This week we revisited several thoughts that caught our attention, from winter tires, maintenance, to reconditioning, and a few others in between. Some things never change as much as change is swirling all around it, they remain constant. They are constants, and folks struggle with that simple fact.
In the auto business there are a ton of individuals still immersed in the various aspects of techonology, overlooking the reality that they are in the people business. Go figure...
Canadian Sales - October
We are not surprised that its another record month, we anticipated a record month. What caught our attention, the Lexus NX is on fire, the VW "diesel gate" does not stop CMS from acquiring VW's when there are massive programs applied during the the month. Its all about mobility at a monthly payment once the metal resonates.
The Autoplex in dowtown Toronto is simply brilliant.
Our usual old race cars from Behind the Scenes at the Spa Classic.
We all know that there is an immense portion of the cloud that is devoted to various perspective of the used vehicle business. Its a thriving area of automotive activity from a myriad of pundits, experts, and consultants.
For two decades the Internet continues to empower, and equalise the used car business at every level and step of the process.
In most if not all instances CMS (Citizen Main Street) in the search for used vehicle tends to focus on the specific model they are seeking, and then it immediately gravitates to the price.
Its fair to say that reconditioning takes a "back seat" to having a competitive price.
Lets turn back to the pre Internet days of print advertising in its various forms.
Back then you would take a used vehicle, be it in trade, or a purchase, inspect the vehicle, perform the required reconditioning, and then offer the vehicle for sale at a fair price to generate a fair profit. Back in the day the dealer would "brand" himself on the quality of the used vehicles they retailed. Back in the day if a franchised dealer was offering for sale its own brand, and a potential customer wanted to have the vehicle inspected by his mechanic. Often the conversation stopped right there, there was no basis to go further.
The correctly reconditioned vehicle that you could spot from 25 meters, always had a higher price. You could compare that vehicle to a CPO of today.
Back in the day there was a ton of old school social media involved/used in the acquisition of a used vehicle.
Fast forward to today, with mechanically reliable, and technologically complex vehicles.
Used vehicles are market priced to attract a potential buyer, and sell quickly. On the premise that its a used vehicle it has wear and tear, and to arrive at a competitive market price reconditioning is discounted, and/or performed on a budget.
Its become the default value added, if a vehicle has a clean history report, its suddenly perfect.
You can recondition with original factory parts/components, with branded aftermarket, or "white label" aftermarket. Or you can skip reconditioning altogether and say that its safe to drive. The objective is to arrive at a competitive market price.
Certified Pre Owned
Its the same vehicle from way back in the day that you could spot from 25 meters. Its been inspected and reconditioned to a branded standard. Obvious that the added value in the vehicle raises the price.
Some Things Never Change
Reconditioning a used vehicle is to literally put value back into the vehicle.
Decades later the correctly and meticulously reconditioned vehicle, most often identified as a CPO commands a higher price. While the average vehicles at market prices are reconditioned on an average basis to meet the market price.
Here is the conversation...
Friend: referring to Project 200K "Why did you waste your time with that car?"..."Now I replace a car if it needs tires".
The Colonel: from the friend's perspective is/was slogging it out with an older Benz, and enduring all sorts of aggravations.
Here is The Colonel with his hard core gear head perspective..."I do it because I can", while the friend has the "I used to be a hard core gear head, don't need it anymore".
Full disclosure both of these guys have "toys" in the garage...
Is it fair to say that most folks have a limited, to absolutely no desire to maintain vehicles, to interface with service departments. Its a compelling factor in the progression from ownership to mobility. Back in the day when vehicles were dramatically less reliable, maintenance was a required part of ownership.
Fast forward to today, all vehicles are mechanically very reliable, include a myriad of technologies, and comprehensive warranties. Much simpler for CMS (Citizen Main Street) to have a monthly mobility cost, than an ownership cost plus an unpredictable maintenance cost.
Another reality, how many individuals have the knowledge base to diagnose what a vehicle requires, and more important a "friendly mechanic" that will perform the work.
Reflect on this for a moment...
How about older vehicles? Consider the following...
The original owner trades in the vehicle in the ideal 36 month time frame, irrelevant of the finance terms. To alleviate maintenance costs.
The traded vehicle is reconditioned following CPO (Certified Pre Owned) manufacturer guidelines, and an extended warranty is applied to the vehicle.
The individual that acquires the CPO vehicle similar to the original owner is spared reconditioning costs, while embarking on a mobility experience.
Reflect on this for a moment...
Its fascinating to revisit perspectives from some time ago, and conclude that it was either prescient, brilliant, smart or just plain dumb. As you know we always say that "We don't follow, we lead" while our thoughts are often a little too far ahead.
We also mention to connect dots and obvious be your own editor with the myriad of opinions that are generated on an ongoing basis.
Was it smart or not smart to ramp up the production of oil, to lower prices, to alter economies, to effect change.
Agreed there is already a good portion of a "cloud" (hard drives are so passe by now) somewhere full of opinions from pundits, analysts, experts on the impact of oil.
Oil has reshuffled the world order be it for the right or wrong reasons. As the current price of oil increases it will recalibrate the reshuffled order. With folks looking back and saying "we told you so" while others will look ahead and also say "we told you so".
The reshuffling has impacted Canada, created a new order, that will be recalibrated in the months and years to come.
Another portion of a cloud is full of various thoughts on the recent federal election in Canada. Which campaign resonated, which one missed the mark. Who had momentum, who was disconnected, and so on.
At Strada we connected a few dots...
For years CMS (Citizen Main Street) was encouraged to increase the level of debt they carried to support the Canadian economy, that was powered by oil and consumer debt. Oil got reshuffled, while consumer debt had reached its rational (or is it irrational) maximum.
In the meantime the government is balancing the books, offering more of the same. While the oil situation is not really sustainable, and the debt situation is at the end of its rope.
We all know the outcome "real change" carried the day. When it came time CMS made a brilliant decision "we collectively have our asses on the line, we need a government that will also puts its ass on the line".
Record year on top of a record year, its never been seen before in Canada. The 3rd largest auto market in Canada (Alberta) is struggling and its still a record year.
Yes...there is the surge in utility vehicles, and the continuing free flowing money from banks.
Lets not forget that "premium economy" is reshuffling segments of the market.
While CMS is inexorably migrating from an ownership to a mobility model.
From car (sedan) to utility, from ownership to mobility.
Have you noticed that a few manufacturers are already advertising winter conditions to promote the capabilities of their various "utility" vehicles.
Pundits are getting on the winter tire bandwagon for another season, and perhaps we are doing the same thing again.
While the ongoing discussion of rear, front, all wheel drive endures for another season.
Do you need winter tires?
Whatever vehicle you have, you absolutely need winter tires to avail yourself of the best traction in snow and ice.
With all the technology on modern vehicles...
More so that you need winter tires to reap all the benefits of the technology, from ABS, traction control, stability programs.
You are the traction manager...
Absolutely, not the vehicle, you manage the traction of your vehicle...its that simple.
Seeking more information...
Take a look at our search feature for winter tires.
Winter tires mounted on wheels...
Its the easiest way to go from summer to winter tires, as a gearhead you probably have an hydraulic jack and it can turn into a fun exercise to convert from summer to winter at this time of year.
Retail sales are up in Canada, primarily due to auto sales. The auto business in Canada is so good, to the point of single handedly increasing the results of the retail sector.
Used vehicle prices at auctions are higher too, a good thing for Canadian dealers not to buy, but to sell vehicles, and in many instances generate a profit. Agreed...not easy to source used inventory, but great to dispose of aged inventory.
This week we had another example that if the metal does not resonate. The deal is not closing, the sale is not happening. It was the classic case of "Lets generate numbers, values, monthly payments" first, and now lets see if the metal resonates...and it did not.
Dealers are in the people business, or they should be the NADA Dealer Workforce Study for 2015, notice the high level of turn over in sales positions. Which begs the question "How do you close deals?".
The various opinions on vehicle service and maintenance in Canada. The premise is that vehicles are not serviced, and there are missed opportunities with older vehicles. Always overlooking the reality that folks have little to no desire to service and, maintain vehicles especially older vehicles. In Canada its increasingly clear that folks do not want to be involved with older vehicles that require ongoing service and maintenance.
Think of this...old school dealers had a 5 car showroom, and 20 service stalls, today its a 20 car showroom, and 10 service stalls.
Should the folks in the auto business spend more time immersed in technology, or in being in the people business, and connecting dots. What do you think?
If you are still "sort of" following the VW diesel developments, an interesting article from Business Week "How Could Volkswagen's Top Engineers Not Have Known" its a good read.
An impressive photo gallery of the Porsche Rennsport Reunion V...enjoy.
A couple of months ago we shared our thoughts on Brick and Mortar. Our final observation was
"What is the right size for these facilities, and where does it start feeling over done, over the top.
Or is it a competition of brands, egos, and the customer is an afterthought?"
Unbeknown to The Colonel at the time, that he would have the unique opportunity to actually do business in one of these facilities.
As a visitor its a detached thought process. When you go to one and actually do business with the folks that work in the facility, represent the brand, and you drop serious money in the place its an entirely different thought vector.
The facility is stunning, represents the brand, is picture perfect.
It has the architectural requirements, the signage, the windows to see the service departement from the waiting area, the various glass offices to communicate transparency, the drive through service reception, and so on...its picture perfect.
The brick and mortar provides the visual brand experience while following an architectural philosophy.
The Colonel was not there for the visual or architectural experience, he was there to acquire a car.
Closing a deal.
When you are focused on closing a deal, the architecture, the glass, granite, steel, become a prop.
How do you close a deal in such a branded environment?
You expect the entire transaction to be elegant, seamless, smooth, frictionless, easy...
You expect the negotiations to be brief, to the point, and quick.
The deal transpired in such a fashion, with prompting from The Colonel.
"Here is a deposit, the plates, please do the paperwork, will pick up the car next week"
It was that simple.
Cavalier on the part of the seller, perhaps a little too cavalier, at a time when being humble goes a greater distance.
A classic case of "I want the car, I need to deal with a cavalier attitude to get the car I want".
Dealers are process oriented, with all the stakeholders sticking to the process. Ex: The sales consultant did his job since he followed the process. Is the customer interested in the dealer process? Not really...to not at all.
With all the stakeholders sticking to the process, execution is acceptable. The customer sees, and experiences the execution. It should be elegant, flawless, seamless, with consumate attention to all the details. It becomes a case of "I followed the steps, I did my job". Instead it should be "I truly delivered a memorable experience for the customer".
Rigid processes, acceptable execution, generate friction points which are quickly captured by the customer. "There is friction in the glass palace". Its obvious that dealers focus on the process, and paperwork from their perspective, instead of from the customer's perspective.
Would The Colonel have done business with this glass palace if the car was not unique? A resounding NO. Will The Colonel recommend this dealer/glass palace? Another resounding NO.
Does the dealer care? Another NO.
Is there continuity...NO
A chance encounter with a muddied carpenter in a Tim Horton had more human value than buying a car, dropping money, in a branded glass palace.
Dealers are missing the human side, and perhaps CMS (Citizen Main Street) does not care, similar to The Colonel they want a vehicle, and endure the human friction.
Which begs the question: Why invest millions in glass palaces? To keep the manufacturer content, and create automated friction processes for customers. While groveling for a review on a review site.
When you ask dealers why they are closing less deals, with more churning in the showroom. They mention anything and everything, except the human aspect.