Kenneth joins us again to look at the agency model, customer confidence, emerging brands and the ownership journey.
Under the agency model, how are the OEMs going to value trade-ins, deal with pre-registrations and are they going to proactive or reactive?
Something for everyone in this episode, whether you’re a sales executive, manager or investor.
Here are the highlights:
{02:50} Emerging brands
{03:48} Pre-registrations
{07:00} Cheaper staff costs
{10:06} Trade-in values
{13:14} Used car prices
About Symco Training:
Symco Training was founded in 2000 by Simon Bowkett and it was his belief that the business had to offer its clients something different. That difference was clear to Simon from his days in the dealership when he experienced many sales trainers who had all the answers, but were unable, unwilling or both to actually show the delegate how they could be implemented. It remains the ethos of the business today. You see, Symco only employ trainers that are committed to delivering not only in spiring and insightful training, but are equally as happy to demonstrate these skills and techniques with real customers in your own showroom. We believe in order for sales training to be effective and in Simon’s words ‘real world’, it needs to be tried and tested in the only place it matters the showroom floor. There is no room for theory when your goals are for your team to sell more cars, hours or parts and retain more profit. In dealerships around the world the focus applied by many of the sales executives is to try and sell a deal. Symco specialise in getting your teams to focus on selling themselves, the product and then supporting this with the deal.
To find out more visit www.symcotraining.co.uk
Welcome to the Selling and the Motor Trade Podcast, an association with Symco Training. This is the weekly podcast where we share best practice tips and ideas on how to sell more cars, improve your service department and generally put more profit into your dealership or dealer group. I'm your host, Simon Bowkett. Now, some of you probably already know me as Skipping. I'm going to start by saying thank you for taking the time to listen to this podcast. So I've got to get you a view on the A-word, agency. Now all of these new brands coming through, you mentioned a vault there, going agency, I believe next year, Land Rover going agency next year, with your ears to the ground speaking lots of dealers. Is there lots of concern out there from investors about agency? I've seen that. There's a lot of concern out there for agency. What I've certainly noticed is, when I initially set up this business, this business card, I was purely to actually supply thousands of other motor industry. What I've found is that there's more people coming on board looking for advice and looking to basically join private office that we have. So we're looking to expand, we're bringing more people on board to affect the run that side. If the agencies or the dealers were not disrespecting anybody, but if they were doing the job right, there'd be no need for us to do that. So I think the agency is a problem. It's a problem certainly in the marketplace because the manufacturer may know the person that buys the car, but the person that buys the car is quite seldomly not the influencer, not the person that makes the decision. It's normal a family decision. The children see the car in Instagram, what have you. A salesperson knows the whole family. If a good salesperson and they get good repeat retention, a referral business, they know it's not all individual. They know the whole family and they get repeat referral business. If people are buying cars online, new cars online, that's lost. But a special agency, it's not just buying cars online, it is just we're not going to discount it. I think there's still going to be people walk into a traditional dealership. I think some of the people want to go direct selling, some of the Chinese might try to get selling. Do you know any of them who are going direct selling to start with? Into the market, placing Europe and the open-to-date customer, but they're also looking at establishing partners as well. So there's a new brand, new emerging brand coming, but they recognize that they need to have partners on the ground as well. And that's an opportunity that shouldn't be overlooked. The agency-based model, I understand what you're saying about Volvo. I mean, Lotus, for example, just now you buy a Lotus online and you effectively get a handling fee for looking after that transaction. It will work for certain individuals, but won't work for all. And my concern I have is a broad brush effect happening in the industry. I want to get your views. So with the agency model, we understand that the dealer gets the handling fee. And of course, there's lots of different types of agency models they're talking about out there. But the bit that I haven't got my head around, there's always going to be an element of push in the dealer world. So speaking to Dale Weick from Suzuki, they're always going to build cars 18 months down the track that that market doesn't want that. And it must be incredibly difficult to find out where the market's going to be in 18 months down the track. So invariably with the dealer model, when they've got a whole lot of stuff that they haven't got, they would through pre-read checkers, so it's the market. We know how it works. Mark works very well. Mr. Clark, we started talking about right at the beginning. He was a master of going to, from what I understand, going to the manufacturers and say, okay, I'll buy all those vehicles for this figure. But under agency, they can't do that. So what does the manufacturer have? Does this pump a whole lot of cars into Daily Rental to the brokers? Is it great for that side of the business so they don't devalue it? The products themselves, do they actually just do what Elon must do? Then discount the car by 10, 15% there and upset the people who bought the car beforehand. That's something I want to get your views on. How do they get the hair on that side of it? I don't know, agencies have been going long enough anywhere yet from to overcome that issue. Yeah, I think the thing they need to establish before they really, really go into is gaining consumer confidence. It's a large investment. It's a large amount of money people spend on their cars and okay, everyone's all retrospective. But ultimately, the day that person needs to have confidence in the product they're buying, if they're going to go down the route of the Tesla route, which I think is probably questionable now whether that is a correct route to go down because, of course, it's been successful, as you rightly said earlier on, as people in those cars, taking the delivery of those cars, spend a lot of money on those cars to find that they're getting discounted but not only once but twice. And that's because the marketplace is that competitive, a marketplace. So if plans are going to sit back and wait and be reactive, that's going to be a big problem. They need to be proactive about how they approach things and what they do. And the best people to deal with that are the people on the ground, the people at the dealership level. If somebody's coming in for a car to be served, for example, and if that individual sales person goes and talks to them and talks about buying a car, I mean, I've had stories where they do a deal and then the person goes up the road and they select a different dealership. That individual and that dealership has done their job, doesn't get paid, doesn't get awarded for it because maybe there's a dealer that's close off the home. Yeah, it's going to be interesting. From what I've heard to some of our dealer friends in the Australian market where Mercedes has already gone ahead with it, there would be some evidence of top salespeople leaving that bread and going somewhere else. But as an investor, is that a bad thing? Can I actually employ people who aren't as highly paid? Can I employ people from the hotel industry that just looks after people there? They don't need that negotiation skills, they just need to be what you said before with Porsche. Okay, just the experience, just maintain the experience. Surely that'll be better for the consumer, will it? It could be better with a consumer, but it's all down to the strength of your brand. That's where that comes down to. A lot of people need to have reality, shape needs to take place because not every brand out there is a same strength and pool and draw as, say, for example, Porsche has. And Porsche operate with salespeople. They operate with very, very highly intelligent individuals who are salespeople. They don't have people on the ground, it's not like walking into an Apple iStore, they don't have people who are very intelligent, they're there to assist and help, they ultimately do a selling job because of that ownership. John is looking to get people on board. They don't sell just one car, they sell the dream. The dream is that this is your car for now, then we'll get you into this other car and another car for the down the line. It's fantastic. But if you're not a disrespect to somebody in our virtual guys or a Toyota dealership, managing that is a totally different way of doing it. It's a totally different sale. So you really need to have the people on the ground to, you know, entrepreneurial, entrepreneurial, people who are prepared to discuss, chat and sell the product because product we have out there just now in the UK is phenomenal. It really really got some really, really good offerings. But again, Simon, it's all down to how you speak to people, how you interact with them, that first time customer engagement, have you visited the same until before? I said, I asked them the question of, can we help you? Have you visited before? If it's a yes, fantastic, hope it brings you back. That, the smile, that interaction, the warm handshake, all these small elements all work together, good customer experience. And that's, I think with the problem is with a lot of the agency-based models, they need to have a strong look at it. They need to have a better blend to it. I'm not saying it's not going to work. I'm going to what I was saying is they need to be careful that they don't lose that interpersonal element. The tide is coming. I think we need to get a head around agency. We've had some people here that said, hold on, it's going to be complete failure. I'm not entirely sure it is. I think the way it's been introduced in some markets has been the issue. But lessons will be learned from that. I don't think it's going to be all bad there, but I just think we need to change. One bit again I don't get is we're not going to discount. So we've got the OEM that has to be setting the price, also of the trading. Surely as dealers, we're going to have to get better at use cars. Everyone's going to be looking at use cars since where they are. We know the market is right there. We need to make sure we look after a service because that's where we're going to make ourselves difference. But I suppose the question is someone at an OEM head office going to agree that the trading prices on that car is going to be 102% of cap or 98% of cap or 106% of cap. That side of it I suppose is it'd be interesting. I have a race my own my face because that's where we come in. That's how we are especially in the spaceless car set. As I said, we provide private individuals and that is they can approach us. We'll set up some market place. We don't operate in the same way as a lot of our businesses operate. There's several different ways to move your car on. You just have to look at motorways. They've been phenomenal at the sensible industry. In that platform, you have for example, collected cars as well, another different platform. There's different ways of doing it. OEMs unfortunately, they'll look at a cap code. They'll look at cap guide. They'll either get it wrong or they'll get it right. When I say when they get it wrong is because the guide doesn't necessarily get it right all the time. Cars have for example, individual specification to them that enhances the value of them but also can detract the value from them as well. It all comes down to how they handle that. I think that's down to the deal of network to capitalize on that opportunity. That's where they really be. That's a strain. That's a bread and butter. They know what to do now. With your business, the advice between your business, are you finding specialist cars for dealer? Are you providing underwriting situations or how much of it now is that buying service where someone comes along and says, right, I want that 911 GTS. I want to find it for me. It tells me about the business. What we do is we'll basically, if somebody makes an inquiry with us, I mean, old school motor trade, if they make an inquiry with their current car just now and they want to move that car on, the question is asked, what is our plan to do? What does our journey? Can we help them out? We're meeting them where all what we can do as well. For example, have a chat a couple of days ago looking for an 911 target for GTS. Something you cannot get, something you have to wait an 18-month lead time. Reminds to source the car. A brand new vehicle for him. The markets, the opportunity in the market is there. You just have to look at it in real time as opposed to it. Look at this, immerse yourself into guides, indications, pressure cars, retrospectively to what the market is performing like Vino. Okay. Well, listen, I really appreciate it. It's interesting to see what's going to happen there. The price of use cars, I want to finish off on this. They kept on going up. How many months have they gone up there? I want to get your view there. They continue to go up there. Are they going to come off a cliff like they did in 2008? Was it 2009? I remember, let Range Rover Sports were coming down and the guy got 5,000 a month. Are we going to see that again? Or is it going to be continuing going up or stable towards the end of the year? I think it's true for that Matt. It's true for the answer to that one is we don't really know. To be honest, I think we're all very, very cautious about it. At some point, it is going to go by the race side. But currently it's now, particularly within the specialist car side, the thing that element is there's no cars or there's a lack of supplier cars or a perceived lack of supplier vehicles. In perceptions, it all comes down to how drive things going forward. You also have to look at how many new cars were built over the last three years with Covid. So that has an effect on things as well. Car prices are probably the highest point they've been for some considerable time. Will it maintain that? Probably for a period of time again as well. As soon as supply changes in new cars, that's when it will till off. Yeah. Yeah. And I don't think this one new cars is going to come. Well, it's getting better and better all the time there. Be interested in seeing you where the back quarter of the year is going to be there. Yeah. Yeah. Again, tell us about your software because you said there that the cars are over 90 days and the 60 to 90 days, you develop your own software to go and scrape the internet to get all the time from my channel. Yes. Yeah. So I mean, I'm not scared to admit it. I was about to geek back in the 2000s and did the computing college and basically managed to develop software that allows me to affect the retail address out there on the marketplace across different markets, media streams. All runs off of effectively insertion dates. Some have incessant dates are visible. Some have it in their code. But allows us to basically look at stock on what is selling. We have it selling regionally. What how is it performing? And it will drill down into color and space vacation as well. So it's good. It's a major benefit for us. It allows us to, I wouldn't say garden tea. We can't guarantee, but what we can do is reduce shall we say the cost of ownership in some cars. Yeah, it's interesting. Very, very interesting. So it's really what auto trade and all that information. But again, you're dealing with that specialist car world there. So you're looking at that and you're not just looking at auto trade. I'd take it. You're doing over what's different platforms. So yeah, so piston heads, everything, you know, all of the above media streams. The good thing about it is, you know, I've been in the market or we'll be in an estate stuff for quite a considerable period of time for about eight years. And the industry is different from shall we say, not just normal cars, but at the same time it doesn't have its pitfalls. If you rate the sale, they'll earn, you know, cars depreciate, you know, five, ten thousand pounds. That's lots of money, a lot of money. So you know, you need to have sold data derived. You have to have something in place. You can't just put the finger on and go right what way is it going to go now. Yeah. Listen, Ken, I've really enjoyed that conversation. Thank you so much for your time. I really appreciate it. Just saying thank you. That just leaves me to say that all details of this episode and other episodes on the selling in the motor trade can be found on our website simcotraining.co.uk. Go there to get a copy of our book, Words That Sell Cars. Go there to sign up to a free trial of our sales fitness online sales training program. Easiest way to get hold of me is Simon Bowkett, food link to him. Thank you.
