Tom McCollum’s Post

Welcome to Tuesday as we talk about franchise dealership count going down while throughput goes up on the other side of the seesaw. We also talk about Dealer complaints about the use of AI in credit leading to misquotes on payments, as well as a follow up on the dealer-purchased Cybertruck from last week. https://lnkd.in/eK9kATwm In 2023, the U.S. saw a slight decrease in new-car dealerships but a notable rise in sales per franchise underscoring the balance between efficiency and high demand. Note: The count excludes excludes BrightDrop, Fisker, Karma, Lucid, Rivian, Tesla and VinFast -The U.S. new-car dealership count dropped to 18,133 in 2023, while average sales per franchise surged 14% to 483 vehicles, up from 425 -General Motors and Ford led the charge in reducing franchise counts, contributing to an overall 3.6% decrease in franchises. -Notably, Buick dealerships nearly halved from 1958 to 1052, but doubled their throughput to 111 -Lincoln cut 100 of its US franchises bringing the total count to 535 and has plans to cut 100 more this year -Hyundai and Genesis are expanding their standalone presence, signaling a shift towards more brand-exclusive dealerships. -"We are well on our way to 75 percent-plus of our network upgrading their facilities by 2025," says Hyundai spokesperson https://lnkd.in/eY_E_A4e A staggering 90% of dealers and lenders report frustrations with AI in digital lending solutions, claiming it often results in inaccurate online payment quotes, a poll by eLEND Solutions reveals. -The majority feel that AI's approach to evaluating consumer creditworthiness doesn't align with the reality of customer negotiations, leading to mismatched payment terms. -"Lenders aren't even pricing to those [rate sheet] tiers any longer," eLEND CEO Pete MacInnis told Automotive News. "Some are, but most of your major ones have this dynamic pricing model" tied to the unique customer and their vehicle choice. -Despite AI's sophistication, 76% of initial digital retail quotes reportedly fail to match final lender decisions, highlighting a disconnect between technology and practical application. The Porsche dealer that turned heads last week by acquiring a Cybertruck for $244,000, at a Manheim auction now has it listed for $289,999 -Porsche South Orlando acquires a Cybertruck for $244,000 from seller “givemethevin” and, now has it listed for $289,999, defying Tesla's resale restrictions which threaten a $50,000 penalty for early resales, the truck has traveled through multiple owners, each turning a profit. -The Cybertruck has under 100 miles on the odometer -"Tesla’s threat...may have actually helped to inflate the price of the trucks," suggests John Clay Wolfe, CEO of givemethevin.com

In 2023, the total number of franchise car dealerships in the U.S. slightly increased to 18,347, an addition of 90 dealerships from 2022, as reported by Urban Science. However, the total number of car brands represented by these dealerships decreased by 1,050 to 30,504. New vehicle sales grew by 13%, largely due to non-retail sales, and each dealership sold an average of 851 vehicles, the highest since the pandemic and chip shortage. Urban Science forecasts this average to rise to 880 in 2024. Most U.S. regions showed little change in dealership numbers, but California gained the most dealerships, while New York lost the most.

Do you know your state's franchise laws? In most American states, in order for a vendor to sell vehicles in the state, they must agree to abide by that state's franchise laws. While the laws vary by state, they cover a wide range of issues - Compliance with lemon laws - Warranty reimbursement times and rates - Spacing between dealers - Product availability - Repurchase obligations (if a dealer terminates a franchise or goes out of business) - Ability to restrict an OE from inserting themselves into a sale through first right of refusal clauses - Product liability - Restrictions on a vendors rights to close a point or award the franchise to another operator - Etc. The list gets really long and there are many nuances between states. In some areas an ATV might be covered under franchise laws, while ORVs might be excluded. Lemon laws cover motorcycles in some states, but not others. About 13 states require reimbursement rates for warranty parts at MSRP. There is one key item dealers need to be aware of. Dealers tend to believe that vendors will honor and comply with state laws: that they won't do anything to violate them. However, the unfortunate truth is that OEs knowingly and constantly violate the state laws. They do this using a few common tactics - The most common is just taking advantage of the fact that most dealers don't know or understand their state franchise laws. Do something, and if no one says anything, keep doing it. - Directly lying to dealers and telling them that what they are doing is legal (see item 1 above) - Ignoring or slow walking dealer questions - Utilizing lobbyists to grease the skids - Involving attorneys and hoping dealers back down instead of retaining their own counsel - Taking advantage of gray areas in the law and ignoring precedent Every week I receive multiple questions from dealers relating to state laws (apologies if I don't respond to everyone, I'm pretty overwhelmed right now). In many cases, I have to refer dealers back to their own state dealer association, or where they don't exist, see if their local auto dealer association can help. I am excited to announce that the National Powersports Dealer Association is working to build a framework so that progressive operators in every state can stand up their own Powersports Dealer Associations. We are working towards an organizational framework, and a suggested outline of legal standards that should be included in each state's franchise protections. Our end goal is to work hand in hand with the franchises that want to work with us to make the powersports industry one that will last long in to the future. For those vendors who want to work against your dealers, well just know that things won't be as easy for you as they have been in the past. For now, my recommendation for every powersports dealer in the country is to take a few hours and read your state franchise laws. Make sure you know what a vendor can and cannot do. #Powersports #Franchise #NPDA

It is an honor to be considered a trusted advisor to our clients. Another special one, here, with the sale of McGeorge Toyota to Ourisman Automotive Group. Our client, Rod McGeorge shares some great perspectives into what he required in an advisor and how our team delivered (see below post). Kevin Nill, who led the transaction on my team, also offered insight into why having a trusted buy-sell advisor in your corner is critical: “Success in the dealership buy-sell market is not just about finding a buyer. It's about identifying the most motivated and best-suited buyer to fulfill the goals of the seller. What sets our team apart can be found in our collective retail dealership expertise, unwavering commitment to our clients, extensive relationships with buyers, and the investment banking-style approach we utilize to market our clients."

Spending more than 30 years as a CPA, I understand the importance of being a trusted advisor to clients. Clients need to know you are doing what is best and right for them based on their goals AND dreams, not just doing what is easy. This is another great example of the power of partnering with an advisor you trust with one of, if not the most valuable asset you own. It is not just about the "transaction." It is about the entire journey.

CIMA MCS Nov 2023 case study How to protect the franchise of a new car manufacturer Protecting the franchise of a new car manufacturer is crucial for the success and longevity of your car dealership. Here are some key strategies to help you protect your franchise: 1. Compliance with Franchise Agreement: - Strictly adhere to the terms and conditions outlined in your franchise agreement. This includes meeting sales and service standards, using approved branding and marketing materials, and following operational guidelines set by the manufacturer. 2. Customer Satisfaction: - Focus on providing excellent customer service. Happy and satisfied customers are more likely to return, refer others, and maintain a positive perception of the manufacturer's brand. 3. Training and Certification: - Ensure that your sales and service staff are properly trained and certified according to the manufacturer's standards. This not only improves the customer experience but also demonstrates your commitment to the brand. 4. Maintain Brand Image: - Keep your dealership in line with the manufacturer's branding standards. This includes the physical appearance of your dealership, signage, and promotional materials. Consistency in brand image is essential. 5. Inventory Management: - Maintain a well-managed inventory that reflects the manufacturer's product lineup. Ensure you have the right mix of models and options based on market demand and the manufacturer's recommendations. 6. Adherence to Pricing Guidelines: - Follow the pricing and discount guidelines set by the manufacturer. Avoid engaging in aggressive pricing strategies that could harm the brand's reputation. 7. Warranty and Service: - Provide warranty and service work in accordance with the manufacturer's warranty policies. Timely and effective service contributes to customer satisfaction and trust in the brand. 8. Marketing and Promotion: - Collaborate with the manufacturer on marketing and promotional campaigns. Use approved advertising materials and strategies to promote the brand effectively. 9. Legal Compliance: - Ensure you comply with all federal, state, and local laws and regulations that pertain to car sales and service. This includes issues related to consumer protection and automotive safety. 10. Communication with the Manufacturer: - Maintain open and transparent communication with the manufacturer. Inform them of any challenges or opportunities, and seek their guidance and support as needed. 11. Feedback and Improvement: - Collect feedback from customers and employees to continuously improve your dealership's operations. Share this feedback with the manufacturer to address any issues or implement enhancements. By diligently following these strategies and maintaining a strong relationship with the new car manufacturer, you can help protect and strengthen your franchise while contributing to the manufacturer's brand success.

■ UK's Jaguar Land Rover dealer agency sales agreements, which were due to come into force later this year, have been put on hold! February 27, 2024 James Baggott Car Dealer Magazin UK • JLR has canned plans to move to a fixed price, no-haggle sales model and will be sticking with its current sales model. Franchise partners were expecting to move to an agency sales model by the end of this year but car dealer bosses have now been told this has been put on ice. Last June, Jaguar Land Rover told its retail partners that it would be moving to the fixed price model with sales made online on the manufacturer’s website, or in a showroom.  JLR planned to invoice the client instead of the dealer and they were set to be paid a handling fee for handing over the cars. JLR also wanted to take control of the part exchanges offered as part of any deal. In a briefing with Car Dealer at the time, the firm said the switch was ‘what the customer wanted’ and would allow its dealer partners to ‘focus on customer service’. However, JLR has now rowed back on those plans following consultation with its retail partners and says it will be sticking with the traditional sales model – albeit with some tweaks. JLR told retail partners it will still be selling cars online but will be continuing with its traditional franchise model too. In a statement, the brand said: ‘A relentless pursuit of excellence has delivered opportunity for JLR to design its own unique retail model – a client-centric retail experience that offers the underpinnings of the traditional franchise model, with key adaptations to accommodate the changing demands of JLR’s discerning clientele.’ The move was welcomed by some of the manufacturer’s largest partners including Darren Edwards, CEO of Sytner Group. Vertu Motors boss Robert Forrester added: ‘The news that the franchise model will be retained is a decision that was made in consultation with the investor community and provides the stability to progress with delivering innovative services to our clients without distraction. On this basis, we welcome the news.’ Jaguar Land Rover is the latest manufacturer to switch away from plans to introduce controversial agency agreements with its dealers.  Stellantis boss Maria Grazia Davino recently shelved plans for its brands to move to agency, promising a consultation with dealers and external experts before putting anything in place while VW Group’s plans have also been delayed.  Meanwhile, Mercedes has been selling cars under an agency sales models since the start of 2023 while Volvo made the switch in the summer. #jaguar #landrover #jaguarlandrover Source: https://lnkd.in/efcHxyWg

 • Aaron Zeigler | Newsmaker 2023 Zeigler Automotive Group February 7, 2024 Abby Poirier -Crain Zeigler Automotive Group acquired six new locations in 2023, scooping up four Holland dealerships and two in Indiana. In July, the Kalamazoo-based automotive group purchased a series of stores from Elhart Automotive in Holland. Former owner Jeff Elhart sold the dealerships as he was looking to retire. The four stores were renamed as Zeigler GMC of Holland, Zeigler Nissan of Holland, Zeigler Hyundai of Holland and Zeigler Kia of Holland. Zeigler Automotive Group President Aaron Zeigler told Crain’s Grand Rapids Business that he planned to invest in a new store for the Hyundai franchise, upgrading the dealership from a showroom to a complete service and sales center. The build-out is slated to be completed in 2024. Then in August, the company added new out-of-state locations in Indiana in a two-store deal with Rohrman Automotive Group. The acquisitions included Lafayette, Ind.-based Bob Rohrman Subaru and Bob Rohrman Subaru of Fort Wayne, which were renamed Zeigler Subaru of Lafayette and Zeigler Subaru of Fort Wayne, respectively. Like the Holland acquisition, Zeigler plans to invest in “dramatic upgrades” at the Fort Wayne location in the next year. Early plans call for expanding the dealership’s 14,000-square-foot facility by about 10,000 square feet and bringing it up to brand design standards, Zeigler told Crain’s Grand Rapids Business at the time. “We’re going to add on to both service and sales,” he said. With these acquisitions, Zeigler Automotive Group owns 82 franchises across 41 locations in Wisconsin, Illinois, Michigan and Indiana. source, image: Crain Communication #automotive #retail #zeigler

“It’s certainly a sellers’ market for the top franchises…And it’s a sellers’ market for high-growth markets, like Florida or Texas. If you’re the top-volume store in one of these markets, as well.” Erin Kerrigan Kerrigan Advisors’ insights were recently featured in an article by WardsAuto discussing current buy/sell market conditions. Based on our recent transaction experience, Kerrigan Advisors continues to see strong buyer demand for top assets in growth markets. Read the full article here: https://lnkd.in/g3nHFVkU #auto #buysell #autoretail #automarket #dealers #wardsauto #kerriganadvisors #dealerships #mergersandacquisitions

Hendrick Automotive Group Coming Soon: BMW of McKinney Tuesday, 23 January, 2024 Construction is well underway for Hendrick Automotive Group’s newest dealership – BMW of McKinney, located just northeast of Dallas. The franchise will be the Charlotte, North Carolina-based company’s second in the area, joining Honda of McKinney, which opened in 1986. Expected to open in spring 2024, the facility will be the Southern Region’s first dealership built from the ground up utilizing BMW’s new “Retail Next” architecture. Highlighted by more than 70,600 square feet of space and offering 50 bays overall, the environmentally sustainable building will focus on meeting the area’s expanding service needs. Sitting on approximately 14.5 acres, the new location will afford easy access, location convenience and a complete immersion into the next generation of BMW. BMW of McKinney will become Hendrick Automotive Group’s ninth new BMW franchise in its broad stateside portfolio, adding to a wealth of brand equity that started when Chairman & CEO Rick Hendrick first opened Hendrick BMW in 1980. As the flagship BMW franchise, Hendrick BMW’s constant drive for excellence has provided the company with a world-class service DNA that’s earned Hendrick Automotive Group franchises BMW’s prestigious ‘Center of Excellence” awards an impressive 45 times. #automotive #retail #hedrick #bmw #dealership https://lnkd.in/eyNX6a_W