2018 NADA: Don’t Worry, Be Happy
Despite a new car sales market that seems increasingly unsettled with every passing headline, I thought last month’s 2018 NADA (National Automobile Dealers Association) was notable for its positivity. There was a feeling of optimism, and energy, that ran through vendor booths, dinners, demos and parties.
It was a little surprising when you think about the changes that are likely coming. For example, Patrick Manzi, the senior economist for NADA, said at the show that interest rates are expected to rise “three or four times” this year, which he said would likely add pressure to vehicle transaction prices and auto loan terms.
Cooling down a hot market through higher interest rates?
That’s not great news. But it didn’t seem to bother attendees; sessions were jammed with dealers and managers looking to learn more about coming changes to the industry, and demos featured active conversations and detailed discussions.
There was a buzz about the place, plain and simple.
It spoke to the future of car sales and a general acceptance about the direction the industry is headed toward – even if that includes autonomous cars and some slowing of sales. In fact, dealers were even eager to embrace the concept of self-driving vehicles – if only at arm’s length, for now.
So, what made 2018 NADA such a happy place? We spotted four trends:
- It’s a digital world.
The 2018 NADA conference was notable because dealers stopped talking about “if” and “when,” and began evaluating retail technology from the perspective of a critical buyer’s eye. Digital retail, online F&I tools, websites and more (finally) entered the mainstream world of car sales. The concept of leveraging online tools and websites to better connect the transaction to the showroom is now nothing more than a part of day-to-day business.
The reason? According to Tanya Sanders, a managing director at Chase Auto Finance and 2018 NADA speaker, the shift comes down to meeting customer demand for a trustworthy, right time and place experience. Ultimately, I think the acceptance of good digital retail solutions was a big part of 2018 NADA because dealers and managers know that the process of buying a car must speed up and become more transparent. This year, the difference was that many dealers already had some of the pieces of the puzzle in place – and they were at NADA looking to augment their digital offerings.
- Connected car buying begins to come of age.
It was refreshing to see more and more vendors delivering solutions to create a ‘connected’ car buying process – melding online and offline into a single, unified shopping experience.
Everyone knows consumers are spending more time online and less time at dealerships so starting their buying journey online and seamlessly integrating their data and preferences into a CRM and/or DMS system can go a long way to create efficiencies and even help with the still arduous process of finishing paperwork. Not only were more vendors talking about, but it also seemed that dealers were starting to really “get” that online shopping and research is now fully entrenched in the buying process – and it’s time to find solutions to connect the on and offline consumer journey in their dealerships.
- The dealership model works now…and in the future
According to the NADA DATA 2017 mid-year report, last year’s average dealership service department wrote 9,446 repair orders, for total average sales of $3,262,336. Fixed Ops now makes up 48.5% of an average dealership’s gross profits.
All of which shows how dealerships are far more than just sales, and that the practice of selling and servicing cars is solid and sustainable for the future…as long as it changes. Case in point: when talk of autonomous cars came up, dealers didn’t hide or push away this inevitable part of the future; they thought of how service departments could expand to meet the needs of these massive new fleets. The same thing happened with talk of ride-sharing, and subscription-based rides.
The model of the dealership is an ideal brick and mortar component to car sales and service as the world grows more mobile and digital. Think about it: With a growing majority of shoppers wanting to handle virtually all aspects of the sale online – yet wanting a test drive at a showroom — dealerships are positioned to best serve these two very different needs.
- Tech-driven collaboration…is it possible?
It might have been a mirage, but it seemed that 2018 NADA ushered in the start of kinder and gentler times between dealer vendors – a spirit that may well wind up resulting in greater cooperation.
One can hope, anyway. One thing was clear, however: vendor partnerships are being created that will better serve dealers, and (at least during NADA) there was a tacit agreement between enlightened vendors that tomorrow’s technology requires greater transparency and partnership.
Ironically, the technology that most people wanted to talk about hasn’t even arrived yet: : Blockchain. Maybe the buzz was because Porsche just successfully installed blockchain technology in its cars for data logging and temporary access authorizations. Or mayb2018 NADA: Don’t Worry, Be Happy e it’s because forward-looking dealers are seeing the value of blockchain as a solution for speed, efficiency, and security…not to mention the transparency of critical data points that drives the customer experience at the dealership.
Either way, the future was bright from the perspective of 2018 NADA and it promises to stay sunny for quite a while longer.
Pete brings over 40+ years of experience in automotive finance and technology as Founder and CEO of eLEND Solutions™. Founded in 2003 as DealerCentric®, Pete is leading the company’s evolution to an automotive FinTech platform focused on deal generation solutions that power transactional digital buying experiences for the retail automotive industry.
The platform specializes in hybrid digital credit, identity, and finance solutions - designed to accelerate conversions of digital end-to-end purchase experiences - concluding with a transactional, fundable deal structure.