Tell me an industry that has more data than Automotive retail….. I can’t think of any. Whether it be via new or used vehicle sales or vehicle servicing, a modern-day dealership reaches thousands of customers per month. Multiplied across the industry, it is likely that majority of the Australian population interacts with a car dealership at least once per year.

But what makes the data captured by dealerships even more interesting is the quality and depth of its data. To service, sell, register, finance, insure, trade-in, repair and market an expensive item like a car, a dealership must get varied, detailed and accurate data from its customers.

This trove of useful data and their high revenues are the primary reasons why they are increasingly being targeted by hackers and criminals. https://www.autonews.com/finance-insurance/retailers-prime-targets-data-theft. It’s a bit sad that hackers are extracting more data from dealers than the dealers themselves!

But why is this?

The primary reason is because most dealerships data isn’t centralised and worse still, isn’t interconnected. The Payrol system doesn’t talk to the DMS, the DMS doesn’t interact with the prospecting system, the prospecting system doesn’t relate with the OEM, the OEM doesn’t communicate with the finance company, the test drive app doesn’t talk to the document storage solutions etc.

To make matters worse, a lot of these stakeholders discourage the free movement of data between systems and therefore create these disparate data siloes. They believe THEY own a dealers data. When they do allow data connections, they often have a short-term focus on high fee’s, which discourages new entrants and innovation.  

DMS providers are unlikely to change their business model anytime soon, so dealers will have to start taking back their data….. And then use it.

Excel SalesLogs are an excellent way of tracking your sales performance of individuals but also of the overall team and their common target. They are also commonly used to plan deliveries and act as a source of truth for many dealership sales departments.

Despite, all the data being available in a DMS, dealerships still create custom spreadsheets to measure, compare and track their daily, weekly and monthly sales performance. Does it matter?

For a number of reasons, it doesn’t make sense for dealerships to persist with siloed spreadsheets. Ideally, a Dealer Management System should have a detailed and flexible sales log that just represents the data already inputted into a format that Dealers want. This is obviously not happening, or they wouldn’t be going to the effort to create complex spreadsheets.

Stop using spreadsheets!

They are inefficient. Your sales team has already entered in the data, whether it be the sales contract or other means, it is a waste of everyone’s time to re-enter the data just to produce a report that should be automatic.

If you add up all the hours these spreadsheets cost in inputting and maintenance, is the data that is extracted really that important?

They are not secure. Because spreadsheets have the flexibility of macros imbedded into their code architecture, they can be easily customised and automated to complete tasks. This is fantastic, but it is also a security risk. Hackers, frequently target business computer users with phishing emails which often have word and excel documents attached, which then have macros programmed to exploit a companies IT infrastructure. The best way of combating this is to have a network policy of preventing macros on all devices, however this can prevent many useful spreadsheets from operating.

In addition, these spreadsheets are often full of useful data and customer information which in the wrong hands could become a target of ransomware.   

The data is siloed. By having a dedicated spreadsheet for sales performance and delivery information, this data often sits in the spreadsheet never to be referenced or cross joined to other useful data. For example. Wouldn’t it be nice if you could compare and combine your sales delivery performance with your finance performance? Or easily understand which customers have a finance application pending? Or, measure the total income generated by your salesperson including aftermarket, finance and vehicle gross?

They are not historical. Often, SalesLogs are workbooks with tabs setup for individual branches or months. By having this data housed within individual spreadsheets, it is very difficult to compare that data to previous years or even months. 

Ditching the spreadsheet could be the best decision you make this year.  

So many goods and services are bought on the internet these days that it almost seems arcane to buy something looking at someone and not a screen. So why is it still not possible to buy a car on the internet?

There are two big obstacles still preventing online purchases, but once they have been solved there is no reason why some people won’t.

The biggest obstacle is the sales process at the dealership. The ability to negotiate the price at a dealership and potentially ‘save’ thousands means that most people won’t want to buy a car online knowing that they could have saved money. Even if the dealer has an online only price, the perception of the consumer is that they could have always got an extra $100 or so dollars out of the salesperson.

Proof of this, is the sometimes sale of special supply-restricted models offered by manufacturers as an online only model, think Subaru BRZ or recently the Toyota Supra. These companies know they have a massive demand for these cars with little supply. So, they sell these cars online only as they recognize that they can sell these models at no discount and they recognize that the consumer won’t batter an eyelid.  

The only way to encourage online sales, is to have a fixed price across the dealer network so that the advertised price is the same as the transaction price and likewise the online price. i.e. there is no disadvantage to a consumer wanting to buy online. An example is Tesla and its control of the whole process including the retail of vehicles. They have proven what can be achieved online.

In New Zealand, both Honda and Toyota have transitioned to an ‘Agency’ Model, where the distributor holds all trading stock and hence controls the sale price. Consumers aren’t worse off because the advertised price came down to the transaction prices that were being offered by dealers anyway. But this model has ensured that both these brands are ready for online sales in the future.  

The next obstacle is that buying a car is a major purchase and subsequently most consumers prefer to test drive a car before they buy. If the car has a fixed price, why would a consumer test drive the car at the dealership and not buy if they are happy with the car?

For consumers to completely do their research online and progress to purchasing online, then the potential ‘buyers remorse’ issue will need to be resolved. Like how clothes and now shoes were encouraged to migrate online, these businesses offered free shipping and free returns to remove the risk of a consumer buying the wrong item. This then increased the volume of sales done online and made up for any increased shipping and return costs.

Sorry for the plug! – but at drivible our mission is to make the whole car experience seamless and to reduce the risk to such an extent that consumers and dealers feel comfortable selecting and transacting a car online. By transacting a car through a subscription, drivible can ensure that the official subscription price is the best price possible, whilst limiting the risk that you select the wrong car by only having a rolling monthly commitment.

Once consumers are comfortable with the subscription option, it is only natural that this model will migrate online.     

A lot has changed in the past 30 years and the characterisation of the sleazy salesperson is outdated. With the professionalization of the industry and the transparency that the internet has brought, salespeople today are as professional as any other. 

However, when you look at various studies, salespeople are still ranked as dishonest as lawyers, journalists, politicians and real estate agents. But is it any wonder that consumers dislike these professions? Their jobs dictate, that they must find a middle ground i.e. negotiate and most people hate negotiating!

The act of negotiating means that from the very start of a conversation both parties know that the other will try and better their position. A customer will try and save money, which they should, and a salesperson is trying to make money, which they should. A customer enters a dealership in defence mode and salesperson in attack. 

The reality is that a new car today is hardly sold for a profit, in fact a recent report by Deloitte showed that the average dealer makes just $70 per vehicle in margin after negotiation. Dealerships mostly sell cars at a loss so they can sell more finance, sell more aftermarket, service more in the future and crucially make manufacturers targets. The aim of the salesperson is to lose less money! And it is the job of every other department in a dealership to earn it back.

Sales targets often come with large bonuses attached, if the dealership doesn’t get their target, they get nothing. Therefore, the central aim for a customer is to ‘get the best price’, but unfortunately, under the current system a salesperson has no way of knowing what the best price is. It varies from day-to-day or month-to-month depending on the dealer’s relative sales to their target for that period. And customers find this lack of consistency and transparency frustrating.

The current system of buying a car is broken and isn’t serving anyone well and perhaps it is the central reason why there are so many businesses trying to ‘disrupt’ the car buying process. However, many of these disrupters just magnify the current process i.e. negotiate a car purchase harder on the customers behalf. This just amplifies the current problem, as the dealer tries even harder to earn back the money they lost through up-sells and higher service costs.

Making the dealer honest through competition is important but to create better customer outcomes, the whole buying, financing and maintenance process of a car needs to be changed