Matthew Phillips is CEO of Car Pros Automotive Group, one of the fastest-growing racing teams in the country, with nine outlets in WA and California.
In May, my company and other dealers in Western Washington teamed up to offer a new vehicle to a nurse and a foster parent that we chose from over a hundred applicants. Although cynics might view this online participation as self-centered promotion, the fact remains that corporations are not obligated to give back, and many do not.
However, car dealerships are an integral component of their communities, making an investment directly in their neighbors through car donations, minor league sponsorships, YMCA donations, and much more. This is just the beginning of what dealers are bringing to the local table. in fact, it is one of the last true “street businesses” in the United States and an indelible and indispensable component of the economic, philanthropic, and service engine that drives local communities.
And that’s no small feat.
Well, in a way it is: Under the SBA’s definition of “small business,” your local franchised new car dealership, one of more than 17,000 franchised new car dealerships nationwide, is most likely a small business and one of 33 million franchised new car dealerships nationwide. which are the foundation of our country’s economy, and particularly contribute to its local tax profits (for example, in 2021, dealers accounted for about 16% of total sales taxes collected). in California), as well as task creation.
Car dealerships are actually family-owned retail establishments (they’re affluent businesses), but they’re also not part of the multimillion-dollar elegance. They aren’t typically owned by tech moguls or investment budgets that funnel money into Wall Street and off it. from local neighborhoods. Distributors, by their very nature, will have to be part of the network and give back as much, if not more, than they contribute.
While other high street businesses are disappearing (from the local butcher shop to the coffee shop to the hardware store), taken over by giant firms or wiped out by giant chains, many of the local dealerships are going strong.
While immune to consolidation through larger groups, the car dealership is still necessarily a small, fundamentally local, and deeply sustainable business that lives and dies within its community, promoting itself from person to person among its neighbors. And it’s the franchise style of car dealerships. that has made this possible.
Despite the efforts of some tech giants to liberate direct-to-consumer vehicle sales (meaning that the visitor transacts directly with the online business compared to the classic franchise style where the visitor transacts with the local dealership), I found that this was the next step. It is trivializing the procedure of promoting a vehicle. And when sales are “direct,” the profit doesn’t get advantages from the local network but goes directly to the owners of multi-billion dollar multinational companies.
Efforts to alter the franchise franchise formula, which has thrived for years, haven’t been a success because what some tech leaders say is how expensive it is to own a store, put a logo on it, fill it with inventory, gain experience in a field, hire staff. and exercise them. It is the style of franchising that allows distributors to outsource some of this expense, painting and management, while maintaining a hyper-local and personalized activity.
In fact, some of the new corporations that specialize exclusively in electric cars are in the process of transitioning from a direct-to-consumer strategy to a network of franchised dealerships. And today’s car dealerships are responding by adding more virtual retail teams to give consumers more into how they shop.
An estimated 85% of car brokerage franchises are family-owned and remain in the same families across generations – a point of interaction with the network that not even AI can replicate. With the franchise system, consumers reap the benefits of competition from local brokers: if a visitor is at their local Ford store and they don’t like the prices/services, they can cross town to another Ford dealership. This helps keep runners on their feet and competitive in terms of value and visitor service.
Employees benefit, too: Auto retail isn’t just another low-paying job in retail, but one of the few opportunities where the less fortunate can find a path to the middle class, where work ethic, checkout expertise, and intelligence are assets. A school degree can be the path to an average car dealership employee’s salary of around $100,000. This is certainly not part of the direct-to-consumer model.
And the franchise formula benefits the network, because workers and consumers make up the network and the profits go to the local area. Actually, the only people for whom the franchise style isn’t smart are Wall Street billionaires.
Interestingly, while many EV-only corporations are redesigning their sales style, I’ve observed that some of the major automakers that have recently shifted to promoting EVs directly to consumers are also reconsidering their distance from franchise style. I think that’s because it’s the most productive style for promoting electric cars for all the reasons cited above: from educating buyers, adding those who would possibly never own an electric vehicle, to a much broader service policy in communities, whereas EV-only brands tend to have only a few service centers and fewer features to fund them. Types of credit situations.
EV or internal combustion engine (ICE), or whatever the next futuristic car is, I believe that the franchise formula with its traditional, hyperlocal focus, subsidized through the strength of economies of scale, is the formula for the long-term of the automobile. . sales.
This doesn’t mean that innovation at the dealer level has to stop, but at the end of the day, the process of selling cars is a deeply human interaction, which can be facilitated, but replaced, through technology.
So, even if a dealership has never donated a loose car, chances are their network has benefited in a number of ways. Today’s car dealership is not the stereotype and remains firmly a blue-chip business, one that has gone far beyond that. The cliché of the flashy, unscrupulous car dealership needs to be replaced by the humanity of a true network partner.
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