ‘Car buyers still favour HP and PCP) took place outside normal office Dealer model’ article in this edition, shows that Nonetheless, it is yet to turn a profit and has not hours. Without this ability, such transactions car-buyers still overwhelmingly prefer to deal announced when it expects to. Its annual net might have been lost to competitors. in-person with Dealers when purchasing a new loss rose 27% in 2020 to $462.2 million. Despite vehicle, with 91% saying it was important to test the loss, total revenue rose 42% from the More than 60% Snows’ online customers have drive a car before buying. previous year, to $5.6 billion in 2020. The main been using mobile devices to conduct their obstacle it faces is finding and training enough transactions, highlighting another shift. That would suggest we are a fair way off ‘click technicians and mechanics, while have enough and buy’, but 29% of respondents to the survey supply to meet demand was also an issue in the Stephen Snow, CEO, Snows, said being a family- also said they would consider buying a car last quarter of 2020. owned business didn’t mean that the company online rather than at a physical dealership – and couldn’t be innovators. less than half (46%) said they wouldn’t consider Other online car Dealers are popping up in the it. US. Vroom Inc. went public in June, and Shift “Over the years, we have always prided Technologies Inc. obtained a public listing by ourselves on the quality of our customer service We know that when it comes to technological merging with a special-purpose acquisition and we were completely focused on ensuring developments, there are early adopters, slow company. While smaller than Carvana, they that our online car solution complemented movers, and the majority in between. With have both invested to expand their capacity. our traditional showroom and the ability to nearly a third of people willing to at least seek support from our physical team when our consider buying online, the shift in paradigm is Pendragon will soon launch its online business customers needed it,” he said. perhaps already underway. as a standalone operation with its own brand. It currently has around 16,000 used cars listed “It’s vital that our customers enjoy their online Certainly, some companies are banking on online (compared to Cazoo’s 3400), and the experience, as well as feel comfortable using the it. With the pandemic causing a significant whole process, from choosing, ordering, site and the transaction tools, so that they come increase in online car sales, companies like financing to home delivery can be done sitting back time and again. The results we’ve achieved Cazoo Holdings, an online used car seller in the at home on a laptop. speak for themselves, but just as importantly, UK, have taken advantage and are projecting the feedback from our customers has been huge growth. Click & Go Already Exists incredibly positive, long may it continue.”

Cazoo is looking to go public in a reported Meanwhile in England, Snows announced The digital shift has resulted in US automakers USD $7 billion to $8 billion deal. US billionaire £37m worth of online car sales over the past 18 expanding delivery programs, while Dealers Dan Och’s capital-raising company AJAX I is months. The company operates 50 dealerships have upgraded their websites to provide virtual planning to merge with Cazoo after Cazoo last in 29 sites across the south of England. Its online showroom tours for customers. This allows October raised $310 million, making its total model is called Click & Go, and has been in buyers to conduct at least part of the car-buying investment at that point USD $580 million. operation since August 2019. process online. With virtual reality (VR) and augmented reality (AR) technology constantly Dealers will be aware of other online car sales In 2020, Snows expanded its Live Chat improving, how long until each household has platforms such as Carvana and CarMax. When capacity, offering video call appointments a VR headset with which they can undertake auto sales began to recover after the initial hit with personalised walk-arounds, with a small, virtual test drives, with a realistic simulation they took due to COVID-19, the online sellers refundable deposit for its real-time click and of what it’s like to physically drive the vehicle? increased their percentage share. collect-style used car sales model. How long until buying a car completely online is as commonplace as ordering a book from The Wall Street Journal reports that Carvana is In the year to January 2021, Snows’ web leads Amazon? building 10 new inspection centres and going grew by 27%, and its Live Chat leads by 47%, on a hiring binge to meet a surge in demand. with an 18% increase in conversion. Its website Cars are a much larger investment than books, The company is investing $500 million in new visitor numbers rose by 28%, with a 16% of course, so it will take time. But the world is facilities and hiring thousands of employees. increase in web conversion. changing. As ever, it will be those who adapt to That indicates they believe that the shift towards meet the new paradigm who will flourish. buying cars online will continue.

34 | APRIL 2021 | automotivedealer.com.au FEATURES Australian Automotive Dealer Association

DO WE NEED A MOTOR SHOW?

otor Shows are wonderful events announced the dissolution of the Australian would react. With more than 50 reveals for anyone who loves cars. International Motor Show joint venture. scheduled for the Swiss event, the automakers MManufacturers use them to unveil instead had to unveil their cars mainly via and hype up concept cars, important new So, it’s nine years since we last had a Motor webcasts. production models and innovations, and Show. With so much change happening in the public flocks to see these wonders of terms of the shift to electric vehicles (and Manufacturers targeted journalists to ‘attend’ technology and horsepower. further down the track, autonomous vehicles), their unveilings from the comfort of their connectivity, mobility sharing and the like, home or office. There was no other choice, Yet it has been almost a decade since the couldn’t we do with a Motor Show to drive of course, but who’s to say this won’t become Australian International Motor Show was last some hype and get the public excited about the way of the future? With improvements held, prompting us to wonder: do we need to automotive possibilities and coming realities? in internet and streaming speeds, the idea revive the event? of a ‘virtual’ showcase for a vehicle is not as The five most prestigious Auto Shows, ludicrous as it would have been considered The Melbourne International Motor Show was sometimes called the ‘Big Five’, are generally even a handful of years ago. Virtual and the longest running Auto Show in Australia, considered to be those held in Frankfurt, augmented reality headsets will become more held from 1925 through to 2009, when it Geneva, Detroit, Paris and Tokyo. They are prevalent, and further enhance the experience. merged with the Sydney show (originally titled spectacular events, attracting crowds in their You won’t ‘be there’, but you’ll feel almost as if Sydney Motor Show but from 2004 called the tens of thousands, with participation from all you were. Australian International Motor Show [AIMS]). the major manufacturers as well as boutique The joint venture between the Federal geniuses, showcasing the cutting edge of Manufacturers could see better value in Chamber of Automotive Industries (FCAI), automotive technology. redirecting the very large budgets required and the Victorian Automobile Chamber of for physical Shows into other areas. The Commerce (VACC) retained the AIMS name Naturally, like everything else, COVID-19 put ability to use the internet to stage a product and planned to alternate between Melbourne a halt to such events in 2020, and given their introduction anywhere, any time, to as and Sydney biennially, commencing with great expense, some are wondering if they will exclusive or as large an audience as desired, has Sydney in 2010. all return in the same format even after the changed the paradigm. world has escaped the grip of the pandemic. It was short-lived though, with the Australian And yet, there is as yet no substitute for a real, International Motor Show (AIMS) Joint Motor Shows have traditionally served as physical, live, in-person experience. And as Venture announcing on 25 March 2013 that an important means of connecting with the we emerge from our COVID-cocoons, there the Australian International Motor Show public, but they are very expensive. is an argument to be made that people will scheduled for Melbourne in June of that year, crave these physical, tangible experiences they When last year’s Geneva Show was cancelled would not proceed. In a statement released once took for granted. Maybe not enough to just a few days before it was to stage its media on 25 February 2014, VACC and FCAI justify an annual Show – maybe we need to preview, many wondered how the OEMs think about a biennial Show. Maybe it’s just not feasible at all. But let’s have the conversation.

automotivedealer.com.au | APRIL 2021 | 35 YOUR ONLINE SHOWROOM IS NOW YOUR MAIN SHOWROOM

SWIPE TO SPIN

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WE ARE CAR PEOPLE. WE KNOW TECHNOLOGY. FEATURES Australian Automotive Dealer Association

USE THE FOOTBALL PLAYBOOK TO RUN A GREAT DEALERSHIP

overall morale of your team by retaining team Brooke Samples members who are well below the caliber of the rest of the team. President, Profit Blueprints, LLC

Lloyd Schiller TEAMWORK Fixed Operations Consultant Without dedicated folks to protect him, even Brady by himself couldn’t win a Super Bowl – it takes teamwork. As soon as one GOALS t’s football season again Down Under, and player, or one department, fails to perform Next, no matter the quality of the players, the even if you don’t like football, you will learn the designated role, all of the hard work and weather, or the opponents; the rules of football a lot from the various codes that can make well-designed processes will be for naught. I don’t allow anyone to move the goal post to your dealership and departments work more You could have an ideal sales department get a touchdown, score a try, or kick a goal. efficiently and profitably. Here in the US, Tom but if the service department fails to deliver The plan is to work continuously to adapt and Brady recently won his seventh Super Bowl, an exceptional experience the customer may improve the plays which will get you to the further cementing his status as one of the never by another vehicle from you or even goal. This fact correlates to your monthly goals. great leaders in sports. recommend your dealership. If there is a snowstorm – or a flood! - you don’t Good leaders attract good players and change monthly goals, you put different plans employees. A winning football team works to in motion. assemble the best talent by defining what it needs in the way of abilities. The leaders know As each play changes the field position, the what makes a great player and look for those coach has contingency plans to build on skills in candidates and just like dealerships, the previous plays. His playbook provides they have to work within a budget. For your options designed to move the ball in the right winning team, take the time to determine what direction. Apply this to a service department you need, what skills are necessary, and always that shows low appointments at the end of be on the lookout for new talent. Football the week. The manager needs a list of go-to LEADERS teams replace under-performers, a practice processes to fill the open time slots: contact special order parts customers, follow-up on Football teams have a cadre of leaders - that is beneficial for any business. unsold work from the previous month, see coaches, managers, and captains - just like When you set goals for employees, it lets them what work the sales department or body shop dealerships. The difference between a winning know what you expect and they know when might need to have done, contact customers football team, and those who get the first few they are doing a poor job. If your department who haven’t been in for service in over six draft picks, is the quality of the leaders - not doesn’t have a clear discipline for culling months, post a special on Facebook, and/ just the coach. To strengthen your leadership non-performers, you could be wasting your or prepare an email blast ready to attract staff, read The Hidden Leader: Discover and advertising money, your training energy, your customers. These, plus many more ideas, need Develop Greatness Within Your Company by customer contacts, and bringing down the to be available to act upon before Friday when Scott Edinger. it is too late to change the week’s outcome.

automotivedealer.com.au | APRIL 2021 | 37 FEATURES Australian Automotive Dealer Association

HUDDLEPRACTICE One crucial component for success in One under-appreciated element - there is a lot American football is the huddle before each of practice and training in football. The coaches play. In the AFL, they do this at breaks in don’t assume that the players will remember quarters, in the NRL at half-time. With a few every play – they practice the plays. It’s been exceptions, each team huddles to discuss the stated that amateurs practice till they get it right; upcoming plays—offense and defense. They professionals practice till they can’t get it wrong. aren’t chatting about the latest show on Netflix; The same concept applies to your department. they are serious about what to do to make the Look at an Express Service Department, the next play a success. training should go beyond so “the Techs don’t forget to tighten the lug nuts,” but also for the While some departments might have a Advisors to consistently present the findings morning meeting, does the agenda help the of the multi-point inspection and sell the employees plan for a successful day? Well-run recommended work. body shops have morning production meetings to determine if there are any “roadblocks” and how the vehicles will move through the shop. The Sales and the Service departments get their teams together to keep employees updated on vehicle rebates or service specials, but can these meetings be even more useful? The Managers can prepare for each huddle with a focus on what to do to make today a great day based on what happened yesterday and today’s challenges. REVIEW It doesn’t have to be a full team huddle; it To make better decisions for future games, can be a “mini huddle” like when a Service coaches and team members review the Advisor has a large estimate to present to the previous game’s plays to determine how customer, the Service Manager can discuss to prevent the missteps or duplicate the the best approach to get the job sold. The successful plays. This same practice works well morning Sales Department huddle should for dealerships. For example, you look at your make sure everyone has a plan to sell a car Profit Blueprints report, and there’s a red cell today! The Parts Department’s huddle can where an account was previously at target - discuss outstanding special order parts, ways dig into that account and see what happened. to better deliver parts, or review the results From there you put plans in place to prevent a of the most recent perpetual inventory. The duplicate occurrence. Look where you did well Accounting Department can examine pending and build on your successes. deals, items to post, outstanding payoff titles, or past due accounts. With a daily or at the An involved coach or leader is crucial to least a weekly huddle, all departments benefit keep everyone moving in the same direction. when they know everything is going in the Whether you agree with the football right direction. analogy or not - be the active leader in your department - the one who plans to take his or her team to the Super Bowl. 38 | APRIL 2021 | automotivedealer.com.au FEATURES Australian Automotive Dealer Association CONVENIENCE IS KING – AND TODAY THAT LITERALLY MEANS AT THE TOUCH OF A FINGER.

f the COVID-19 pandemic has taught Reviews, Scheduling, Surveys, Payments, Text messages work better businesses anything, it is that consumers are and more. All automated. All on your phone. • 90% of text messages are read within Iwilling and able to research, browse, engage three minutes; and buy online – and it is true for the retail What are people saying about you online? automotive industry. Customers are warming Swell shows you all of your reviews and ratings • 80% of people say they would like the to the possibility of buying a vehicle online, across platforms like Google and Facebook, option to use their smartphones to and they are certainly more than ready to so you can get a feel for how well you’re doing. interact with businesses; and submit enquiries, make appointments, and You can even use it to reply to reviews. • 68% of purchasers trust reviews over chat with your staff via their computer, tablet, friends and family. or mobile device. Swell allows you to send out text-message surveys, which help you understand how In one platform, on one App, Swell delivers: It stands to reason, then, that no modern well you’re doing or find ways to improve the • Reviews dealership can afford to be without the best customer experience. online engagement and website tools. Potential • Customer Engagement Insights buyers are online at any and all times of day Swell enables you to create meaningful • Webchat and night, and if you are not equipped to interactions and build trust through text, engage them whenever they desire, you will online chat, and more. Swell lets you chat • Messaging lose them to someone who is. with customers over text message, Facebook • Payments Messenger, or live web chat all in one place. • Surveys Swell is the latest and greatest customer This helps your team keep on top of questions engagement toolkit designed to help and requests, so great service never stops. • Scheduling dealerships provide convenient online experiences and improve customer If you don’t have a live chat on your site, you It drives an effective, automated online review interactions. Users can send messages in should. Swell Webchat is easy to add to your solution that makes leaving reviews so simple, various formats to individuals or targeted website and lets you instantly connect with customers will actually do it. groups, all from a single messaging tool. They prospects who visit your website, so you can can engage site visitors via webchat and reduce start creating a relationship right away. It provides a clear, at-a-glance view of your friction around appointment-scheduling and company’s online health and the nexus for all payment submission. And they can easily send Swell Message lets you assign messages to customer engagement. and respond to customer surveys and gather locations, departments, or even employees, so more positive reviews. Business growth is all the right people can solve problems ASAP. It is a single place to instantly connect with about engagement. Swell makes it simple. your website visitors, answer questions, Swell can automatically ask customers to leave and help convert prospects to customers. With so many different means of you a review on sites like Google My Business A single, seamless place to chat with all of communicating these days, it is crucial to and Facebook. More reviews lead to higher your customers, one on one or in groups, know and use your customers’ preferred search rankings, and a solid reputation that via text, email, or Facebook Messenger. A methods. Swell allows you to keep in touch gets customer lining up. With more reviews, quick, convenient way for website visitors to with customers via text message. It lets them you can increase Google search rankings, and request and schedule appointments online. request appointment slots online. It helps prove you’re a trustworthy choice to prospects An easy way to send customer surveys that you get paid through text-based payment who find you. The platform has already can reveal your business’ strengths and areas reminders. You can even ask them to leave delivered 2.1 million reviews for its clients, for improvement. A secure, simple way to you reviews, so you can elevate your online with an average rating of 4.8 out of 5. request and accept payment via text, email, or status and get customers lining up. Swell has Facebook Messenger. everything Dealers need to grow, and it is all Swell Pay sends text-message reminders, so accessible through a simple to use dashboard, patients can settle up with their phone. It’s If you are serious about connecting with your as well as an App that allows you to work on much simpler than calling and emailing to customers, making it as easy as possible for the go – anywhere, anytime – just like your chase down payments. them to engage with you, and growing your customer base. reputation online – all in order to boost sales and profitability, Swell is a must-have tool.

automotivedealer.com.au | APRIL 2021 | 39 ustr A al o ia

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