IS20G11 - Defend Your Dealership - Matt Cragin
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It’s crazy to think that as recently as a few years ago, not a single one of these companies existed: Turo, Shift, Uber, Clutch, Blinker, Maven, Lyft, Car2Go, or ZipCar. So why has there been such a sudden explosion in new mobility models? What are the forces that are driving these changes? And most importantly – how will your business be affected? Join automotive strategist, Matt Cragin, for a critical look at the new competitive landscape and learn how to fight back against these challengers and defend your dealership. Takeaways: -Explore the new ownership models that are competing for your customer’s mobility dollars. -Understand the values that are fueling this rapid experimentation. -Defend your dealership with 7 easy changes to your business.
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IS20G11 - Defend Your Dealership - Matt Cragin
- 1. Defend Your Dealership Matt Cragin Director of Corporate Strategy at Fair dealers@fair.com Title Sponsor
- 2. Defend Your Dealership Understanding the Powerful Forces That Are Fighting for Your Customer’s Mobility Dollars
- 3. Who is competing for mobility dollars? S e r v i c e s t h a t o f f e r vehicles with all-in-one monthly payments that c o v e r t h e v e h i c l e , i n s u r a n c e , a n d maintenance. Subscription Services Ride-Sharing Car-Sharing Modern taxi or livery services powered by m o b i l e a p p s w i t h sophisticated logistics a n d e - p a y m e n t technology. Micro-rentals for vehicles that are parked around town, enabling city- dwellers to access a car for brief periods of time. Autonomous Vehicles Computer-controlled vehicles that can operate w i t h o u t h u m a n intervention. Coming soon.
- 4. Millennials
- 5. Who are the Millennials? • Born from 1980-2000 • Children of Baby Boomers Echo Boom • Youngest generation at advent of consumer internet Connected • Significantly more diverse than any prior generation Diverse
- 6. How large is the Millennial generation? 76M Millennials 66M Baby Boomers
- 7. Millennial spending power is already strong Purchasing Power $1.68T Avg. Household Income $60k Spending in 2016 $1T
- 8. Millennial spending power is growing rapidly 25% Millennials are projected to become a quarter of the total American workforce by 2030 33% Millennials will make up one third of all adults in America within the next two years
- 9. 11% 38% 24% 27% Millennials Gen X Boomers Silent New Vehicles (17.5M) Used Vehicles (38.7M) 42% 58% Non-Millennial Millennials Millennials made up 37% of the total US auto market in 2016
- 10. Many Millennials are still defined by debt Outstanding vehicle loan Carrying credit card balance 2001 2010 45% 32% 50% 39%
- 11. Millennial debt creates significant disadvantage Millennials Generation X Baby Boomers+ National Avg. 625 $52,120 $26,485 $34,430 $3,403 43% 650 $125,000 $26,670 $50,400 $6,752 41% 709 $87,438 $19,217 $46,340 $5,603 25% 667 $88,313 $23,089 $46,790 $5,340 34% Avg. Vantage Score Avg. Debt Avg. Debt excl. mortgage Est. Avg. Income Bankcard Balances Bankcard Utilization
- 12. 69 69.5 70 70.5 71 2012 2016 Millennials prefer low monthly payments Millennials: Average Loan Term
- 13. Millennials find leases appealing Millennials have highest lease penetrationLease credit applications rose from 2012-2016 20% 80% Other Gens Millennials 27% 73% Other Gens Millennials 2012 2016 29 30.5 32 33.5 35 zMillennials 34-44 45-55 55-64 65-74 75+
- 14. 14 Millennial values differ from older generations Justice Integrity Fam ily Practicality Duty Millennials Boomers Values that are stronger for older generationsValues that are stronger for MillennialsHappiness Passion Diversity Sharing Discovery Millennials Boomers
- 15. Millennials are finally entering family lifestage Today’s Home Buyer 42% 31% 16% 10%• 42% of all US home buyers are under age 36 • 47% of Millennial homeowners live in the suburbs • 1/3 of Millennial homeowners live in the city, more than any other generation today • 2/3 of Millennial home buyers considered renting at the same time that they were house- hunting Millennials Gen X Baby Boomers Silent Gen
- 16. Suburban living is easier with a personal vehicle • Suburban residents travel longer distances for commuting and errands • Kids require more frequent trips to support schooling and extra-curricular activities • Young children require car seats Personal vehicles prove more cost-effective in the suburbs
- 17. New Innovations
- 18. 15+ hours of online research 3.5 hours spent at the dealership Time Consuming 94% don’t know how a lease works 66% don’t understand the purchasing process No Transparency Or Validation would do anything to avoid dealership Anxiety And Lack Of Control 84% 60-75 loan term Long - Term Commitment 50% of income is used for car purchase Buying a car remains intimidating for consumers
- 19. Other 13% Gas & Oil 23% AutoFinance 4% Maintenance & Repairs 7% $9.9T Insurance 8% Vehicle Purchase 45% Consumers spend 14.1% of their gross income on mobility Global Mobility Market
- 20. Entertainment 4% Food 10% Mobility 14% Healthcare 6% Housing 26% Miscellaneous 11% Non-Expenditures 9% Personal insurance & Pensions 9% Consumer Expenditures as a Percentage of Gross Annual Income
- 21. Direct Purchase Peer-to-Peer PurchaseSubscription Car-Sharing Lead-Generation Ride-Sharing Innovation is happening across the automotive retail landscape
- 22. Ride-Sharing
- 23. Ride-Sharing • Less expensive than a taxi or livery service • Convenient app-based hailing, payment, and rating systems Pros • Limited availability outside major metro markets • Doesn’t work well for many “family” situations • Expensive as a pure vehicle replacement Cons • Today: Uber, Lyft • Future: Waymo Players
- 24. Does it pass the car seat test? Car seats • Bulky and heavy to carry • Difficult and time-consuming to install • Where are your children while you are installing the car seat in the vehicle? • Every round trip in a non-personal vehicle would require installation and removal of the car seat twice
- 25. Car-Sharing
- 26. Car-Sharing • Personal access to a vehicle • Cost-effective for short trips, like running errands • Designated parking spots major benefit in crowded cities Pros • Expensive for long trips • The vehicle you want isn’t always available • Some customers don’t follow the rules for fuel, cleanliness • Doesn’t work well for many “family” situations Cons • Corporate: Zipcar, Maven, Car2Go • P2P: Turo, Getaround • Future: Waymo, Tesla, Lynk & Co. Players
- 28. Subscription Services • Personal access to a vehicle • Simple messaging: The consumer doesn’t have to worry about any of the details of ownership Pros • Certain business models require the consumer to change vehicles every so often • The vehicle you want isn’t always available • Doesn’t work well for some “family” situations Cons • OEMs: Cadillac, Porsche, Volvo • 3rd parties: Maven, Canvas, Flexdrive, Clutch Players
- 30. 2016 RANK COMPANY GEOGRAPHY INDUSTRY R&D SPEND (IN BILLIONS) 1 Volkswagen Germany Automotive 13.2 2 Samsung Soul Korea Computing and electronics 12.7 3 Amazon U.S. Software and Internet 12.5 4 Alphabet U.S. Software and Internet 12.3 5 Intel U.S. Computing and electronics 12.1 6 Microsoft U.S. Software and Internet 12 7 Roche Switzerland Healthcare 10 8 Novartis Switzerland Healthcare 9.5 9 Johnson & Johnson U.S. Healthcare 9 10 Toyota Japan Automotive 8.8 Automakers spending significant R&D dollars Global top R&D expenditures in 2016
- 31. 0.0 22.5 45.0 67.5 90.0 2020 2025 2030 Global Autonomous Vehicle Forecast (Millions)
- 32. 2030 Shared driver-driven 9% Shared autonomous 25% Personally owned driver-driven 55% Personally owned autonomous 11% 2020 Shared driver-driven 2% Personally owned driver-driven 98% Private car ownership will remain high in mid-term
- 33. Autonomous Vehicles • Personal access to a vehicle • Opens up new markets: children, elderly, handicapped • Cost of ownership reduced via higher fuel efficiency and reduced risk of accidents Pros • Expensive sensor arrays and software will limit adoption in the beginning Cons • Waymo, GM, Tesla, Nissan, Mercedes, Delphi, Zoox, Uber • NOTE: Supplier tech may enable rapid adoption among all OEMs Players
- 35. 35 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 Convenienceof"MyCar" Relative Monthly Cost Mobility options are expanding rapidly but struggle to match the low cost and high convenience of private ownership Know your competition and prepare your sales staff to counter objections Relative Monthly Cost is estimate based on cost of D-segment car, insurance, and 1,000 miles traveled Lease Loan Car-Sharing Ride-Sharing Rental Subscription Rental Subscription Lux Rental Cost & Convenience hamper many new entrants
- 36. High-quality photos and videos are the new showroom Invest time and money into quality and into compatibility with mobile web Think about background, lighting, and how to highlight key features Online media is the new showroom
- 37. Consumers want lower payments above all else - don’t lose a sale over a few dollars! Stay on top of your desking to make sure that you’re running multiple options and finding the best fit Investigate credit unions as an alternative to larger banks Lead the charge with your lenders Lenders
- 38. Do as much of the transaction as you can outside of the dealership to reduce the perception of time spent Invest in full-featured, realistic payment calculators Don’t be afraid to negotiate terms remotely Prepare paperwork ahead of time to reduce time spent in F&I Offer home delivery - even if you have to charge for it Bring the dealership to the customer
- 39. Return policies empower customers to purchase a vehicle sight unseen There will be some customers who abuse the policy but it will work out at the portfolio level Keep the return window at 3 days or less so that you can still register the sale with the DMV within the required time window Prevent fraud by limiting your program only to customers who have placed a deposit and have already been approved for credit Confirm that you have sufficient insurance in place beforehand Offer a complimentary return policy
- 40. Millennials prefer texting/messaging over any other form of communication Make it easy for customers to get questions answered via text Don’t ask for a phone call until the customer demonstrates a high level of engagement Ask your legal counsel for guidance relating to TCPA compliance Learn to love texting
- 41. A standard deal jacket in California includes 15 documents Many dealers choose to add additional forms and disclosures beyond what is legally required Work with your legal counsel to find ways to reduce or consolidate any optional paperwork Remove paperwork to reduce time spent in F&I • Lease Agreement • Used Vehicle Disclosure • Due Bill • Agreement to Furnish Insurance Policy • Warranty Guide • Acknowledgement of Receipt of Front License Plate Information • Used Vehicle Condition at Delivery Report • Pre-Contract Optional Product and Services Disclosure • Thumbprint Verification Form • Foreign Language Transaction Acknowledgement • Prepaid Maintenance Agreement • Contract Cancellation Agreement • Tire Chain Disclosure • DMV Vehicle Transfer and Reassignment Form • DMV Report of Sales of Used Vehicle 15 Documents, 17 Pages Total
- 42. Q & A
- 43. ENJOY THIS SESSION? Post about it on social media using the hashtag #IS20G! Share some love for your favorite speakers! Title Sponsor Defend Your Dealership Matt Cragin Director of Corporate Strategy at Fair dealers@fair.com