Resilient partnerships will be key to navigating the economic and structural complexities of the retail landscape, according to industry leader John O’Hanlon.
At the Vehicle Remarketing Association’s (VRA) most recent seminar, the CEO of Waylands Automotive provided insight into how industry players can thrive in an ever-changing automotive landscape, where adaptability and collaboration are paramount.
O’Hanlon spoke about the intricacies of the company’s style in which brands will take a straightforward approach to sales, emphasizing that a delicate balance is needed to ensure good luck for everyone: the original appliance manufacturer (OEM), the dealership, and most importantly, the consumer.
O’Hanlon shared his first-hand experience racing with a Waylands franchise, where a collective effort resulted in the bottom line for all stakeholders. “Because all three of us are winning, we’re in a wonderful position. It is difficult to verify and achieve the result for the original manufacturer, for the broker and for the customer.
The Impact of Margin Changes
One of the main challenges, O’Hanlon noted, is the potential decline in margins of advantage for distributors, especially those that are historically strong in retail. As costs rise, he noted that distributors don’t necessarily gain higher margin advantages, forcing them to volume to trump emerging costs. However, the limited capacity of the market poses a challenge that is likely to cause declines in the sector.
Above all, the shift to a firm brand, while increasing automobile sales, presents difficult situations for maintaining historical profit margins. “This small margin is impacting our world,” he observed, highlighting the need for dealers to adapt to the new economic situation. landscape.
“Agency is predicated on selling more cars but every manufacturer can’t sell more cars. We’ve got a limited market. So we know there’s going to be winners and losers as the opportunity for additional sales is more limited than ever.”
Navigating the New Normal
As the automaker takes on financing, dealers now have to work even harder to ensure they don’t lose out. O’Hanlon emphasizes the importance of promoting financing as a gateway to promoting insurance and other complementary products.
He cautioned that if financing isn’t sold through the dealership, upcoming sales efforts are likely to be even more difficult. “If we don’t sell financing, it’s much harder to sell insurance,” he said, pointing to the threat of potential friction issues. on the visitor’s journey.
The customer experience is paramount, and O’Hanlon has emphasized from the beginning the need for flawless systems, well-resourced teams, and attractive offerings. “What does the smart look look like? What sounds smart for a company is the systems and when For example, I’m talking about customer-facing and retail-oriented systems, and we can combine them when those systems are backed up by groups of highly trained and well-resourced brokers who can fix the little bumps in the road.
Here, the franchised broker has a role to play in ensuring that the exceptional visitor experience is the endpoint, the product of what he calls the company and the broker working intensively in combination in “a virtuous circle. “a car in a stylish and glorious way and if the visitor sits in the middle of that delight, then we win,” he said, adding that this would naturally lead to a new cycle of visitor ownership and retention.
“A manufacturer doesn’t have that capability today. Maybe it’s about understanding, it’s about secure systems, it’s about growth. But those are the persistent problems we’re seeing. “
“Whether it’s a Mercedes or a Volvo, you’re going to start to feel some of that pain. The interesting question will be how quickly they overcome the learning curve. I don’t know where we’re going to get to. ” I’m still hopeful because there are genuine gains in terms of stock and speed.
The Electric Revolution
When it comes to the EV landscape, O’Hanlon reflected on the strategic partnerships Waylands has forged with brands embracing electrification, highlighting the importance of opting for partners with a transparent industry strategy and spotting the critical role those partnerships can play in the retailer’s growth. and position them for good luck in this developing market.
O’Hanlon said he had an exclusive opportunity in 2017 with the partners he was looking to work with, choosing brands such as MG, Kia, Volvo and Polestar, each representing a distinct facet of the market and likely to make a contribution. to the growth and viability of the business.
“If you look at the expansion they intend to achieve, it makes my task as a store a lot easier. If I can take advantage of the hard jobs and the hard jobs that those brands are doing as they grow, I have a chance to fight. “,” he said.
Challenges of the EV Aftermarket
O’Hanlon spoke of the aftersales challenges posed by the advent of electric vehicles, flagging the looming threat to traditional revenue streams, particularly in terms of the sale of oil and second services.
“Our gross profit is made up of a few key elements. Look at oil, 30% of my gross profit comes from the sale of oil. According to the company model, we have to sell more than 23% more cars to be able to compensate. for this after-sales loss.
“If we simply sold electric cars overnight, most of the work we would do would be on instant service, which would account for 74% of my gross profit, eliminating 75% of my net profit. “
“This is critical to our viability, so let’s sense that the EV aftermarket is coming, and as I’m positioning my logo to sell more new EVs, I’m going to deal with that sooner rather than later. “
With a significant portion of this gross profit historically coming from oil sales, the move to electric cars demands a proactive strategy in aftermarket services, and O’Hanlon highlights the importance of annual electric vehicle inspections (EVCs) and methods to build customer loyalty. to offset this impact. to after-sales revenue.
Partnerships, Future Scaling
Fundamentally, the converting automotive landscape will require an update of intermediary methods. On this topic, O’Hanlon advocates stepping up and forming partnerships that overcome the complexities of the brokerage industry.
“As the EV mandate grinds on,” he said. “We know we’ll have to sell more and more EVs. They’ll be a few dealerships who will jump on board who need to fill showrooms. But that’s not the answer. We need to be very diligent with the partners that we work with going forward,” warning that “an empty showroom might be better than a showroom with the wrong brand.”
He predicted a change in the optimal length of concessions, stating, “I think the era of single-site and two-site concessions is disappearing. We want to grow and large-scale partnerships must be our priority. “
“We want to work with partners who understand our business, we want to understand what they can do, and then we can move forward at a time when scale and speed will be critical. “
“The demanding situations are greater depending on the sector in which we work, whether economic or structural. They are more complicated and we want to understand them and work with strong associations within our companies to be able to resolve them.
There has never been better control, on-site control, streamlining and automation information than there is today.
Aimée Turner is a B2B specialist and journalist who has been covering the foreign shipping industry for more than 20 years.
She has specialised in the significant safety, regulatory, and environmental issues that impact advanced technology businesses in the pursuit of more efficient, safer and sustainable transportation modes.
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