What Is Missing in the Automotive Retail Space

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There is no question that the automotive space is a fast-paced, ever-changing, ever-growing industry. In the last few years, that pace has accelerated and progressed the industry in ways that have, and will continue to have, positive impacts for years to come. We have spoken multiple times on the Dealer Talk Podcast, and on our blog, that one of those positive takeaways isn’t the temporary profitability but the motivation for decision-makers to now be more open than ever to evaluate their business strategies from a different lens–the lens of experimentation.  

I, myself, experienced a perspective change while conversing with Sean Welsh. Sean postulated that dealerships are one of the more progressive industries when it comes to technology and is more willing to be early adopters of new technology. Up until that point, like many in the industry, I had looked at our approach to technology in the opposite way. I saw dealers as slow to adapt, improve, or change and that is not the case. Covid allowed our true skills to shine through. However, while dealers are willing to bet on technology with their wallets there is an acute breakdown between adoption and implementation at the dealer level. While decision-makers are quick to accept new ideas they seem slower to hold their teams accountable for the new processes. 

Decision-makers want to adopt, sales staff is slow to adapt.  

There is a big gap between the technology being built and the users. New innovations satisfy one requirement but create other gaps not fulfilled by the same technology. This results in the acronym ADD or Another D*mn Dashboard–20 different dashboards, 20 platforms all vying for positions in the next version of what our industry is trying to accomplish.  

Here at DTVMS we see the dealership of the future is s a one-stop for all your digital needs with open-source API’s that allow for innovation and future development.  

As an industry, we are at a pivotal moment reminiscent of when Chip Perry began Autotrader in 1997. At that time dealers were trying to decide whether they were going to participate in the “so-called” fad of the internet, and Chip was envisioning the first digital marketplace for buyers and sellers to exchange information.  

Unbeknownst to Chip, his creation had many impacts on our industry both positive and negative.  

-The advent of market data introduced the concept of VDP views as an attribution mechanism for success. 

-Advertising and connecting with the consumer became significantly cheaper. 

-The creation of search filtration systems capable of sorting vehicles by lowest price thereby creating a race-to-the-bottom culture for consumers. 

-Consumer access to information that empowered buyers and leveled the field between buyer and seller.  

Now, in the midst of our global tumult, we are about to shift again and have the potential to either amplify or diminish the very framework of our industry.  

Companies such as Tekion, and their counterparts, have begun eying one of the biggest problems in the automotive retail industry—A.D.D.—all those bulky technologies struggling to cross-communicate the data and needs of any single store or group. Yet, we need all these pieces of technology–that don’t integrate or integrate inefficiently and leave us auditing our own information–in order to run our day-to-day operations and responsibly make decisions. From a data standpoint, the Tekion model makes sense. Our current set-up of multiple solutions from multiple vendors creates and/or expands the gaps in how we function. For example, dealerships, for the most part, are run on a VIN level yet marketing strategies are not. While some cars perform better than others there are few ways to implement marketing strategies based on the specific vehicles you need to move. With the appropriate digital tools, a marketing team could create strong campaigns that powerfully impact the bottom line. 

Here at DTVMS, we are sincerely concerned that a company such as Tekion can come into our space and raise $400 million to cover a retail industry with only 17,000 stores nationwide. 

Typically venture capitalists don’t bet on niche markets like ours. They bet on the masses in order to fund all the ideas that don’t pan out and still make a significant return on their investment. With a valuation that high, the only real way to justify a venture into the automotive retail space Tekion would need to capture at least 70% of the dealer operations nationwide and then charge for every single transaction from an email campaign to creating a data list, and beyond.

The future remains to be seen, but it is our opinion that leaving one of the biggest potentials, in the industry, in the hands of outsiders is a big risk. Dealers’ ability to utilize open-source API’s–which would enable us to improve upon existing technology and help create effective end-to-end integrations that allow dealers to run their process smoother—would rapidly propel the automotive retail space forward. We are not sold on the idea that companies such as Tekion have the industry’s best interests in mind, and while there remains any hesitation regarding their intentions the question should remain: Do we want to grant outsiders access to our first-party data–access that could offer a positive financial outcome for them and a negative one for us? They may say they want to change the industry for the better, but the math just doesn’t make sense.  

Looking at our history and how our data has been leveraged in the past—vendors who take our inventory and sell it back to us through piece-meal solutions –should help us recognize that we are at a space and time where we need to move forward as a community and leave an infrastructure ready for the next generation. 

We are all for capitalism—if you have a solution that solves a problem you should be compensated—but are we really going to leave the future of our industry to outsiders?  

This isn’t a dig or a jab at any specific company. The issue we have right now, that is hindering innovation, is we have technologies that don’t integrate together or offer ways to connect and build off of one another. Technology built for dealers by dealers is the best way to preserve our industry and really grow. Our current setup inhibits this.  

Thus far in my career: 

I have had the opportunity to work in the day-to-day operations at dealerships. 

I have had the opportunity to experience this industry through the lens of vendor solutions and watched the bigger companies, and their not-so-responsible decisions, inhibit others from gaining access to their data simply because it might impact profitability.  

In the current phase of my career, which is by far the most fulfilling and exciting phase, I have had the opportunity to spearhead the building of technologies we need for the industry—by dealers for dealers. I can tell you first-hand how incredibly difficult it is to put together programs and services that should already exist. 

I recently had the opportunity to discuss this topic of generational responsibility to our craft with someone I respect and admire. Immediately after agreeing with me on how impactful such actions could be this person admitted the sad naivete of expecting it to be achievable. Decision-makers in the retail space, he told me, are concerned with only one thing—selling cars at a profit and nothing else. 

While I agree that there is a responsibility as a decision-maker to be focused on success, not only for yourself but for your employees and their families as well, I truly believe that a part of that responsibility is to lay down the path for the next generation. As the older generation readies themselves to retire, would it not behoove them to assist in the laying of that foundation? 

With more self-regulation from companies like Google, Meta, and their counterparts, moving toward more first-party practices is going to be paramount in the automotive space. Having the ability to control that movement through the elimination of many as third parties as possible and protecting our information seems a worthwhile effort.  

Maybe I am naïve, but I care about this industry and its future. I truly believe in technology that is for us by us.  

So instead of doing a test this week, I want to invite you to leave some insights and comments.  

What do you think?  

Is the industry in the midst of a technological change?  

Is it worth our while to create a structure that is for us by us?  

Should we be concerned that companies like Tekion could potentially get a hold of our first-party data?  

Is it our job to create technology or should we just focus on selling cars?

 I am curious to see what the perspectives are on this topic and hopefully, we can bring awareness to where we are as an industry and really think of what the future looks like for the next generation.  

Herb Anderson / Charity Ann