AutoNation’s collision parts division is scheduled to be eliminated by the end of 2020, freeing up some cash after the two-year endeavor proved less than profitable.

Former CEO Cheryl Miller had made it clear that one of her main goals for the company was to ramp up services in an attempt to enhance revenue and diversify the business. But this tactic has proven perilous for the automotive industry at large, often offsetting opportunities to make money with sizable financial risks.

Mobility is probably the best example of this, as its broad enough to encompass everything from self-driving vehicles to subscription models and relies on the market maturing into something that will presumably see returns on investment years down the line. However, AutoNation’s diversification was far more traditional. It seemed like a sure thing, since the collision parts business was forecast to grow over the next five years. In fact, despite being the the largest automotive retailer in the United States, the company actually owes 46 percent of its gross profit to parts and service. Selling cars (both new and used) only accounts for 24 percent — with the rest coming from finance and insurance. (Read More…)

Slowly but surely, a phenomenon is spreading across the United States: standalone Jeep dealerships, as well as Fiat Chrysler dealers with Jeep showrooms.

Located where the buying public is most receptive, these types of stores could play a larger role in the brand’s future, especially as Jeep prepares to add three new models to its lineup next year. (Read More…)

The automotive industry has borrowed an estimated $132 billion since the world started taking the coronavirus more seriously, according to a recent analysis by Bloomberg.

Despite migrating around the planet months before anyone thought to close down a single airport or suggest masks were necessary, March is broadly viewed as the start of the pandemic in the Western World, as that’s when most governments started taking direct action and businesses started looking for handouts. Still, it’s exceptionally difficult to follow the money if you didn’t devote yourself entirely to the task of tracking payments while under shelter-in-place orders.

We do know that a lot of money was being thrown around, however. Car dealerships were among the largest recipients of Paycheck Protection Program (PPP) funds in the United States, garnering anywhere from $7.5 billion to $12 billion in government aid to maintain staff. Plenty of criticism over exactly where that money went arose as the press questioned which businesses were more deserving and who was just taking advantage of the system.

But it’s only the tip of the iceberg. PPP funds don’t need to repaid unless they weren’t earmarked entirely for payroll purposes; the government also used the program to send over $600 billion to support banks in extending low-interest loans to companies during the pandemic. The automotive industry was one of the largest beneficiaries of that arrangement.

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Automotive retail magnate and part-time actor Mark Wahlberg has obtained another car dealership in Columbus (which may be renamed “Flavortown”), Ohio.

After having partnered with longtime friend and business associate Jay Feldman to scoop up Bobby Layman (now Mark Wahlberg) Chevrolet in 2018, the duo said they eventually hoped to expand their auto businesses. Feldman already owned a swath of dealerships in Michigan; the friends admitted they were eyeballing additional opportunities in the area.

They did not have to venture far. Wahlberg just purchased Haydocy Buick-GMC, which is right across the street from the Chevy showroom. The site has already been rebranded to include the Hollywood actor’s name and will immediately leverage his star power to reel in customers.  (Read More…)

The annual Automotive Franchise Activity Report asserts that the number of new-car dealerships in the United States has shrunk for the first time since 2013. The difference is marginal when viewed from a national perspective, but could support prior theories that larger dealer networks are consolidating while smaller, less competitive shops are being forced out of the market. The report claims the total number of storefronts fell from 18,294 in 2018 to 18,195 at the start of 2020. Dealership throughput was similarly down, decreasing by eight units from 2018 to 940.

While not particularly alarming, the figures do seem to mirror national population trends when placed under a microscope. The states that lost the highest number of showrooms  tended to be regions that had the most trouble preventing people from moving.  (Read More…)

I’ve shared my experience in choosing a suitable replacement for my Subaru Outback recently. And while that mission was accomplished successfully at the end of December (story coming soon), I was left with a tale to share about a particular dealership and its “customer service.”

Time for a quick story about how not to treat the customer.

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Back when the Dodge Demon originally launched, Fiat Chrysler indicated it would do everything it could to prevent dealer markup. As one of the car’s best features was its comparatively low MSRP, at least for the amount of power Dodge was offering, FCA didn’t want price gouging sullying the monster’s good name. Besides, the factory isn’t seeing any of that extra cash so there’s no incentive for it to support markups.

Unfortunately, gouging still took place. Some dealerships found a workaround by having intermediaries on eBay auction off the right to buy one of their Demon allocations — resulting in customers paying tens of thousands in bidding wars to have the opportunity to purchase the car at its “fair price.”

While grimy, it’s not much different than dealerships automatically tacking on premiums to the likes of the Honda Civic Type R or Toyota Supra. Pretty much every manufacturer building a rare or coveted automobile takes some precautions these days, but there’s always someone waiting to screw you. For example, Porsche is pretty good at selling its rather expensive vehicles at MSRP, yet rarer models are frequently flipped online for a small fortune.

Hoping to cut markups off at the ankles, a subset of buyers interested in Chevrolet’s new Corvette have been busy strategizing — resulting in an effective-sounding plan. (Read More…)

With the American public growing less inclined to visit car dealerships, Ford Motor Company is toying with an interesting solution — setting up shop in your local mall. The concept will be similar to the storefront Jake and Elwood crash through in The Blues Brothers after noticing “the new Oldsmobiles are in early this year.” It’ll be small, limited to a couple of showroom models, and will serve as a satellite for local dealerships.

However, shopping malls aren’t nearly as popular as they were in the 1980s. Back then, people actually left the house to do their shopping. But there’s still hope. Many malls are rebranding themselves as shopping centers and focusing more on experiential services and the kind of goods you wouldn’t want to purchase sight unseen. The rest continue to wither on the vine.  (Read More…)

If there’s one thing I loved about spending time in the offices of General Managers and dealership principals, it was hearing about the harebrained schemes they had to bring customers into the dealership. GMs see an average of 80 or more vendors every single month — there’s always a new piece of software, a new way to buy inventory, even a new way to wash the windows. Invariably, due to some combination of pressure to meet unrealistic sales goals and the attractiveness of the sales rep, managers would fall for something that would make me shake my rather large head in disbelief.

The tough part was always maintaining a straight face when they told me about their plans. One of my fondest memories was listening to a GM explain that he had canceled all of his third party advertisers and ordered two Wacky Waving Inflatable Arm Flailing Tubemen. I wasn’t entirely surprised to see that the store was out of business 90 days later.

But one of my all-time, tried and true favorites is the “gypsy sale.” Click the jump to see our friend Greg’s question about these direct mail pieces and whether or not they actually work. (Read More…)

Due to weakening new-vehicle sales, the United States was staring down the barrel of near-record inventories a couple of months ago. Encouraged by the factory to ensure their lots were filled with the latest wares, dealers have watched their margins evaporate as employees and customers drowned in the sea of metal parked out front.

While still uncomfortably high, U.S. inventories started creeping back down in May. By the end of the month, the number of vehicles waiting to be adopted fell below 4 million for the first time since the beginning of 2019.  (Read More…)

The last couple of weeks (and, um, stories) have been awash in negative press and bad vibes for Nissan. Fortunately, mother nature stepped in to help one Florida dealership restore the cosmic balance by having a family of ducks move in.

A few months ago, a nest of ducklings hatched outside Sutherlin Nissan Orlando. They decided to stick around, creating an interesting incentive for customers. While we doubt the company would implement new dealer conditions that mandate an on-site petting zoo, it could be a novel solution to its sales woes. After all, promoting dogs worked extremely well for Subaru. Maybe Nissan can become the duck brand.  (Read More…)

Unlike components used in new vehicle assembly, the finished product is not shipped to the customer in a just-in-time manner. There’s usually a healthy amount of dealer-ready vehicles on hand, though recent months has seen inventories slide into obesity. Extended downtime and shift cuts at assembly plants are one result of a bloated supply made worse by falling U.S. sales (Fiat Chrysler’s Windsor Assembly is just the latest victim), but autoworkers aren’t the only ones bearing the brunt.

Figures from the beginning of April shows the inventory problem is only getting worse, with pressure growing on the dealers tasked with selling these vehicles. (Read More…)

Dearest TTAC readers,

I’ve come to know you incredibly well over the last seven years. I realize that what I’m about to tell you is somewhat akin to waving a dripping piece of red meat in front of a starving, caged tiger. But, like Bane, I am here for you, the people, and I’m willing to suffer abuse at your hands because the truth will ultimately set you free.

I also know that because much of my source material for this blog post was given to me anonymously and confidentially by one of the most influential dealers in the country, you’ll scream something like “I WANT TO SEE YOUR DATA,” but such is life, guys. I can’t show his numbers to you. I’ve substituted some data from the National Auto Dealer Association’s Mid-Year report for 2018 (the final 2018 report isn’t available just yet). You’ll see the correlation.

Now, let’s get into the meat waving bit, shall we. Breathe deeply, and jump in with me as I tell you this:

In 2019, car dealers are happier than ever to sell you a used car instead of a new one. This could make buying used a bad proposition. Here’s why.

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Last year, Ford announced its intent to develop a rewards program aimed at keeping customers engaged — while also making it worth their while to stick with the brand for their next purchase. While customer rewards are old hat, regardless of industry, automakers are busy devising new ways of using the venerable marketing theory to improve customer retention. It’s an urgent gambit, given today’s cooling market.

General Motors launched its “My GM Rewards” loyalty program in 2018, using a points-based system to reward customers who use OnStar’s new services, purchase a new vehicle, or service an older one. Those points can then be redeemed, knocking some cash off a subsequent GM purchase. Meanwhile, Honda previewed “Dream Drive” at the recent Consumer Electronics Show — a concept with its own redeemable points system (one that incorporates some potentially unsettling gamification within the app).

While Ford’s FordPass-based efforts appeared similar, it wasn’t until this month’s North American Dealers Association (NADA) meeting that the automaker was willing to flesh it out.  (Read More…)

Cox Automotive, in conjunction with Automotive News, just released its Retail Brand Scorecards Study for 2018. The survey is interesting in that it ranks the perceived value of automakers by assessing how desirable they are to dealerships via an A-through-F grading system. Though, as engaging as it might be to look at these traits from a highly specific viewpoint (how dealerships see you in relation to specific manufacturers), we’re not sure how useful the average consumer will find them. Dealers and industry geeks, however, may want to take notice.

“This study represents a comprehensive review of brands from a unique perspective — how well they support the success of dealers,” said Cox Automotive Chief Economist Jonathan Smoke. “As we assembled the data and began to see how the brands performed differently, we started looking at the results as grades in high school, where the most well-rounded and high-achieving students are those who perform well across a wide range of disciplines. With that scorecard framework, we found a clear set of brands that are honor-roll worthy, as they are in essence the hardest-working, most successful students.”  (Read More…)