MARINA DEL REY, CA – Auto dealers should do five key things to transition into the new age of mobility when people will rely on ride- and car-sharing services and potentially buy fewer personal vehicles.
So says Frank Ferrara, a former Hyundai executive who now runs Traction Labs, which he describes as a platform for auto-mobility growth and transformation.
He offers advice during a presentation entitled “The Dealership as the Neighborhood Mobility Center” at the Thought Leadership Summits’ 2018 Customer Experience Conference here.
“This transition could move fast,” he says. “The reduction in personal vehicle ownership is coming.”
Here’s what he says dealers need to do to ride that wave.
· Maintain sales and parts-service operations at separate locations. Showrooms belong in prominent, often high-rent spots to draw customers. But service departments should go elsewhere, including industrial parks, where real estate is less expensive.
· Employ drivers to drop off vehicles for test drives or pick them up for service.
· Lower inventory levels. “There’s no need to have high floor-plan costs.”
· Get into the vehicle-rental business. “That’s a springboard to subscription services,” he says, adding that many customers want leases shorter than today’s conventional 2- and 3-year terms.
· Enhance used-car sales, particularly with subscription services and shorter leases funneling a steady stream of vehicles into pre-owned vehicle lots. “There’s no reason a dealership’s new-car to used-car ratio shouldn’t be 1:1.”
Dealers by the nature of their business are short-term-oriented, Ferrara acknowledges. That’s why his long-term proposals don’t currently resonate with many auto retailers.
“They’ll say, ‘Business is good; we’ll wait and see,’” he tells WardsAuto. “But some dealers are working on this transition. And I’m out preaching.”