CHICAGO — Rather than waiting for third-party disruptors to reshape auto retailing, dealers need to do it themselves — and quickly, Don Flow, CEO of Flow Automotive Cos., said last week at Automotive News' Retail Forum: Chicago.
Dealers must seize opportunities by embracing new business models that match the needs of modern consumers.
"It would be a tragedy if we allow third parties to come into our business and take that value away from us," said Flow, who generally keeps a low profile but is a mentor to a number of privately held dealership groups.
Flow Automotive operates 36 franchises in North Carolina and Virginia.
Flow said the value propositions American dealerships developed long ago have weakened dramatically.
For instance, car dealers once had a stranglehold on the shopping process because store visits allowed consumers to learn more about vehicles, test drive them, discover trade-in values and arrange financing. Now, consumers do much of that online.
Back in the day, Flow said, the scales were tipped in the dealer's favor. Now shoppers come armed with data and the dealer has lost that advantage.
"If we made our money from low transparency, that is gone forever from us," Flow said. "The market is full of intelligence now. When you have all of the market knowledge, it gives you pricing power. That is gone now."
Dealerships also provided convenience as the country grew. Stores seemed to pop up on every corner, Flow said.
Put it all together and consumers developed a strong sense of the value of dealerships. Dealers haven't stopped providing all of those services, but consumers have changed.
Now consumers live in a one-click world and expect everything to be easy. And if a consumer leaves the house to buy something, Flow said, the retailer had better make it a worthwhile experience.
"We need to be as efficient as Amazon is digitally and we need to be as enjoyable as Apple when customers actually engage us. It has to be a great guest experience," he said.
The way to do it, he said, is to become digital and focus on creating a personalized experience for customers. Stores must turn to innovations in artificial intelligence and look for insights from predictive analytics. That should lead to the kind of personalization that gives customers what they want, when they want it.
Dealers also have a role to play in setting up new vehicle ownership models.
The shopper who hauls his family to the beach four times a year will buy a big SUV tailored for that experience, but may not need that kind of capability every day. Flow said the customer will want to have a pickup or sedan on other occasions. Dealers, he said, can tap into this opportunity by becoming transportation service providers.
He said dealers already manage service loaners and should use their imaginations to generate revenue from a transportation service model.
"We have everything in place to actually do this. We have all of the fixed costs, we have all of the locations," Flow said.
"We've got to be at the very center of understanding how we access all of those buckets of transportation needs. It's ours for the taking. We have to start trying things now and moving in that direction."