Five Key Dealership & Construction Trends To Watch For...
Brent Tally
Facility Construction Management & Owner's Representative | Automotive, C-Store, Stadium, QSR & Health Care Facility Development | TallyCM
As I reflect on the opportunities of the new year, the team and I at TallyCM are very optimistic about the overall state of the auto and construction industries. Since our work as an Owner’s Rep firm is at the cross roads of the two industries we wanted to share our insights on some of the trends and new operating dynamics that you may see in 2018 and beyond.
These are based on my experiences while visiting our clients, their feedback, predictions from our field team, and from the business media outlets we follow. We wanted to provide these notes as not only as a trend outlook but also as something to consider when reviewing your facilities program. Our intent is that these topics find a way into your discussions in the coming year.
Count on the Media To Over Hype Autonomous Vehicles and “Slowing” Car Sales
Regardless of how you feel about the media and who they favor, the one thing you can count on is that the auto industry will always motivate pundits to make bold claims. Sometimes with excitement comes sensationalism, especially on slow news days. Here is one thing to count on in 2018, the media will not be short on coverage regarding autonomous vehicles. It is an exciting story and can be “banked” on coming true. The real question is, “When will it come true?”
My prediction is that autonomous vehicles will not impact your day to day operations or sales for at least 10-15 years and certainly should not affect your dealership design plans for many years to come. Even if 2018 was the year of the Autonomous Car the footprint of a typical modern dealership would be able to handle it and any dealership improvements if needed would come in the areas of service.
Prepare & Expand Electric Footprint
The latest version of the Nissan Leaf, Tesla Model 3, Chevy Bolt, Honda Clarity, VW e-Golf, and many others are going to be popular mainstream EVs. Every large manufacturer has electric cars already in their lineup or coming soon, and it will become a priority for every dealership. Training every dealership employee on EV technology and how to communicate to the customer how your dealership has the infrastructure and training to support their needs will be a critical part of your EV selling strategy.
In the future dealerships will become a hub for all EV activity. Incorporating fast-charging stations at your store to encourage electric car customers to visit more frequently, providing them with a knowledgeable service staff, and flexible loaner programs for times when customers need longer range fuel vehicles will help your dealership gain a foothold for the EV customer.
Continue To Plan on Off Site Flex Parking
The demand of car buyers may taper off, but the supply of new and quality certified pre-owned units will remain strong. The operating reality of having too much supply is upon us. The most profitable and efficient dealers we work with are always on the look out to bolster their parking and general operations space. If you see a barren parcel of land within 1-3 miles of your dealership, perhaps give it a look as an option for additional space. In time, with all good pieces of land, it will be purchased.
Plan on Labor Shortages of Skilled Tradesman
Although U.S. commercial construction firms are optimistic about the economy’s, they agree that finding skilled labor still poses a challenge. According to a recent survey by USG and the US Chambers of Commerce Association, over 65% of recipients said skilled labor was one of their major concerns. Take the current labor situation into account when setting key project dates and timelines. When vetting a contractor ask them for multiple recent references and ask what their sub to FTE associate ratio is. This will help you better understand how vulnerable your contractor is to the labor shortage.
Create An Off Site Selling Strategy That Ends In The Show Room
Many brands are creating new selling strategies that guarantee convenience and efficiency for the buyer. This evolution is positive for both the customer and the industry. The strongest dealers will embrace this trend but will find new ways to end the transaction within the dealership by making the hand off even more special. Implementing a high profile “Delivery Area”, Valet or At Home Delivery for new customer introductions with digital welcome kits will set the stage for a longer and deeper customer relationship.
Overall, the outlook for both the auto and construction industry is bright. As with any industry though, they will have some challenges to overcome. The best thing that auto groups who have a facilities improvement program on the horizon can do is to stay knowledgeable and open to new ideas and ways of doing things. The auto industry will continue to evolve, and it’s up to the professionals in the field to evolve with it. By making a commitment to being open minded your customers will be bettered served, your team will be engaged, your margins will remain strong, and you as an operator will have a greater sense of fulfillment in what you do and how you go about doing your business.
- By: Brent Tally | Founder of TallyCM
Sales Manager at Cool Blew Plumbing Heating
6yYou took the words out of my mouth, seeing the trends are key to expansion and future sales.
Automotive Operations Management
6yAutonomous EV's will result in fewer collisions and reduced body and paint repairs. However, electric vehicle maintenance only benefits from the elimination of the oil change. No current EV is immune to suspension issues, drive unit failures, battery charging or range reduction concerns. That does not include software or firmware issues that cannot be diagnosed or corrected with over the air updates. The other opportunity will be in providing technology upgrades. Technical evolution is not going to stop with autonomous platforms. I have yet to keep an iPhone longer than two years. I believe that the author's 10 to 15 year window for the impact on day to day operations applies to all EV operation. It is not limited to the autonomous driving components. You may want to ensure you have the space and the tooling to provide the hover conversions customer will be demanding.
Are you a custom machine builder still using spreadsheets to track your project elements, or using a jobshop software that fits only a fraction of your business?
6yDealers will have to shrink in size eventually during the transition. They, like every other business will need to start thinking diversity. Lots of EVs, even if only 10% of ICE cars in the service bay means lots of energy. Everyone will expect to leave fully charged (even though that is not the case with ICE today). This means creating a power generation platform.
Retail Network Development Director | Go-to-market Strategy | Customer Experience | ex-Stellantis | ex-Management Consulting
6yI believe EVs and Autonomous EVs will play a significant role in the reduction of service requirements and footprint (maintenance/repair bays + body & paint). Showroom footprint might also be reduced thanks to digital sales platforms and virtual/augmented reality technology already available in some markets. In a recent article, Peugeot Brand Director JP Imparato stated that dealers will have to reduce by 20 to 30% their facility footprint to remain sustainable.
Strategist, Futurist, Leader, Influencer - Principal Consultant at Vision Mobility
6yWith initial trials of fully autonomous Level 4 vehicles occuring now, and most OEMs saying that they will have something available as L4 autonomous by 2020 to 2021, your "no impact for 10-15 years" forecast is somewhat shaky. There are 3 other big trends that are critical to a dealer's revenue and profitability (as well as dealership facility planning) that have not been picked up on: 1) On the whole, people despise the current Sales Process: Edmunds - 90% of people would rather clean the toilet than shop for a car; Autotrader - 1% of buyers like the current sales process). If ever there was an opportunity for disruption, this is it, and certainly many have forecast a shared mobility boom being driven by this factor (and cost). I'd suggest your ideas are based on the old "get 'em in, get 'em signed up" philosophy. 2) Parts - KPMG has forecast a 48% reduction in the sale of crash parts by dealers between now and 2030. This is due to ADAS and autonomous technology coming on stream. Let's not forget that high level ADAS technology is now STANDARD on almost all Toyota and Lexus models today, with many OEMs close behind. Electric vehicles also have almost no consumable parts in the drive train as well. 3) Service - Several studies have forecast a 20-40% take rate for new electric vehicles. Norway is already at 50% today. Though, the IC carparc will be large for some time. Let's not forget that Electric Vehicles require 50% less maintenance than typical IC vehicles (Source- Renault Nissan), and no service regularity due to oil changes mean that it is going to be extremely difficult to get someone in for service. Planning to know how to service EVs is the very least a dealer can do and finding the right people is very important (I'd suggest programmers), but there are a lot bigger problems for fixed ops than just this. Given these points, dealers need to be very, very careful how they invest in new facilities, and whether they will see any of the returns in the long run. Let's not forget it takes 15-20 years to pay off a new facility, and I can guarantee the automotive world will look very, very different then - that facility might be worth just land value. If you wanted to maximize the return on selling your facility (blue sky + facility), you've missed the boat. That was 2015. It's a long slow decline in dealer values from here on in.