By Chris Jordan – Senior Consultant – MSX International
Introduction
With the last strains of the Lock Down nightmare being lifted, I cannot help but reflect on a Career spanning 40 years in the Automotive Industry and especially the last two years with the dark threat
of Covid hanging over the Industry’s well-being. I am not for a minute suggesting that our Industry is the only affected Industry; by no means but as this is the only Industry I have ever worked in, this is where the focus of my discussion will be It has been said that the “Health” of a Country’s Economy is measured by the Health of the Automotive Industry and whether this is true or not, the fact remains that a Vehicle and the spent over the lifetime of the vehicle in one’s possession, contributes quite a lot to the Personal Income Statement with not nearly as positive effect one one’s Balance Sheet as for example, one’s House
Vehicles depreciate at about 25% per annum, depending on the Brand and the Model off course but suffice to say, owning a Vehicle doesn’t bode well to the value on one’s Balance Sheet. My career in this extremely fulfilling Industry had started off in Parts, the Aftersales Manager, Dealer Principal, Franchise Director and eventually Managing Director and currently involved in Training and Consulting within the Industry – it is safe to assume that I understand the “workings” of an Automotive Dealership – quite a complex Business Model indeed
Covid and the “Critics”….
If my memory serves me right, Covid and Lock Downs had been introduced around the 10th of March 2020 and the words of the President weren’t even cold when the “Critics” of the Industry started their Doomsday Prophecies.
The following statements I and many of my Colleagues had to listen to….
“The end of Dealerships – it will all become Digital”
“The Industry will never recover”
“End of the Traditional Dealerships”
The Auto Industry will shed Jobs and Livelihoods like never before”
“New Era of Buying Vehicles”
“Only Servicing Facilities will Remain”
“We are going to see an Unprecedented closure of Dealerships”
“Local Manufacturing is dead”
“Only limited Imports from now on”
Automotive Industry– resilient or lucky
The time immediately after the first Covid Lockdown
Admittedly, many of us had found ourselves outside our Traditional Comfort Zones with Dealerships closing their Doors. At MSX, we had embarked onto a Digital Consulting Platform, and we very quickly learnt how to use Zoom, Teams, Google Meet, Webex and a host of other platforms whose names we couldn’t spell before March 2020. Some brilliant Interactions between all interested Groups followed and the RMI had played a major role in keeping Communication Channels open and then, eventually around 11 May 2020, Dealerships started opening their doors with very strict Covid Protocols
The “New Reality”
Admittedly, quite a lot of changed actions and thinking had become the New Reality and within a very short time, most Dealerships were operating at Pre-Covid levels less the scourge of Pre-Reports and the unhealthy Balance Sheets of some Dealerships had, at the time, presented real Challenges and one thing Covid has taught us – watch the health of the Balance Sheets
Was it Luck or Resilience?
One can never deny the presence and need for some Luck – however, luck aside, why did most dealerships do, how did they survive, are they stronger than before Covid?
There are probably as many answers as there are Dealerships – however some very distinct Common denominators are evident – what are they?
The Successful Dealership did not listen to the Doomsday Prophets
They understood and still understand the value of healthy Balance Sheets
The OEMs had played and is still playing a significant role in providing relevant Training
to their Dealerships
Dealerships actively engaged in Performance Groups, learning from their Peers
Dealerships sought active Interventions to understand the Data they produce and what
it fact actually meant – changing Data into Knowledge
Understand the Relationship between Gross Profit, Expenses, Dealership Cost Recovery
and Energy in the Operational Assets
Understanding the required Balance between the Drivers of Dealership Profitability
Understand that Profit is the result of effective Key Performance Indicators
Driving the KPIs’
Measure Everything
Develop their Staff
Understand the Value of Solid Leadership
Understand the VITAL Role Aftersales HAVE to play in Dealership Growth
Much better understanding than before on the CRITICAL Drivers of Service Successes
Understand that continued Success depends on delivering Solid Aftersales Experiences
Understand Customer Expectations
Understand Customer Perceptions
Understand the Relationship that needs to be in sync between Customer Expectations
and Customer Perceptions
Understand the CRITICAL Importance of Skilled Aftersales Staff
Continuously Develop Skilled Staff
Understand Customer Retention and that Sales only sells the First Unit
Thereafter Aftersales and the successful Aftersales efforts will sell the next vehicle
Successful Dealers stopped the Focus on Competitors
The New Focus is now on Customers and their Expectations
They Understand the Value of a Digital Presence
They Understand Pre-Owned as a Department, not only for Trade Ins but a Fully Fledged
Business
They UNDERSTAND how to Source Pre-Owned Vehicles
Automotive Industry – resilient or lucky?
Conclusion
You as the Reader of this Article – what do you think – Luck or Resilience?
Chris is a Senior Consultant at MSX International and can be contacted on 083 461 1233 or cjordan1@msxi.com
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